WAIVER AND AMENDMENT NO. 2 TO AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
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This WAIVER AND AMENDMENT NO. 2 TO AMENDED AND RESTATED REVOLVING
CREDIT, TERM LOAN AND SECURITY AGREEMENT (the "Agreement"), dated as of March
31, 2002, 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 in the Credit Agreement ("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, as amended on August 6, 2001 and November 13, 2001 (the
"Credit Agreement").
B. Borrower and the Lenders have agreed to enter into this Agreement
to amend the Credit Agreement to waive certain covenant violations and other
obligations of Borrower.
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.
(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 determined
as follows: (a) for the quarter ended March 31, 2002, Consolidated
EBITDA shall be calculated at the end of such quarter and annualized by
multiplying such calculation by four, (b) for the quarter ending June
30, 2002, Consolidated EBITDA shall be calculated at the end of such
quarter, added to Consolidated EBITDA for the previous quarter and
annualized by multiplying the resulting sum by two, (c) for the quarter
ending September 30, 2002, Consolidated EBITDA shall be calculated at
the end of such quarter, added to Consolidated EBITDA for the previous
two quarters and annualized by multiplying the resulting sum by
1.33333, (d) for all quarters ending on or after December 31, 2002,
Consolidated EBITDA shall be determined on a trailing four-quarter
basis.
(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 March 31, 2002, Consolidated Interest Expense and
Consolidated EBITDA shall be calculated at the end of such quarter and
annualized by multiplying such items for the quarter by four, (ii) for
the quarter ending June 30, 2002, Consolidated Interest Expense and
Consolidated EBITDA shall be calculated at the end of such quarter,
added to the total Consolidated Interest Expense and Consolidated
EBITDA (as appropriate) for the previous quarter and annualized by
multiplying such sums by two, (c) for the quarter ending September 30,
2002, Consolidated Interest Expense and Consolidated EBITDA shall be
calculated at the end of such quarter, added to the total Consolidated
Interest Expense and Consolidated EBITDA (as appropriate) for the
previous two quarters and annualized by multiplying such sums by
1.33333, (d) for all quarters ending on or after December 31, 2002,
Consolidated Interest Expense and Consolidated EBITDA shall be
determined on a trailing four-quarter basis.
(e) The definition of "REVOLVING CREDIT MATURITY DATE" in the
Credit Agreement is hereby deleted and replaced with the following definition:
"REVOLVING CREDIT MATURITY DATE" means April 15, 2003.
(f) 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 as follows: (i) for the quarter ended March 31, 2002, such
items shall be calculated at the end of such quarter and annualized by
multiplying unallocated cash flow 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 unallocated cash flow 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 unallocated cash flow 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,
unallocated cash flow shall be determined on a trailing four-quarter
basis.
2. Waiver of Covenants. In consideration of the terms and
conditions of this Agreement, for the quarter ended December 31, 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. In addition, for the quarter ended March 31, 2002, the
Lenders hereby waive Borrower's compliance with the Minimum Fixed Charge
Coverage financial covenant set forth in Paragraph 9.12(b) of the Credit
Agreement.
3. Waiver of Payments. In consideration of the terms and conditions
of this Agreement, for the months ended February 28, 2002 and March 31, 2002,
the Lenders hereby waive the requirement set forth in Section 2.1(e) of the
Credit Agreement that Borrower repay the excess of the Revolving Credit
Outstandings over the Borrowing Base.
4. Repayment of Term Loan. Section 2.2(c) of the Credit Agreement
is hereby deleted and replaced with the following:
Repayment. Borrower promises to pay to Lenders the outstanding
principal of the Term Loan as follows: (i) until the Term Loan
Maturity Date, (A) for the year 2002, quarterly payments in
the amount of $500,000, which payments shall be due and
payable on the last Business Day of each quarter with the
first such payment being due on Xxxxx 00, 0000, (X) for the
year 2003 and thereafter, quarterly payments in the amount of
$1,000,000, which payments shall be due and payable on the
last Business Day of each quarter with the first such payment
being due on March 31, 2003, and (C) annual payments equal to
75% of Excess Cash Flow, which payments shall be due and
payable on April 30 for the immediately preceding Fiscal Year
beginning in Fiscal Year 2002, and (ii) in full upon the
earlier to occur of (A) termination of this Agreement, (B)
acceleration of the time for payment of the Indebtedness
pursuant to this Agreement or (C) on the Term Loan Maturity
Date. All payments of Excess Cash Flow shall be applied to
repayment of the Term Loan in reverse order of maturity.
Subject to the provisions of this Agreement, any amounts
outstanding under the Term Loan may be voluntarily prepaid in
the minimum amounts of $100,000 or such greater amount that is
an integral of $10,000. Borrower shall notify Lender by 1:00
p.m. on any Business Day of any prepayment of any portion of
the Term Loan. Except as otherwise agreed to in writing by the
Lenders, to the extent not used to repay amounts owed under
the Revolving Credit Facility, Borrower shall also be required
to use all Net Proceeds to repay the outstanding principal
and interest of the Term Loan, in reverse order of maturity,
up to the total amount of such Net Proceeds.
5. Amendment of Covenants. Borrower and Lenders hereby agree that
the covenant set forth in Section 4(b) of Amendment No. 1 to Amended and
Restated Revolving Credit, Term Loan and Security Agreement dated November 13,
2001, related to Borrower raising $10,000,000 in additional financing is hereby
deleted and replaced with the following:
On or before April 1, 2003, 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.
Notwithstanding the foregoing, Borrower shall use commercially
reasonable efforts to close successfully such transaction as
soon after the date of this Agreement as possible. Any
prepayment under this section shall be applied to the
outstanding balance of the Term Note in reverse order of
maturity.
6. Amendment of Financial Covenants. 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. The Consolidated Leverage Ratio
shall not exceed the following:
Period Consolidated Leverage Ratio
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Quarter ending 3/31/2002 10.50 : 1
Quarter ending 6/30/2002 6.10 : 1
Quarter ending 9/30/2002 5.00 : 1
Quarter ending 12/31/2002 and thereafter 5.00 : 1
(b) Paragraph 9.12(b) of the Credit Agreement is hereby
deleted and replaced with the following:
Minimum Fixed Charge Coverage. Borrower's Fixed Charge Coverage shall
at no time be less than the following:
Period Fixed Charge Coverage
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Quarter ending 3/31/2002 1.00 : 1
Quarter ending 6/30/2002 1.00 : 1
Quarter ending 9/30/2002 1.00 : 1
Quarter ending 12/31/2002 and thereafter 1.00 : 1
(c) Paragraph 9.12(c) of the Credit Agreement is hereby
deleted and replaced with the following:
Minimum Interest Coverage. Borrower's Interest Coverage shall at no
time be less than the following:
Period Interest Coverage
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Quarter ending 3/31/2002 1.30 : 1
Quarter ending 6/30/2002 2.15 : 1
Quarter ending 9/30/2002 2.70 : 1
Quarter ending 12/31/2002 and thereafter 2.70 : 1
7. Waiver and Restructure Fee. Borrower shall pay to Agent for the
benefit of the Lenders a waiver and restructuring fee as follows: a payment
shall be made on the last Business Day of each month for the five months
beginning March 31, 2002, in an amount equal to 1/10 of 1% (0.10%) of the Total
Revolving Credit Commitment and the total outstanding principal amount of the
Term Loan as of each payment date. This waiver and restructure fee shall be a
"fee" covered by Section 4.2(f) of the Credit Agreement.
8. Additional Principal Payments. In addition to all other payments
due to the Lenders by Borrower pursuant to the Credit Agreement or this
Amendment, on or before April 15, 2003, Borrower agrees to pay to the Lenders an
additional principal payment (the "Principal Make-Up Payment") on the Term Loan
in an amount to be determined as follows. In the event Borrower's Consolidated
EBITDA for its 2002 Fiscal Year is $12,000,000 or greater, the Principal Make-Up
Payment shall be $2,000,000. In the event Borrower's Consolidated EBITDA for its
2002 Fiscal Year is less than $12,000,000, the Principal Make-Up Payment shall
be an amount equal to (a) $2,000,000 less (b) $0.66 multiplied by ($12,000,000
less Borrower's Consolidated EBITDA). For example, if Borrower's Consolidated
EBITDA is $10,000,000, the Principal Make-Up Payment would be $680,000
($2,000,000 less $0.66 multiplied by ($12,000,000 less $10,000,000) = $2,000,000
less $1,320,000 = $680,000). In calculating Borrower's Excess Cash Flow for its
2002 Fiscal Year, the Principal Make-Up Payment shall be an additional deduction
from Consolidated EBITDA. The Principal Make-Up Payment shall be applied to
repayment of the Term Loan in reverse order of maturity.
9. Miscellaneous.
(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.
(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.
(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/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President Finance and Administration
Address:
00000 Xxxx 00xx Xxxxxx, Xxxx X
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, President and CEO
Phone: (000) 000-0000
Facsimile: (000) 000-0000
LENDERS:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President
Address:
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Vice President
Phone: (000) 000-0000
Facsimile: (000) 000-0000
KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxxx Xxxxxxxx
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Name: Xxxxxxxx Xxxxxxxx
Title: Senior Vice President
Address:
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
