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EXHIBIT 10.34
SECOND MODIFICATION AGREEMENT
BY THIS SECOND MODIFICATION AGREEMENT, made and entered into as of the
29th day of September, 1997, AMERICAN COIN MERCHANDISING, INC., a Delaware
corporation, d/b/a SUGARLOAF CREATIONS, INC., whose address is 0000 Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (hereinafter called "Borrower"), and XXXXX
FARGO BANK, NATIONAL ASSOCIATION, successor in interest to Xxxxx Fargo Bank
(Colorado), National Association, whose address is 000 Xxxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx 00000 (hereinafter called "Lender"), confirm and agree as
follows:
SECTION 1. RECITALS.
1.1 Borrower and Lender entered into a Credit Agreement dated
September 23, 1996 (the "Credit Agreement"), which provides for a revolving
loan by Lender to Borrower in the maximum principal amount of $6,000,000.00
upon the terms and conditions contained therein (the "Loan").
1.2 The Loan is evidenced by a Revolving Line of Credit Note dated
September 23, 1996, executed by Borrower, payable to the order of Lender, in
the principal amount of $6,000,000.00 (the "Note").
1.3 The Loan is secured in part by a Continuing Security Agreement
dated September 23, 1996, executed by Borrower as the Debtor for the benefit of
Lender as the Secured Party (the "Security Agreement").
1.4 Borrower and Lender entered into a Modification Agreement
dated May 27, 1997 (the "Modification Agreement"), which provided for, among
other things, an increase in the maximum principal amount of the Loan to
$9,000,000.00.
1.5 The Credit Agreement, the Note, the Security Agreement, the
Modification Agreement, and all other documents and instruments executed and
delivered in connection with the Loan or that secure payment of the Loan, are
hereinafter called the "Loan Documents," and each reference herein to the Loan
Documents, or to any Loan Document, shall refer to the Loan Documents, or to
such Loan Document, as modified by the Modification Agreement.
1.6 The total principal and accrued interest outstanding under the
Loan Documents as of the date hereof is $9,034,092.45, comprised of principal
of $8,973,240.00 and interest of $50,852.45.
1.7 Borrower and Lender desire to make modifications to the Credit
Agreement and other Loan Documents as set forth herein.
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SECTION 2. CREDIT AGREEMENT.
2.1 The first sentence of subsection (a) of Section 1.1
of the Credit Agreement is hereby deleted in its entirety and the following
inserted in lieu thereof:
"(a) Revolving Line of Credit. Subject to the
terms and conditions of this Agreement, and including, the conversion
right set forth in Section 1.2 hereof, Bank hereby agrees to make
advances to Borrower from time to time up to and including July 5,
1999, not to exceed at any time the aggregate outstanding principal
amount of Fifteen Million Dollars ($15,000,000) ("Revolving Line of
Credit"), the proceeds of which shall be used for working capital,
equipment purchases, capital expenditures, acquisitions, letters of
credit and retirement of existing Bank debt."
2.2 Subsection (b) of Section 1.1 of the Credit Agreement
is hereby deleted in its entirety.
2.3 Subsections (a) through (d) of Section 1.3 of the
Credit Agreement are hereby deleted in their entirety and the following
inserted in lieu thereof:
"(a) Definitions. As used herein, the following
terms shall have the meanings set forth after each, and any other term
defined in this Agreement shall have the meaning set forth at the
place defined:
(i) "Business Day" means any day
except a Saturday, Sunday or any other day on which commercial banks
in Colorado are authorized or required by law to close.
(ii) "Fixed Rate Term" means a period
commencing on a Business Day and continuing for one (1), two (2) or
three (3) months, as designated by Borrower, during which all or a
portion of the outstanding principal balance of the Revolving Line of
Credit bears interest determined in relation to LIBOR; provided
however, that no Fixed Rate Term may be selected for a principal
amount less than Five Hundred Thousand Dollars ($500,000.00); and
provided further, that no Fixed Rate Term shall extend beyond the
scheduled maturity date hereof. If any Fixed Rate Term would end on a
day which is not a Business Day, then such Fixed Rate Term shall be
extended to the next succeeding Business Day.
(iii) "LIBOR" means the rate per annum
(rounded upward, if necessary, to the nearest whole 1/8 of 1%) and
determined pursuant to the following formula:
LIBOR = Base LIBOR
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100% - LIBOR Reserve Percentage
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(iv) "Base LIBOR" means the rate per
annum for United States dollar deposits quoted by Bank as the
Inter-Bank Market Offered Rate, with the understanding that such rate
is quoted by Bank for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of a
Fixed Rate Term for delivery of funds on said date for a period of
time approximately equal to the number of days in such Fixed Rate Term
and in an amount approximately equal to the principal amount to which
such Fixed Rate Term applies. Borrower understands and agrees that
Bank may base its quotation of the Inter-Bank Market Offered Rate upon
such offers or other market indicators of the Inter-Bank Market as
Bank in its discretion deems appropriate including, but not limited
to, the rate offered for U.S. dollar deposits on the London Inter-Bank
Market.
(v) "LIBOR Reserve Percentage" means
the reserve percentage prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for "Eurocurrency
Liabilities" (as defined in Regulation D of the Federal Reserve Board,
as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
(vi) "Prime Rate" means at any time
the rate of interest most recently announced within Bank at its
principal office in Denver, Colorado as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and
serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced
by the recording thereof after its announcement in such internal
publication or publications as Bank may designate. Each change in the
rate of interest shall become effective on the date each Prime Rate
change is announced within Bank. The Prime Rate is not necessarily
the best rate offered by the Bank and Bank may make loans at rates
greater than or less than the Prime Rate.
"(b) Interest. The outstanding principal balance
of the Revolving Line of Credit shall bear interest (computed on the
basis of a 360-day year, actual days elapsed) either (i) at a
fluctuating rate equal to the Prime Rate in effect from time to time,
or (ii) provided that the then current Debt Service Coverage Ratio
(hereinafter defined) is not greater than 1.5, at a fixed rate per
annum in relation to LIBOR in effect on the first day of the
applicable Fixed Rate Term, determined by Bank as follows:
(A) if the then current Debt Service
Coverage Ratio is greater than 1.0, but not greater than 1.5,
at a rate equal to LIBOR plus two and thirty-five one
hundredths percent (2.35%);
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(B) if the then current Debt Service
Coverage Ratio is greater than 0.5, but not greater than 1.0,
at a rate equal to LIBOR plus two and one tenth percent
(2.10%); and
(C) if the then current Debt Service
Coverage Ratio is not greater than 0.5, at a rate equal to
LIBOR plus one and eighty-five one hundredths percent (1.85%).
When interest is determined in relation to the Prime Rate, each change
in the rate of interest hereunder shall become effective on the date
each Prime Rate change is announced within Bank. With respect to each
LIBOR selection hereunder, Bank is hereby authorized to note the date,
principal amount, interest rate and Fixed Rate Term applicable thereto
and any payments made thereon on Bank's books and records (either
manually or by electronic entry) and/or on any schedule attached to
the Revolving Line of Credit Note, which notations shall be prima
facie evidence of the accuracy of the information noted.
"(c) Selection of Interest Rate Options. At any
time any portion of the Revolving Line of Credit bears interest
determined in relation to LIBOR, it may be continued by Borrower at
the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime
Rate or to LIBOR for a new Fixed Rate Term designated by Borrower. At
any time any portion of the Revolving Line of Credit bears interest
determined in relation to the Prime Rate, Borrower may convert all or
a portion thereof so that it bears interest determined in relation to
LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR
option for all or a portion of the outstanding principal balance of
the Revolving Line of Credit, and at the end of each Fixed Rate Term,
Borrower shall give Bank notice specifying: (i) the interest rate
option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the
applicable Fixed Rate Term. Any such notice may be given by telephone
so long as, with respect to each LIBOR selection, (A) Bank receives
written confirmation from Borrower not later than three (3) Business
Days after such telephone notice is given, and (B) such notice is
given to Bank prior to 10:00 a.m., Colorado time, on the first day of
the Fixed Rate Term. For each LIBOR option requested hereunder, Bank
will quote the applicable fixed rate to Borrower at approximately
10:00 a.m., Colorado time, on the first day of the Fixed Rate Term.
If Borrower does not immediately accept the rate quoted by Bank, any
subsequent acceptance by Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate; provided
however, that if Borrower fails to accept any such rate by 11:00 a.m.,
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Colorado time, on the Business Day such quotation is given, then the
quoted rate shall expire and Bank shall have no obligation to permit a
LIBOR option to be selected on such day. If no specific designation of
interest is made at the time any advance is requested hereunder or at
the end of any Fixed Rate Term, Borrower shall be deemed to have made
a Prime Rate interest selection for such advance or the principal
amount to which such Fixed Rate Term applied.
"(d) Additional LIBOR Provisions.
(i) If Bank at any time shall
determine that for any reason adequate and reasonable means do not
exist for ascertaining LIBOR, then Bank shall promptly give notice
thereof to Borrower. If such notice is given and until such notice
has been withdrawn by Bank, then (A) no new LIBOR option may be
selected by Borrower, and (B) any portion of the outstanding
principal balance hereof which bears interest determined in relation
to LIBOR, subsequent to the end of the Fixed Rate Term applicable
thereto, shall bear interest in relation to the Prime Rate.
(ii) If any law, treaty, rule,
regulation or determination of a court or governmental authority or
any change therein or in the interpretation or application thereof
(each, a "Change in Law") shall make it unlawful for Bank (A) to make
LIBOR options available hereunder, or (B) to maintain interest rates
based on LIBOR, then in the former event, any obligation of Bank to
make available such unlawful LIBOR options shall immediately be
cancelled, and in the latter event, any such unlawful LIBOR-based
interest rates then outstanding shall be converted, at Bank's option,
so that interest on the portion of the outstanding principal balance
subject thereto is determined in relation to the Prime Rate; provided
however, that if any such Change in Law shall permit any LIBOR-based
interest rates to remain in effect until the expiration of the Fixed
Rate Term applicable thereto, then such permitted LIBOR-based interest
rates shall continue in effect until the expiration of such Fixed Rate
Term. Upon the occurrence of any of the foregoing events, Borrower
shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any fines, fees, charges, penalties
or other costs incurred or payable by Bank as a result thereof and
which are attributable to any LIBOR options made available to Borrower
hereunder, and any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
(iii) If any Change in Law or
compliance by Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental
authority shall:
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(A) subject Bank to any tax, duty or
other charge with respect to any LIBOR options, or change the
basis of taxation of payments to Bank of principal, interest,
fees or any other amount payable hereunder (except for changes
in the rate of tax on the overall net income of Bank); or
(B) impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances or loans by, or
any other acquisition of funds by any office of Bank; or
(C) impose on Bank any other
condition;
and the result of any of the foregoing is to increase the cost to Bank
of making, renewing or maintaining any LIBOR options hereunder and/or
to reduce any amount receivable by Bank in connection therewith, then
in any such case, Borrower shall pay to Bank immediately upon demand
such amounts as may be necessary to compensate Bank for any additional
costs incurred by Bank and/or reductions in amounts received by Bank
which are attributable to such LIBOR options. In determining which
costs incurred by Bank and/or reductions in amounts received by Bank
are attributable to any LIBOR options made available to Borrower
hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.
"(e) Payment of Interest. Interest shall be
payable at the times and place set forth in the Revolving Line of
Credit Note (the "Note").
"(f) Letter of Credit Fees. Borrower shall pay to
Bank fees upon the issuance of each Letter of Credit, upon the payment
or negotiation by Bank of each draft under any Letter of Credit and
upon the occurrence of any other activity with respect to any Letter
of Credit (including without limitation, the transfer, amendment or
cancellation of any Letter of Credit) determined in accordance with
Bank's standard fees and charges then in effect for such activity."
2.4 Subsection (c) of Section 4.3 of the Credit
Agreement is hereby deleted in its entirely and the following inserted in lieu
thereof:
"(c) not later than 45 days after and as of the
end of each fiscal quarter, a compliance certificate in the
form attached hereto as Exhibit A setting forth Borrower's
internally prepared ratios described in paragraph 4.9 hereof
and, immediately upon each request
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from Bank, a list of the names and addresses of all of
Borrower's account debtors;"
2.5 The clause "and the value of such vending machines is
not included in the Borrowing Base hereunder" is hereby deleted from Section
5.6 of the Credit Agreement.
2.6 Exhibit A to the Credit Agreement, the Borrowing Base
Certificate, is hereby deleted in its entirety and Exhibit A hereto inserted in
lieu thereof.
SECTION 3. NOTE.
3.1 The header and first paragraph of the Note are hereby
deleted in their entirety and the following is inserted in lieu thereof:
"$15,000,000.00 Denver, Colorado
September 23, 1996
FOR VALUE RECEIVED, the undersigned AMERICAN COIN
MERCHANDISING, INC. ("Borrower"), promises to pay to the order of
XXXXX FARGO BANK, NATIONAL ASSOCIATION, successor in interest to
Xxxxx Fargo Bank (Colorado), National Association ("Bank") at its
office at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, or at such other
place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the
principal sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00)
or so much thereof as may be advanced and be outstanding, with
interest thereon, to be computed on each advance from the date of its
disbursement (computed on the basis of a 360-day year, actual days
elapsed). Pursuant to the terms of that certain Credit Agreement
dated September 23, 1996 (as amended, "Credit Agreement"), the
principal balance of this Revolving Line of Credit Note shall bear
interest either (i) at a fluctuating rate per annum equal to the Prime
Rate in effect from time to time, or (ii) at a fixed rate per annum in
relation to LIBOR calculated as provided in the Credit Agreement
executed by Borrower and Bank. When interest is determined in
relation to the Prime Rate, each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change
is announced within Bank."
SECTION 4. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
4.1 All references to the Credit Agreement in the other
Loan Documents are hereby amended to refer to the Credit Agreement as amended
by this Agreement.
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4.2 All references to the Note in the other Loan
Documents are hereby amended to refer to the Note as amended by this Agreement.
4.3 All references to any other Loan Document in the
other Loan Documents are hereby amended to refer to that Loan Document as
amended by this Agreement.
4.4 Borrower acknowledges that the indebtedness evidenced
by the Note is just and owing, that the balance thereof is correctly shown in
Section 1.6 hereof, and Borrower agrees to pay the indebtedness evidenced by
the Note and secured by the Loan Documents, according to the terms thereof, as
modified by this Agreement.
4.5 Borrower reaffirms to Lender each of the
representations, warranties, covenants and agreements of Borrower set forth in
all the Loan Documents, with the same force and effect as if each were
separately stated herein and made as of the date of this Agreement.
4.6 Borrower ratifies, reaffirms, acknowledges, and
agrees that the Loan Documents, as amended by this Agreement, represent valid,
enforceable and collectible obligations of Borrower, and that there are no
existing claims, defenses, personal or otherwise, or rights of setoff
whatsoever with respect to any of these documents or instruments. In addition,
Borrower hereby expressly waives, releases and absolutely and forever
discharges Lender and its shareholders, directors, officers, employees and
agents, and their heirs, personal representatives, successors and assigns, from
any and all liability, claims, demands, damages, actions and causes of action
that Borrower may now have, or has had prior to the date hereof and, without
limiting the generality of the foregoing, from any and all liability, claims,
demands, damages, actions and causes of action arising out of, or in any way
connected with, the Loan. Borrower further acknowledges and represents that no
Event of Default (as defined in the Credit Agreement) or matter which, with the
giving of notice, passage of time, or both, would constitute an Event of
Default exists.
4.7 All terms, conditions and provisions of the Loan
Documents are continued in full force and effect and shall remain unaffected
and unchanged except as specifically amended by this Modification Agreement.
SECTION 5. GENERAL.
5.1 This Agreement in no way acts as a release or
relinquishment of those liens, security interests and rights securing payment
of the Loan, including, without limitation, the liens created by the Security
Agreement and the other Loan Documents. Such liens, security interests and
rights are hereby ratified, confirmed, renewed and extended by Borrower in all
respects.
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5.2 Borrower shall execute and deliver such additional
documents and do such other acts as Lender may reasonably require to fully
implement the intent of this Agreement, including, but not limited to, the
execution of such financing statements or amendments thereto as Lender may
require to reflect Borrower's doing business as Sugarloaf Creations, Inc.
5.3 Borrower shall pay all costs and expenses, including,
without limitation, recording fees and reasonable attorneys' fees incurred by
Lender in connection with this Agreement. Lender, at its option, but without
any obligation to do so, may advance funds to pay any such costs and expenses
that are the obligation of the Borrower, and all such funds advanced shall bear
interest at the Prime Rate provided in the Note, shall be due and payable upon
demand and shall be secured by all of the Loan Documents.
5.4 Notwithstanding anything to the contrary contained
herein or in any other instrument executed by Borrower or Lender or in any
other action or conduct undertaken by Borrower or Lender on or before the date
of this Agreement, the agreements, covenants and provisions contained herein
shall constitute the only evidence of Lender's consent to modify the terms and
provisions of the Loan Documents. Accordingly, no express or implied consent
to any further modifications involving any of the matters set forth in this
Agreement or otherwise shall be inferred or implied by Lender's execution of
this Agreement. Further, Lender's execution of this Agreement shall not
constitute a waiver (either express or implied) of the requirement that any
further modification of the Loan or of the Loan Documents shall require the
express written approval of Lender; no such approval (either express or
implied) has been given as of the date of this Agreement.
5.5 This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their heirs, personal
representatives, successors and assigns.
5.6 This Agreement is made for the sole protection and
benefit of the parties hereto, and no other person or entity shall have any
right of action hereon.
5.7 This Agreement shall be governed by and construed
according to the laws of the State of Colorado.
[Signatures on Following Page]
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IN WITNESS WHEREOF, this Agreement is executed as of the date indicated above.
BORROWER:
AMERICAN COIN MERCHANDISING,
INC., a Delaware corporation,
d/b/a SUGARLOAF CREATIONS, INC.
By: /s/ XXXXXX X. XXXXX
------------------------------------
Title: President
---------------------------------
LENDER:
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, successor in
interest to Xxxxx Fargo Bank
(Colorado), National Association
By: /s/ XXXXX XXXXXXXX
-----------------------------------
Title: Vice President
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STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 30
day of September, 1997, by Xxxxxx Xxxxx, the President of American Coin
Merchandising, Inc., a Delaware corporation.
My commission expires: June 14, 2000
--------------------------------
Witness my hand and official seal.
[SEAL]
/s/ XXXXX X. XXXXXX
-----------------------------
Notary Public
XXXXX X. XXXXXX
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 30
day of September, 1997, by Xxxxx Xxxxxxxx, the Vice President of Well Fargo
Bank, National Association, successor in interest to Xxxxx Fargo Bank
(Colorado), National Association.
My commission expires: 6/14/2000
--------------------------------
Witness my hand and official seal.
/s/ XXXXX X. XXXXXX
-----------------------------
Notary Public
[SEAL]
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EXHIBIT A
American Coin Merchandising, Inc.
dba Sugarloaf Creations, Inc.
Compliance Certificate
As of:
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Required Actual
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Current Ratio not less than 1.15/1 _______
Total Liabilities to Tangible Net Worth not 1.5/1 _______
greater than
Funded Debt to EBITDA not greater than 1.5/1 _______
The undersigned represents that the above calculations are in accordance with
the Credit Agreement, as modified, and that the undersigned is in full
compliance with the terms of these agreements and other Loan Documents. The
undersigned further represents that the attached financial statements are
accurate and that there exists no Event of Default nor any condition, act or
event which with the giving of notice or the passage of time or both would
constitute an Event of Default.
American Coin Merchandising, Inc. dba Sugarloaf Creations, Inc.
(authorized agent)
By:
----------------------------
Title:
-------------------------
Date:
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