AMENDMENT NO. 1 TO AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
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This AMENDMENT NO. 1 TO AMENDED AND RESTATED REVOLVING CREDIT, TERM
LOAN AND SECURITY AGREEMENT (the "Agreement"), dated as of November 13, 2001, is
by and among KOALA CORPORATION, a Colorado corporation, as borrower and debtor
("Borrower"), KEYBANK NATIONAL ASSOCIATION ("KeyBank"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as a Lender and in its capacity as
agent acting in the manner described below ("U.S. Bank" or "Agent").
RECITALS
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A. Borrower, U.S. Bank and KeyBank are parties to that certain Amended
and Restated Revolving Credit, Term Loan and Security Agreement dated September
26, 2001 (the "Credit Agreement").
B. Borrower and the Lenders have agreed to enter into this Agreement to
amend the Revolving Credit Agreement to waive certain covenant violations of
Borrower and make certain other amendments to the Credit Agreement.
C. The Lenders are willing to waive certain covenant violations based
on the covenants, terms and conditions set forth herein.
AGREEMENT
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1. Definitions.
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(a) Any capitalized terms used but not defined in this
Agreement shall have the meanings given to such terms in the Credit Agreement.
(b) The definition of "CONSOLIDATED LEVERAGE RATIO" in the
Credit Agreement is hereby deleted and replaced with the following definition:
"CONSOLIDATED LEVERAGE RATIO" means, as of the date of computation
thereof, the ratio of (i) Debt to (ii) Consolidated EBITDA.
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(c) The definition of "FIXED CHARGES" in the Credit Agreement
is hereby deleted and replaced with the following definition:
"FIXED CHARGES" means the sum of scheduled principal payments on Debt,
cash interest on Debt and rent and operating lease expense of the
Borrower determined as follows: (a) for the quarter ended March 31,
2002, such items shall be calculated at the end of such quarter and
annualized by multiplying Fixed Charges for the quarter by four, (b)
for the quarter ending June 30, 2002, such items shall be calculated at
the end of such quarter, added to the total Fixed Charges for the
previous quarter and annualized by multiplying such sum by two, (c) for
the quarter ending September 30, 2002, such items shall be calculated
at the end of such quarter, added to total Fixed Charges for the
previous two quarters and annualized by multiplying such amount by
1.33333, (d) for all quarters ending on or after December 31, 2002,
Fixed Charges shall be determined on a trailing four-quarter basis.
(d) The definition of "INTEREST COVERAGE" in the Credit
Agreement is hereby deleted and replaced with the following definition:
"INTEREST COVERAGE" means (a) Consolidated EBITDA divided by (b) the
Consolidated Interest Expense for Borrower determined as follows: (i)
for the quarter ended December 31, 2001, Consolidated Interest Expense
shall be calculated at the end of such quarter and annualized by
multiplying Consolidated Interest Expense for the quarter by four, (ii)
for the quarter ending March 31, 2002, Consolidated Interest Expense
shall be calculated at the end of such quarter, added to the total
Consolidated Interest Expense for the previous quarter and annualized
by multiplying such sum by two, (c) for the quarter ending June 30,
2002, Consolidated Interest Expense shall be calculated at the end of
such quarter, added to the total Consolidated Interest Expense (as
appropriate) for the previous two quarters and annualized by
multiplying such amount by 1.33333, (d) for all quarters ending on or
after September 30, 2002, Consolidated Interest Expense shall be
determined on a trailing four-quarter basis.
(e) The definition of "UNALLOCATED CASH FLOW" in the Credit
Agreement is hereby deleted and replaced with the following definition:
"UNALLOCATED CASH FLOW" means the sum of (a) Consolidated EBITDA, plus
(b) rent and operating lease expense, less (c) cash dividends, less (d)
cash taxes and less (e) unfinanced capital expenditures of the Borrower
determined on a trailing four-quarter basis.
2. Waiver of Covenants.
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In consideration of the terms and conditions of this Agreement, for
the period ending September 30, 2001, the Lenders hereby waive
Borrower's compliance with (a) the Consolidated Leverage Ratio
financial covenant set forth in Paragraph 9.12(a) of the Credit
Agreement, and (b) the Interest Coverage financial covenant set forth
in Paragraph 9.12(c) of the Credit Agreement.
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3. Amendment of Financial Covenants.
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Borrower hereby agrees to the following amendments to the financial
covenants of the Credit Agreement:
(a) Paragraph 9.12(a) of the Credit Agreement is hereby
deleted and replaced with the following:
Maximum Consolidated Leverage Ratio.
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The Consolidated Leverage Ratio shall not exceed the following:
Period Consolidated Leverage Ratio
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Quarter ending 12/31/2001 5.40 : 1
Quarter ending 3/31/2002 4.00 : 1
Quarter ending 6/30/2002 3.50 : 1
Quarter ending 9/30/2002 2.60 : 1
Quarter ending 12/31/2002 and thereafter 2.00 : 1
(b) Paragraph 9.12(b) of the Credit Agreement is hereby
deleted and replaced with the following:
Minimum Fixed Charge Coverage.
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Borrower's Fixed Charge Coverage shall at no time be less than the
following:
Period Fixed Charge Coverage
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Quarter ending 12/31/2001 No requirement
Quarter ending 3/31/2002 1.00 : 1
Quarter ending 6/30/2002 1.00 : 1
Quarter ending 9/30/2002 1.25 : 1
Quarter ending 12/31/2002 and thereafter 1.50 : 1
(c) Paragraph 9.12(c) of the Credit Agreement is hereby
deleted and replaced with the following:
Minimum Interest Coverage.
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Borrower's Interest Coverage shall at no time be less than the
following:
Period Interest Coverage
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Quarter ending 12/31/2001 2.25 : 1
Quarter ending 3/31/2002 2.25 : 1
Quarter ending 6/30/2002 3.00 : 1
Quarter ending 9/30/2002 4.00 : 1
Quarter ending 12/31/2002 and thereafter 4.00 : 1
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4. Additional Covenants.
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So long as any part of the Indebtedness remains unpaid or the Credit
Agreement remains in effect, Borrower shall comply with the following
covenants, which shall be treated as additional affirmative covenants
under Section 8 of the Credit Agreement:
(a) In order to raise additional cash through equity sales,
Borrower, in conjunction with Green Manning & Bunch, LTD or another investment
banker or underwriter reasonably acceptable to Lenders, shall complete and be
actively marketing an offering memorandum (the "Offering Memorandum") by
December 17, 2001. A copy of the Offering Memorandum must also be provided to
the Lenders by December 17, 2001.
(b) On or before March 31, 2002, Borrower shall raise a
minimum of $10,000,000 through equity sales or other acceptable financing
approved by the Lenders, all of which proceeds must be used to prepay the Term
Note that evidences the Term Facility. Such prepayment shall be applied to the
outstanding balance of the Term Note. After such prepayment, the Term Note will
be re-amortized on a 6.75 year straight-line basis and corresponding payment
adjustments shall be made to the Term Note.
(c) Borrower shall provide the Lenders with weekly updates on
the status of the Offering Memorandum and any equity sales of Borrower.
5. Miscellaneous.
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(a) Borrower agrees to pay on demand all costs and expenses of
the Agent in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the other
Transaction Documents, and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
the Agent (including the cost of internal counsel) with respect thereto and with
respect to advising the Agent as to its rights and responsibilities under the
Transaction Documents. Borrower further agrees to pay on demand all costs and
expenses of the Agent and the other Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses and the cost of internal
counsel), in connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of this Agreement or the Transaction Documents.
(b) The Lenders and Borrower, as used herein, shall include
the successors or assigns of those parties, except that Borrower shall not have
the right to assign its rights hereunder or any interest herein.
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(c) No modification, rescission, waiver, release, or amendment
of any provision of this Agreement shall be made, except by a written agreement
signed by Borrower and the Required Lenders.
(d) This Agreement may be executed in any number of
counterparts, and by the Lenders and Borrower on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
shall together constitute one and the same Agreement.
(e) Article and Section headings used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.
(f) The terms of this Agreement and the other Transaction
Documents shall be cumulative except to the extent that they are specifically
inconsistent with each other, in which case the terms of this Agreement shall
prevail.
(g) This Agreement, the Credit Agreement, and the other
Transaction Documents constitute the entire agreement and understanding between
the parties hereto with respect to the transactions contemplated hereby and
supersede all prior negotiations, understandings, and agreements between such
parties with respect to such transactions, including, without limitation, those
expressed in any commitment letter delivered by the Lenders to Borrower.
(h) This Agreement, and the transactions evidenced hereby,
shall be governed by, and construed under, the internal laws of the State of
Colorado, without regard to principles of conflicts of law, as the same may from
time to time be in effect, including, without limitation, the Uniform Commercial
Code as in effect in the state.
(i) Borrower and the Lenders agree that any action or
proceeding to enforce, or arising out of, the Transaction Documents may be
commenced in any state or federal court of competent jurisdiction in the State
of Colorado, and Borrower and Lenders waive personal service of process and
agree that a summons and complaint commencing an action or proceeding in any
such court shall be properly served and shall confer personal jurisdiction if
served by registered or certified mail to Borrower or the Lenders, as
appropriate, or as otherwise provided by the laws of the State or the United
States.
(j) Borrower and the Lenders hereby knowingly, voluntarily,
and intentionally waive any right to trial by jury borrower or lenders may have
in any action or proceeding, in law or in equity, in connection with the
Transaction Documents or the transactions related thereto. Borrower represents
and warrants that no representative or agent of the Lenders has represented,
expressly or otherwise, that the Lenders will not, in the event of litigation,
seek to enforce this right to jury trial waiver. Borrower acknowledges that the
Lenders have been induced to enter into this Agreement by, among other things,
the provisions of this paragraph.
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(k) Oral agreements or commitments to loan money, extend
credit or to forbear from enforcing repayment of a debt, including promises to
extend or renew such debt, are not enforceable. To protect you (Borrower) and us
(Lenders) from misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this Agreement and the Transaction
Documents, which are the complete and exclusive statement of the agreement
between us, except as we may later agree in writing to modify it.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BORROWER:
KOALA CORPORATION
By: /s/ Jeffrey L. Vigil
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Name: Jeffrey L. Vigil
Title: Vice President Finance and
Administration
Address:
11600 East 53rd Avenue, Unit D
Denver, CO 80239
Attn: Mark A. Betker, President and CEO
Phone: (303) 770-3934
Facsimile: (303) 574-9000
LENDERS:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Andrew K. Aye
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Name: Andrew K. Aye
Title: Vice President
Address:
8401 E. Belleview
Denver, Colorado 80237
Attention: Andrew K. Aye, Vice President
Phone: (303) 773-0709
Facsimile: (303) 290-8671
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KEYBANK NATIONAL ASSOCIATION
By: /s/ Jeanette Ganousis
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Name: Jeanette Ganousis
Title: Senior Vice President
Address:
1675 Broadway, Suite 500
Denver, CO 80202
Attn: Jeanette Ganousis
Phone: (720) 904-4542
Fax: (720) 904-4515
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