EXHIBIT 10.60
FINAL
Wellspring Capital Management LLC
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxxx Xxxxx & Co.
c/x Xxxxxxx Investment Partners
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
FEBRUARY 11, 2002
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SERVICES AND FEE AGREEMENT
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American Coin Merchandising, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
This is to confirm the understanding among Wellspring Capital
Management LLC and its respective affiliates, successors and assigns
("WELLSPRING"), Knightsbridge Holdings, LLC d/b/a Xxxxxxx Xxxxx & Co. and its
respective affiliates, successors and assigns ("KNIGHTSBRIDGE" and, together
with Wellspring, the "CONSULTANTS") and American Coin Merchandising, Inc. (the
"COMPANY") with respect to the performance by the Consultants of certain
services in connection with the Company and its direct and indirect
subsidiaries.
1. Services. Each Consultant will perform ongoing consulting services
for the Company in the areas of business planning and budgeting, financial
planning, assistance, acquisitions and other business combinations, personnel
and other matters relating to the day-to-day business and operations of the
Company and/or any of its affiliated companies.
2. Annual Fees.
(a) In consideration of the services to be performed by the
Consultants, the Company, subject to the further provisions of this Section 2
and to the terms of the Credit Agreement (as hereinafter defined) and the
Purchase Agreement (as hereinafter defined), shall pay to the Consultants,
and/or to such other persons or entities as each of the
Consultants shall designate in writing with respect to its allocable portion, an
aggregate annual consulting fee equal to $400,000, payable in arrears in equal
monthly installments. Such annual consulting fee shall be allocated 66 2/3% to
Wellspring and 33 1/3% to Knightsbridge.
(b) If at any time the terms of either:
(i) the Credit Agreement dated the date hereof by and
among the Company, Madison Capital Funding LLC and certain other parties (as
amended, supplemented, refinanced or replaced from time to time, the "CREDIT
AGREEMENT"); or
(ii) the Purchase Agreement dated the date hereof by
and among the Company, the Guarantors named therein, and Audax Mezzanine Fund,
L.P. and the other Purchasers named therein (the "PURCHASE AGREEMENT");
do not permit the entire payment of any amount of the fees provided in Section
2(a) hereof, then the Company shall not thereafter make any such prohibited
payment of such fees except as provided below. In the event and to the extent
that any portion of such fees is not permitted to be paid pursuant to either or
both such agreements, then (i) the portion of such fees which is permitted to be
paid pursuant to such agreements shall be payable to the Consultants and, if
applicable, their written designees, pursuant to the allocations described in
Section 2(a) hereof and (ii) the portion of such fees which is prohibited to be
paid shall be deferred but shall continue to accrue (the aggregate amount of
such fees deferred, the "ACCRUED FEES") and, subject to Section 2(c) below, such
Accrued Fees shall, when permitted, be paid without interest pro rata to the
Consultants and, if applicable, their written designees, pursuant to the
allocations described in Section 2(a). The parties to the Credit Agreement that
are financial institutions and the Purchasers (as defined in the Purchase
Agreement) shall be third party beneficiaries of the Company's covenant under
this Section 2(b) and shall be entitled to enforce the terms of this Section
2(b) against the Company. The Company hereby agrees that, without the consent of
both Wellspring and Knightsbridge, it will not consent to any amendment of the
Credit Agreement or the Purchase Agreement to the extent that such amendment
deals directly and specifically with a reduction in the payment of fees under
this Agreement if such amendment would treat Knightsbridge and Wellspring
differently; provided, that any change affecting Wellspring and Knightsbridge in
the Relevant Proportion (as defined below) will not be deemed to be treating
them differently.
(c) In the event of any bankruptcy or insolvency of the
Company that occurs prior to the payment of any Accrued Fees pursuant to Section
2(b) above, each Consultant's and, if applicable, each designee's right to
receive such Accrued Fees shall be subordinated to the prior indefeasible
payment in full in cash of (i) all amounts due and owing under the Loan
Documents (as defined in the Credit Agreement) and (ii) all amounts due and
owing in respect of the Notes issued pursuant to the Purchase Agreement
(including all Notes issued in payment of pay-in-kind interest pursuant to the
Notes), together with all interest and other amounts payable with respect
thereto.
(d) Notwithstanding the foregoing, provided that such
deferrals affect the Consultants in the same proportion described in the last
sentence of Section 2(a) above (the "RELEVANT PROPORTION"), the Company may,
with the consent of Wellspring, on one or more
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occasions, defer the payment of any or all of the annual consulting fee payable
under Section 2(a) above by delivering written notice of such deferral to the
Consultants. Such notice shall indicate the aggregate amount to be so deferred
and whether the monthly installments shall be deferred in whole or in part. The
Company may, with the consent of Wellspring and provided that such change
affects the Consultants in the Relevant Proportion, modify, alter, extend or
terminate any notice previously delivered pursuant to this Section 2(d). No such
deferral shall in any way effect the accrual of any consulting fees pursuant to
Section 2(a) above. The Company may, subject to Sections 2(b) and (c) above, pay
such deferred fees, without interest, pro rata to the Consultants and, if
applicable, their written designees, pursuant to the Relevant Proportion at such
time or times as the Company, with the consent of Wellspring, may determine.
3. Closing Fees and Expenses. The Company shall also pay on the date
hereof to the Consultants, and/or to such other persons or entities as each of
the Consultants shall designate in writing with respect to its allocable
portion, an aggregate closing fee equal to $2,466,667. The Closing Fee shall be
allocated 67.5% to Wellspring and 32.5% to Knightsbridge. In addition, the
Company shall pay all expenses as determined jointly by the Consultants in their
sole discretion, plus fees and expenses payable to the senior and subordinated
lenders pursuant to the Credit Agreement and the Purchase Agreement,
respectively.
4. Other Fees. The parties hereto agree that any other consulting or
similar fees ("ADDITIONAL FEES") paid by the Company to the Consultants during
the term of this letter agreement shall be allocated 65% to Wellspring and 35%
to Knightsbridge; provided, however, that the Company shall pay all or part of
each Consultant's allocable portion of such Additional Fees to such other
persons or entities, if any, and in such amounts, as each of the Consultants
shall designate in writing with respect to its allocable portion.
5. Required Participation. Notwithstanding any other provision hereof,
Knightsbridge shall be entitled to receive the fees described in Sections 2(a)
and 4 hereof only if, and for so long as, (i) it owns 100% of that certain
warrant, dated the date hereof, to purchase 113,773 shares of Common Stock of
ACMI Holdings, Inc. ("ACMI"), or all of the shares of Common Stock underlying
such warrant, (ii) it owns 100% of that certain warrant, dated the date hereof,
to purchase 164,044 shares of Common Stock of ACMI, or all of the Available
Shares (as defined therein) underlying such warrant and (iii) it maintains a
representative on the Board of Directors of ACMI; provided, however, that if
Knightsbridge fails to maintain a representative on the Board of Directors of
ACMI solely because one of the parties (other than Knightsbridge) to the
Stockholders Agreement of ACMI, as amended, has breached the provisions of
Section 10(a) thereof, then Knightsbridge shall not be required to maintain such
a representative in order to be entitled to receive the fees described in
Sections 2(a) and 4 hereof.
6. Expense Reimbursements. In addition to the fees payable pursuant to
paragraph 2 and 3 above, the Company shall reimburse each Consultant for all
reasonable out-of-pocket costs and expenses incurred by each such Consultant
directly in connection with the performance of its services hereunder.
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7. Term and Termination.
(a) This letter agreement shall continue until the fifth
anniversary of the date hereof; provided, however, that, at the end of the
five-year term this letter agreement shall renew for additional one-year periods
unless the Company, on the one hand, or both Consultants, on the other hand,
shall provide written notice of termination to the other party or parties hereto
no later than 30 days prior to the next expiration date.
(b) Either of the Consultants may terminate this letter
agreement with respect to itself by giving the other parties hereto 5 days prior
written notice. The Company shall have no right to terminate this letter
agreement unless a Consultant shall have committed gross negligence or willful
misconduct in the performance of its duties hereunder, and then only with
respect to such Consultant. In the event of a dispute with respect to the
foregoing, the prevailing party in such dispute shall be entitled to recover its
reasonable legal fees and expenses in connection therewith. In the event that
this letter agreement is terminated by or with respect to only one Consultant,
it shall remain in full force and effect between the other Consultant and the
Company.
(c) Notwithstanding the foregoing, this letter agreement shall
terminate upon the closing of the earlier to occur of (i) an underwritten public
offering of the common stock of the Company or ACMI and (ii) the sale of all or
substantially all of either the capital stock or business and assets of the
Company or ACMI.
(d) Notwithstanding any other provision hereof, in the event
that this letter agreement is terminated for any reason, the obligations of the
Company to pay all fees accrued hereunder and to reimburse all out-of-pocket
costs and expenses incurred in connection herewith and as contemplated hereby
prior to termination shall survive such termination.
8. Limitation on Assignment. None of the parties hereto may assign its
rights or obligations under this Agreement without the express written consent
of the other parties hereto except that each Consultant shall be permitted to
assign its rights and duties hereunder to any entity controlled by, under common
control with, or controlling, such Consultant.
9. Indemnification. The Company shall, to the fullest extent permitted
by law, indemnify each Consultant and its respective agents, officers,
shareholders, employees, members, representatives, and all others acting on its
behalf (collectively with each Consultant, the "INDEMNIFIED PARTIES"), against
any and all liabilities, costs, expenses (including reasonable legal fees and
expenses), settlements, judgments and losses (collectively, "DAMAGES"),
resulting from, in connection with or arising out of any actual or threatened
claim, action, demand, dispute or proceeding of whatever kind and nature that
may be asserted against an Indemnified Party in any way arising from the
activities of any Consultant pursuant to this letter agreement to the same
extent as if such Indemnified Party were an officer of the Company under
Delaware law, and all of such Damages shall be advanced to each Indemnified
Party to the fullest extent permitted an officer of the Company under and
subject to repayment in accordance with Delaware law. In addition, the personal
liability of each Indemnified Party is hereby eliminated or limited to the
fullest extent permitted by paragraph 7 of subsection (b) of Section 102 of the
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Delaware General Corporation Law, as the same may be amended from time to time,
or pursuant to any successor provision, to the same extent as if such
Indemnified Party were an officer of the Company under Delaware law.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN
ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH
STATE.
11. Relationship. Nothing herein contained shall be deemed to have
created, or be construed as having created, any joint venture or partnership
relationship between the Company and the Consultants. The Consultants are
independent contractors with respect to the services to be provided hereunder,
and neither the Company nor any of its managers, members, agents or employees
shall be deemed to be agents or employees of either Consultant in the
performance of services or other work hereunder.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed to the
addresses set forth above.
13. Entire Agreement. This letter agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and thereof and supersedes any and all prior agreements between the
parties hereto with respect to the subject matter hereof.
14. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement is held to be
invalid, void or unenforceable in any jurisdiction, any court or arbitrator so
holding shall substitute a valid, enforceable provision that preserves, to the
maximum lawful extent, the terms and intent of this Agreement. If any of the
provisions of, or covenants contained in, this Agreement are hereafter construed
to be invalid or unenforceable in any jurisdiction, the same shall not affect
the remainder of the provisions or the enforceability thereof in any other
jurisdiction, which shall be given full effect, without regard to the invalidity
or unenforceability in such other jurisdiction. Any holding shall affect such
provision of this Agreement, solely as to that jurisdiction, without rendering
that or any other provision of this Agreement invalid, illegal, or unenforceable
in any other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant will be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
15. Signature in Counterparts. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the 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 agreement.
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Please signify your approval of this agreement by signing in the space
provided below.
Very truly yours,
WELLSPRING CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Partner
KNIGHTSBRIDGE HOLDINGS, LLC D/B/A
XXXXXXX XXXXX & CO.
By: /s/ Xxxxxxxx Xxxxx
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Name: Xxxxxxxx Xxxxx
Title: Manager
Agreed:
AMERICAN COIN MERCHANDISING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
[SERVICES AND FEE AGREEMENT SIGNATURE PAGE]
