Exhibit 10.2
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (the "Amendment") is
made this 1st day of March, 2000, by and between KOALA CORPORATION, a Colorado
corporation ("Borrower") and U.S. BANK NATIONAL ASSOCIATION, a national banking
association ("Bank").
R E C I T A L S
A. Borrower and Bank are parties to that certain Revolving Credit
Agreement dated as of December 16, 1998 (the "Credit Agreement") and the other
Relevant Documents described therein.
B. Borrower has requested that Bank increase the Revolving Credit Line
from a maximum amount of $15,000,000 to a maximum amount of $40,000,000 and to
extend the Termination Date from December 16, 2001 to the third anniversary of
this Amendment.
C. Bank is willing to increase the Revolving Credit Line, extend the
Termination Date and make certain other modifications to the Credit Agreement
subject to and in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
A G R E E M E N T
1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Credit Agreement.
2. Amendments to the Credit Agreement.
a. Section 1.01. Section 1.01 is hereby amended and restated
in its entirety to read as follows:
1.01 Revolving Credit Line. Subject to the following terms and
conditions, Bank agrees to make a line of credit available to
Borrower (the "Revolving Credit Line") in the maximum amount
of $40,000,000 (the "Maximum Line") or, if less, the amount of
the Cash Flow Limit (defined below), pursuant to which Bank
will make loans to Borrower (each an "Advance") in such
amounts as Borrower may request from time to time, the
proceeds of which shall be used for working capital, the
acquisition of SCS Interactive, Inc. (the "SCS Acquisition"),
and future acquisitions. The aggregate outstanding principal
balance of all Advances made hereunder
1
may not exceed the Maximum Line. Amounts borrowed under the
Revolving Credit Line may be repaid prior to the Termination
Date (defined below) without penalty, except as set forth in
Exhibit A to the Note (defined below), and may be reborrowed
subject to the terms hereof.
Bank's commitment to make Advances hereunder is subject to
satisfaction of the conditions in Section 4 below and the
following limitations:
(i) Bank's commitment to lend hereunder shall terminate on
the third anniversary of the date hereof (the "Termination
Date"), if not sooner terminated under Section 8 below;
(ii) Bank shall not be obligated to make any Advance which
would cause the outstanding principal balance of the
Revolving Credit Line (the "Line Balance") to exceed the
Maximum Line or, if less, the Cash Flow Limit; and
(iii) Bank shall not be obligated to make any Advance if an
Event of Default, as defined in Section 7 below, or an event
which, with the giving of notice or lapse of time, or both,
would become an Event of Default (a "Potential Default"),
has occurred and has not been cured by Borrower or waived by
Bank.
b. Section 1.03. Section 1.03 is hereby amended and restated
in its entirety to read as follows:
1.03 Interest. Borrower agrees to pay interest on the Line
Balance from time to time as provided herein. Interest will
accrue on the daily outstanding balance of each Advance at a
fluctuating rate per annum equal to the applicable "Reserve
Adjusted LIBOR Rate" plus the applicable margin as set forth
below for the selected Interest Period (see the attached
Exhibit A which will be attached to and incorporated into the
Line Note for terms and definitions which will apply to the
interest rates based on a Reserve Adjusted LIBOR Rate). On the
date of and for each Advance, Borrower shall have the option
to select fixed Interest Periods of one month, three months or
six months or a reset daily one-month Interest Period basis.
The interest rate for any new Advance made on or after the
date of determination of Borrower's ratio of Debt to
Annualized Cash Flow for each fiscal quarter or for any
Advance outstanding on a reset daily basis on such
determination date, will be subject to further adjustment, as
of the date of such determination each fiscal quarter, as
follows: When Borrower's ratio of Debt (as defined in Section
6.02) to Annualized Cash Flow (as defined in Section 1.04) is
within one of the ranges set forth below, then the "margin" or
"spread" to be added to the applicable Reserve Adjusted LIBOR
Rate shall be the rate per annum set forth below opposite such
range:
2
Debt/Annualized
Cash Flow Ratio Margin
--------------------------------------------------------------
Less than 1.00:1 2.15%
Equal to or greater than 1.00:1 but less than 2.50:1 2.35%
Equal to or greater than 2.50:1 but less than 3.25:1 2.60%
Equal to or greater than 3.25:1 2.85%
Accrued interest on each Advance shall be due and payable
(i) at the end of each fixed Interest Period but not less
than at the end of each 3 months, (ii) on the first day of
each month for interest on a reset daily one-month Interest
Period basis , (iii) at maturity of the Line Note and (iv) on
demand after such maturity. After the occurrence of an Event
of Default or after maturity or any acceleration of maturity
of the Line Note, at Bank's option, the interest rate
applicable to any Advance or the Line Balance may be
increased as provided in the Line Note and Borrower agrees
to pay any such increased interest. Interest shall be
computed using the actual number of days in the period for
which such computation is made and a per diem rate equal to
1/360 of the fluctuating rate per annum.
c. Section 1.04. Section 1.04 is hereby amended and
restated in its entirety to read as follows:
1.04 Cash Flow Limit. The "Cash Flow Limit" means, at any
point in time, a multiple of Borrower's Annualized Cash Flow
in accordance with the following schedule:
Quarter Ending Applicable Multiple
-------------- -------------------
March 31, 2000 4.0
June 30, 2000 4.0
September 30, 2000 4.0
December 31, 2000 3.5
March 31, 2001 3.5
June 30, 2001 3.5
September 30, 2001 3.5
December 31, 2001 3.0
March 31, 2002 and thereafter 3.0
"Annualized Cash Flow" means Borrower's earnings before
interest, taxes, depreciation and amortization calculated at
the end of each quarter for the previous four quarters (i.e.
on a four-quarter trailing basis).
d. Section 1.05. Section 1.05 is hereby amended and
restated in its entirety to read as follows:
1.05 Repayment of Principal. Borrower agrees to repay all
Advances made hereunder. The Line Balance will be due and
payable in full at the maturity of the Line Note, which will
be the Termination Date, subject to acceleration upon the
occurrence of an Event of Default. If Borrower issues any
additional debt or equity securities for cash after the date
hereof (excluding any Debt to Bank or
3
Bank's affiliates), Borrower agrees to repay outstanding
Advances hereunder from and to the extent of the net proceeds
received from any such issuance of securities.
e. Section 2.01. Section 2.01 is hereby amended and
restated in its entirety to read as follows:
2.01 Collateral. The repayment of all of Borrower's
indebtedness to Bank shall be secured by first priority
perfected security interests (the "Security Interests") in all
assets of Borrower, including without limitation equity
interests in wholly-owned or majority-owned or controlled or
subsidiary corporations or other limited liability entities
(collectively, the "Subsidiaries") and other entities,
accounts, general intangibles, inventory, equipment,
furniture, fixtures and goods (all such terms having the
meanings given them in the Colorado Uniform Commercial Code)
now owned or hereafter acquired by Borrower and in all
proceeds thereof (the "Collateral"). Borrower further agrees
to cause each of its Subsidiaries to grant Security Interests
in all Collateral owned by such Subsidiary. The Security
Interests shall be created and perfected by security
agreements, UCC financing statements, assignments and any
other collateral documents deemed necessary or advisable by
Bank in its sole discretion, each in form and substance
satisfactory to Bank, duly executed by Borrower or Borrower's
Subsidiary (the "Collateral Documents"). Hereafter, Borrower
and Borrower's Subsidiaries shall from time to time execute
and deliver to Bank such other documents in form and substance
satisfactory to Bank, and perform such other acts, as Bank may
reasonably request, to perfect and maintain valid Security
Interests in the Collateral. In addition, Borrower hereby
grants to Bank a security interest in all Borrower's deposit
accounts at Bank to secure all obligations of Borrower to Bank
now or hereafter arising.
f. Section 3.04. Section 3.04 is hereby amended and
restated in its entirety to read as follows:
3.04 Financial Condition. The audited balance sheet of
Borrower as at December 31, 1999, and the related statements
of income and retained earnings for the fiscal year then
ended, copies of which have been furnished to Bank, fairly
present the financial condition of Borrower as at such date
and the results of the operations of Borrower for such period,
all in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis, and since
December 31, 1999 there has been no material adverse change in
such condition or operations.
g. Section 5.09. Section 5.09 is hereby amended and
restated in its entirety to read as follows:
5.09 Financial Condition. Maintain the financial condition
of Borrower, determined in accordance with GAAP so that it
meets the following requirements measured on a quarterly
basis for the preceding four fiscal quarters, i.e., on a
4-quarter trailing basis:
4
i. Borrower's ratio of (a) Debt to (b) Annualized
Cash Flow ("Debt/ ACF") will be not more than the
ratio provided in the following schedule for any
particular quarter:
Quarter Ending Debt/ACF
-------------- --------------
March 31, 2000 4.00:1
June 30, 2000 4.00:1
September 30, 2000 4.00:1
December 31, 2000 3.50:1
March 31, 2001 3.50:1
June 30, 2001 3.50:1
September 30, 2001 3.50:1
December 31, 2001 3.00:1
March 31, 2002 and thereafter 3.00:1
ii. Borrower's ratio of (a) Annualized Cash Flow to
(b)Interest Expense will be not less than 3.00:1.
h. Section 6.02. Section 6.02 is hereby amended and
restated in its entirety to read as follows:
6.02 Debt. Create, incur, assume or permit to exist any Debt
except 1) Debt to Bank or to affiliates of Bank; 2) Debt which
is trade debt incurred by Borrower in the ordinary course of
business on a short term basis for the acquisition of supplies
or services; and 3) other Debt up to an aggregate amount of
$400,000 at any one time outstanding. "Debt" means (i)
indebtedness for borrowed money or for the deferred purchase
price of property or services, (ii) obligations as lessee
under leases which shall have been or should be, in accordance
with GAAP, recorded as capital leases, (iii) obligations under
direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to
in clause (i) or (ii) above, and (iv) liabilities in respect
of unfunded vested benefits under plans covered by Title IV of
ERISA.
i. Section 6.04. Section 6.04 is hereby amended and
restated in its entirety to read as follows:
6.04. Loans and Investments. Make any loans or advances to any
person or entity or purchase or otherwise acquire the capital
stock, assets, or obligations of, or any other interest in,
any person or entity or make any other investments, except (i)
readily marketable direct obligations of the United States of
America or a money market mutual fund investing solely
therein; (ii) certificates of deposit issued by commercial
banks of recognized standing operating in the United States of
America; (iii) other loans or investments in an aggregate
amount in any one fiscal year not exceeding $1,000,000,
excluding the Acquisition and the SCS Acquisition; or (iv)
loans or advances to Subsidiaries.
5
j. Section 6.06. Section 6.06 is hereby amended and
restated in its entirety to read as follows:
6.06 Merger or Sale. Merge into or consolidate with any
corporation or other entity; or sell, lease, assign or
otherwise transfer or dispose of all or any material portion
of its assets (including the stock of any Subsidiary) except
for sales of inventory in the ordinary course of business.
k. Section 9.06. Section 9.06 is hereby amended and
restated in its entirety to read as follows:
9.06 Notices. All notices, requests and demands given to or
made upon either party must be in writing and shall be deemed
to have been given or made when personally delivered or two
(2) days after having been deposited in the United States
Mail, first class postage prepaid, addressed as follows:
If to Borrower: Koala Corporation
Attn: Xxxx X. Xxxxxx
President and CEO
00000 X. 00xx Xxxxxx, Xxxx X
Xxxxxx, XX 00000
If to Bank: U.S. Bank National Association
Attn: Xxxx X. Xxxx, Vice President
0000 Xxxx Xxxxxxxxx
Xxxxxx, XX 00000
3. Conditions Precedent. Each of the conditions precedent stated
in Article IV of the Credit Agreement shall apply with equal force to any and
all Advances made under this Amendment, including without limitation Borrower's
obligation to provide evidence that the SCS Acquisition has closed and been
completed in accordance with the SCS Acquisition Agreement.
4. Conditions to Effectiveness. Notwithstanding any other
provision contained herein to the contrary, this Amendment shall not become
effective until all of the following conditions are fully satisfied:
(a) Delivery of Amendment. Each of Borrower and Bank shall
have executed and delivered this Amendment, the Line Note and all other
documents required or contemplated hereby.
(b) Reimbursement for Expenses. Borrower shall have reimbursed
Bank for all expenses (including filing, loan and legal fees and related
expenses) actually incurred by Bank in connection with the preparation of this
Amendment.
(c) Representations True; No Default. The representations and
warranties of Borrower as set forth in Article 3 of the Credit Agreement are
true on and as of the date of this
6
Amendment with the same force and effect as if made on and as of this date and
there shall be no uncured Event of Default under the Credit Agreement.
(d) Other Documents. Borrower shall have delivered to Bank
such other documents, instruments, and undertakings as Bank may reasonably
request.
(e) Origination Fee. Borrower shall have paid to Bank $85,000
as an origination fee for this Amendment.
5. Representations and Warranties. Borrower hereby represents
and warrants to Bank that each of the representations and warranties set forth
in Article 3 of the Credit Agreement is true and correct in each case as if made
on and as of the date of this Amendment. Borrower expressly agrees that it shall
be an additional Event of Default under the Credit Agreement if any
representation or warranty made hereunder shall prove to have been incorrect in
any material respect when made.
6. No Further Amendment. Except as expressly modified by this
Amendment, the Credit Agreement and the other Relevant Documents shall remain
unmodified and in full force and effect and the parties hereby ratify their
respective obligations thereunder. Without limiting the foregoing, Borrower
expressly reaffirms and ratifies its obligation to pay or reimburse Bank on
request for all reasonable expenses, including legal fees, actually incurred by
Bank in connection with the preparation of this Amendment, and the closing of
the transaction contemplated hereby.
7. Miscellaneous.
(a) Entire Agreement. The following documents contain the
entire agreement between the parties concerning the subject matter hereof: this
Amendment, the Credit Agreement and the other Relevant Documents. Any
representation, understanding or promise concerning the subject matter hereof,
which is not expressly set forth in this Amendment, the Credit Agreement or the
other Relevant Documents, shall not be enforceable by any party hereto or its
successors or assigns. In the event of any conflict or inconsistency between the
terms of this Amendment and the terms of the Credit Agreement, the terms of this
Amendment shall govern.
(b) Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same Amendment.
(c) Governing Law. This Amendmen and the other agreements
provided for herein and the rights and obligations of the parties hereto and
thereto shall be construed, interpreted and governed in accordance with the laws
of the State of Colorado.
EXECUTED AND DELIVERED by the duly authorized officers of the parties
as of the date first above written.
7
BORROWER: KOALA CORPORATION, a Colorado corporation
By:______________________________________
Name (Print):____________________________
Title:
BANK: U.S. BANK NATIONAL ASSOCIATION, a national
banking association
By:______________________________________
Xxxx X. Xxxx, Vice President
