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EXHIBIT 10.30
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of September 23, 1996, by and
between AMERICAN COIN MERCHANDISING, INC., a Delaware corporation ("Borrower"),
and XXXXX FARGO BANK (COLORADO), NATIONAL ASSOCIATION ("Bank").
RECITAL
Borrower has requested from Bank the credit accommodation described
below ("Credit"), and Bank has agreed to provide the Credit to Borrower on the
terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as
follows:
ARTICLE I
THE CREDIT
SECTION 1.1 REVOLVING LINE OF CREDIT.
(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 September 23, 1998 not to exceed at any time the
aggregate outstanding principal amount of Six Million Dollars ($6,000,000)
("Revolving Line of Credit"), the proceeds of which shall be used for working
capital, equipment purchases or capital expenditures, letters of credit and
retirement of existing Bank debt. Borrower's obligation to repay advances under
the Revolving Line of Credit shall be evidenced by a promissory note
substantially in a form satisfactory to the Bank ("Revolving Line of Credit
Note"), all terms of which are incorporated herein by this reference.
(b) Limitation on Borrowings. Outstanding borrowings
under the Revolving Line of Credit, to a maximum of the principal amount set
forth above, shall not at any time exceed the Borrowing Base with the Borrowing
Base defined as the aggregate of seventy-five percent (75%) of Borrower's
eligible accounts receivable, plus fifty percent (50%) of the value of
Borrower's eligible inventory (exclusive of work in process and inventory which
is obsolete, unsalable or damaged), with value defined as the lessor of
Borrowers cost or current market value; plus seventy-five percent (75%) of the
net book value of Eligible vending machines (with Eligible vending machines
defined as vending machines with respect to which the Bank has either a lien of
first priority or a second priority lien where the first lien has been
subordinated to the lien of the Bank) and transportation equipment. All of the
foregoing shall be determined by Bank upon receipt and review of all collateral
reports required hereunder and such other documents and collateral information
as Bank may from time to time require.
As used herein, "eligible accounts receivable" shall
consist solely of trade accounts created in the ordinary course of Borrower's
business, upon which Borrower's
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right to receive payment is absolute and not contingent upon the fulfillment of
any condition whatsoever, and in which Bank has a perfected security interest
of first priority, and shall not include:
(i) any account which is more than sixty (60)
days past due;
(ii) that portion of any account for which there
exists any right of setoff, defense or discount (except regular
discounts allowed in the ordinary course of business to promote prompt
payment) or for which any defense or counterclaim has been asserted;
(iii) any account which represents an obligation of
any state or municipal government or of the United States government
or any political subdivision thereof (except accounts which represent
obligations of the United States government and for which Bank's forms
N-138 and N-139 have been duly executed and acknowledged);
(iv) any account which represents an obligation of
an account debtor located in a foreign country, other than Canada;
(v) any account which arises from the sale or
lease to or performance of services for, or represents an obligation
of, an employee, affiliate, partner, member, parent or subsidiary of
Borrower; provided, however, receivables from franchisees shall be
"Eligible Accounts" if they meet all the other requirements of
eligible accounts set forth herein;
(vi) that portion of any account which represents
interim or progress xxxxxxxx or retention rights on the part of the
account debtor;
(vii) any account which represents an obligation of
any account debtor when fifty percent (50%) or more of Borrower's
accounts from such account debtor are not eligible pursuant to (i)
above;
(viii) that portion of any account from an account
debtor which represents the amount by which Borrower's total accounts
from said account debtor exceeds twenty-five percent (25%) of
Borrower's total accounts;
(ix) when Bank, in its reasonable discretion,
deems the creditworthiness or financial condition of the account
debtor, or the industry in which the account debtor is engaged, to be
unsatisfactory.
(c) Letter of Credit Subfeature. As a subfeature under
the Revolving Line of Credit, Bank agrees from time to time during the term
thereof to issue letters of credit for the account of Borrower to finance the
purchase of inventory and equipment (each, a "Letter of Credit" and
collectively, "Letters of Credit"); provided, however, that the form and
substance of each Letter of Credit shall be subject to approval by Bank, in its
sole discretion. Letters of Credit which, When issued would cause the total of
principal outstanding and the amount of outstanding Letters of Credit to exceed
the limit on availability under this Agreement, shall be subject to a separate
credit evaluation by the Bank under the credit standards and other eligibility
criteria then in effect and the Bank shall be under no obligation to issue any
such Letters of Credit. Each Letter of Credit shall be issued with an
expiration date not more than one year beyond the maturity date of the
Revolving Line of Credit.
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The undrawn amount of all Letters of Credit shall be reserved under the
Revolving Line of Credit and shall not be available for borrowings thereunder.
Each Letter of Credit shall be subject to the additional terms and conditions
of the Letter of Credit Agreement and related documents, if any, required by
Bank in connection with the issuance thereof (each, a "Letter of Credit
Agreement" and collectively, "Letter of Credit Agreements"). Each draft paid by
Bank under a Letter of Credit shall be deemed an advance under the Revolving
Line of Credit and shall be repaid by Borrower in accordance with the terms and
conditions of this Agreement applicable to such advances; provided however,
that if advances under the Revolving Line of Credit are not available, for any
reason, at the time any draft is paid by Bank, then Borrower shall immediately
pay to Bank the full amount of such draft, together with interest thereon from
the date such amount is paid by Bank to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to advances under the Revolving
Line of Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any demand deposit account maintained by Borrower with
Bank for the amount of any such draft.
(d) Borrowing and Repayment. Borrower may from time to
time during the term of the Revolving Line of Credit borrow, partially or
wholly repay its outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions contained herein or in the Revolving Line of
Credit Note; provided however, that the total outstanding borrowings under the
Revolving Line of Credit shall not at any time exceed the maximum principal
amount available thereunder, as set forth above.
(e) Cash Collateral Account. Borrower shall maintain
with Bank, and Borrower hereby grants to Bank a security interest in, a
non-interest bearing deposit account over which Borrower shall have no control
("Cash Collateral Account") and into which the proceeds of all Borrower's
accounts and other rights to payment in which Bank has a security interest
shall be deposited immediately upon their receipt by Borrower. Bank shall, and
Borrower hereby authorizes Bank to, apply all such proceeds immediately upon
their receipt by Bank as a principal reduction on the Revolving Line of Credit.
SECTION 1.2 CONVERSION OR EXTENSION. By written notice to
Borrower made not less than thirty days before September 23, 1997, Bank may at
it sole option: 1) convert the Revolving Line of Credit to a term loan as of
September 23, 1997 ("Conversion Date"); 2) extend the maturity date for the
Revolving Line of Credit to September 23, 1999; or 3) invite Borrower to
negotiate revised terms for the Revolving Line of Credit. If Bank does none of
the above, the Revolving Line of Credit shall remain in place on terms set
forth herein with a September 23, 1998 maturity date.
(a) Term Loan. If Bank elects to convert the Revolving
Line of Credit to a Term Loan:
(1) Amount. The new Term Loan shall be in an
amount equal to principal outstanding on September 23, 1997.
(2) Repayment. Payments of principal and
interest due under the Term Loan shall be made on the last day of each calendar
quarter in installments sufficient to fully amortize the principal outstanding
on the Conversion Date over 36 months commencing October 31, 1997, and
continuing up to and including September 23, 2000, with a final installment
consisting of all remaining unpaid principal and interest on September 23,
2000.
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(3) Prepayment. Borrower may prepay principal on
the Term Loan at any time, in any amount and without penalty. All prepayments
of principal shall be applied on the most remote principal installment or
installments then unpaid.
(b) Extension of Maturity. If Bank elects to extend the
maturity of the Revolving Line of Credit, the terms of this Credit Agreement
shall remain unchanged except that the Maturity Date shall be September 23,
1999.
(c) Renegotiation. If the Bank invites Borrower to
negotiate a revised credit agreement, the terms of this Agreement shall remain
in place until other terms are agreed upon in writing and signed by the Bank
and Borrower and neither the Bank nor Borrower shall be required to agree to
any changes in the terms hereof. In Borrower's sole discretion, Borrower may
decline the Bank's invitation to negotiate without penalty of any sort.
SECTION 1.3 INTEREST/FEES.
(a) Interest. The outstanding principal balance
of the Revolving Line of Credit shall bear interest at the rate of equal to the
Prime Rate in effect from time to time.
(b) Prime Rate. The term "Prime Rate" shall mean 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.
(c) Computation and Payment. Interest shall be computed
on the basis of a 360-day year, actual days elapsed. Interest shall be payable
at the times and place set forth in the Revolving Line of Credit Note (the
"Note").
(d) 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.
SECTION 1.4 COLLECTION OF PAYMENTS. Borrower authorizes Bank to
collect all principal, interest and fees due under this Agreement by charging
Borrower's demand deposit account number ___________ with Bank, or any other
demand deposit account maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds in any such demand deposit account
to pay all such sums when due, the full amount of such deficiency shall be
immediately due and payable by Borrower.
SECTION 1.5 COLLATERAL. As security for all indebtedness of
Borrower to Bank. Borrower hereby grants to Bank security interests of first
priority in all Borrower's accounts, contract rights, bank accounts, general
intangibles, including trademarks, copyrights, and franchise rights and
agreements, inventory, and equipment, including vehicles ("Collateral").
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All of the foregoing shall be evidenced by and
subject to the terms of such security agreements, financing statements, deeds
of trust, notation of liens on vehicle titles and other documents as Bank shall
reasonably require, all in form and substance satisfactory to Bank. Borrower
shall cooperate with Bank to perfect all such liens, including those on titled
motor vehicles and shall reimburse Bank immediately upon demand for all costs
and expenses incurred by Bank in connection with any of the foregoing security,
including without limitation, filing and recording fees and costs of
appraisals, audits and title insurance.
SECTION 1.6 SUBORDINATION OF DEBT. All obligations of Borrower
identified on Exhibit B hereto shall be subordinated in right of repayment to
all obligations of Borrower to Bank, as evidenced by and subject to the terms
of subordination agreements in form and substance satisfactory to Bank.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.
SECTION 2.1 LEGAL STATUS. Borrower is a corporation, duly
organized and existing and in good standing under the laws of the State of
Delaware, and is qualified or licensed to do business (and is in good standing
as a foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower.
SECTION 2.2 AUTHORIZATION AND VALIDITY. This Agreement, the
Notes, and each other document, contract and instrument required hereby or at
any time hereafter delivered to Bank in connection herewith (collectively, the
"Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms.
SECTION 2.3 NO VIOLATION. The execution, delivery and
performance by Borrower of each of the Loan Documents do not violate any
provision of any law or regulation, or contravene any provision of the Articles
of Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which Borrower
is a party or by which Borrower may be bound.
SECTION 2.4 LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.
SECTION 2.5 CORRECTNESS OF FINANCIAL STATEMENT. The financial
statement of Borrower dated June 30, 1996, a true copy of which has been
delivered by
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Borrower to Bank prior to the date hereof, (a) is complete and correct and
presents fairly the financial condition of Borrower, (b) discloses all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied. Since the date
of such financial statement there has been no material adverse change in the
financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a
security interest in or otherwise encumbered any of its assets or properties
except in favor of Bank or as otherwise permitted by Bank in writing.
SECTION 2.6 INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to
any year.
SECTION 2.7 NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may be
bound that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
SECTION 2.8 PERMITS, FRANCHISES. Borrower possesses, and will
hereafter possess, all permits, franchises and licenses required and rights to
all trademarks, trade names, patents, and fictitious names, if any, necessary
to enable it to conduct the business in which it is now engaged in compliance
with applicable law.
SECTION 2.9 ERISA. Borrower is in compliance in all material
respects with all applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended or recodified from time to time ("ERISA");
Borrower has not violated any provision of any defined employee pension benefit
plan (as defined in ERISA) maintained or contributed to by Borrower (each, a
"Plan"); no Reportable Event as defined in ERISA has occurred and is continuing
with respect to any Plan initiated by Borrower; Borrower has met its minimum
funding requirements under ERISA with respect to each Plan; and each Plan will
be able to fulfill its benefit obligations as they come due in accordance with
the Plan documents and under generally accepted accounting principles.
SECTION 2.10 OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11 ENVIRONMENTAL MATTERS. Except as disclosed by
Borrower to Bank in writing prior to the date hereof, Borrower is in compliance
in all material respects with all applicable Federal or state environmental,
hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of Borrower's operations
and/or properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act as any
of the same may be amended, modified or supplemented from time to time. None
of the operations of Borrower is the subject of any Federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste
or substance into the environment. Borrower has no material contingent
liability in connection with any release of any toxic or hazardous waste or
substance into the environment.
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ARTICLE III
CONDITIONS
SECTION 3.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The
obligation of Bank to grant any of the Credit is subject to the fulfillment to
Bank's satisfaction of all of the following conditions:
(a) Approval of Bank Counsel. All legal matters
incidental to the granting of each of the Credit shall be satisfactory to
Bank's counsel in such counsel's sole discretion.
(b) Documentation. Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and the Note.
(ii) Security Agreement.
(iii) Borrowing Resolution of Borrower.
(iv) UCC Search.
(v) Release of existing liens as required by
Bank.
(vi) Evidence of Insurance.
(vii) Projected cash flow through December, 1997.
(viii) UCC-1 forms as the Bank shall require.
Such other documents as Bank may require under any other Section of
Agreement.
(c) Financial Condition. There shall have been no
material adverse change, as determined by Bank, in the financial condition or
business of Borrower, nor any material decline, as determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower.
(d) Insurance. Borrower shall have delivered to Bank
evidence of insurance coverage on all Borrower's property, in form, substance,
amounts, covering risks and issued by companies satisfactory to Bank, and where
required by Bank, with loss payable endorsements in favor of Bank.
SECTION 3.2 CONDITIONS OF EACH EXTENSION OF CREDIT. The
obligation of Bank to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank's satisfaction of each of
the following conditions:
(a) Compliance. The representations and warranties
contained herein and in each of the other Loan Documents shall be true on and
as of the date of the signing of this
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Agreement and on the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and warranties had been
made on and as of each such date, and on each such date, no Event of Default as
defined herein, and no condition, event or act which with the giving of notice
or the passage of time or both would constitute such an Event of Default, shall
have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all
additional documents which may be required in connection with such extension of
credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing:
SECTION 4.1 PUNCTUAL PAYMENTS. Punctually pay all principal,
interest, fees or other liabilities due under any of the Loan Documents at the
times and place and in the manner specified therein, and immediately upon
demand by Bank, the amount by which the outstanding principal balance of any of
the Credit at any time exceeds any limitation on borrowings applicable thereto.
SECTION 4.2 ACCOUNTING RECORDS. Maintain adequate books and
records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of Borrower.
SECTION 4.3 FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:
(a) not later than 120 days after and as of the end of
each fiscal year, an unqualified financial statement of Borrower, prepared by
certified pubic accountants reasonably satisfactory to the Bank.
(b) not later than 45 days after and as of the end of
each month, a financial statement of Borrower, prepared in accordance with GAAP
by Borrower, to include accounts receivable agings, income and profit and loss
statements;
(c) not later than 45 days after and as of the end of
each month, a borrowing base certificate in the form attached hereto as Exhibit
A, an inventory collateral report, an aged listing of accounts receivable, a
reconciliation of accounts, Borrower's internally prepared ratios described in
paragraph 4.9 hereof and immediately upon each request from Bank, a list of the
names and addresses of all Borrower's account debtors;
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(d) not later than 30 days prior to the end of each year,
projection, prepared by Borrower for the upcoming year(s) to and including the
Maturity Date as it may be extended to include projected income statements,
balance sheets and cash flows;
(e) contemporaneously with each annual and monthly
financial statement and/or projections of Borrower required hereby, a
certificate of the president or chief financial officer of Borrower that said
financial statements are accurate and that to the best of Borrower's knowledge
after appropriate good faith investigation 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;
(f) from time to time such other information as Bank may
reasonably request.
SECTION 4.4 COMPLIANCE. Preserve and maintain all licenses,
permits, governmental approvals, rights, privileges and franchises necessary
for the conduct of its business; and comply with the provisions of all
documents pursuant to which Borrower is organized and/or which govern
Borrower's continued existence and with the requirements of all laws, rules,
regulations and orders of any governmental authority applicable to Borrower
and/or its business.
SECTION 4.5 INSURANCE. Maintain and keep in force insurance of
the types and in amounts customarily carried in lines of business similar to
that of Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect.
SECTION 4.6 FACILITIES. Keep all properties useful or necessary
to Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.
SECTION 4.7 TAXES AND OTHER LIABILITIES. Pay and discharge when
due any and all indebtedness, obligations, assessments and taxes, both real or
personal, including without limitation Federal and state income taxes and state
and local property taxes and assessments, except such (a) as Borrower may in
good faith contest or as to which a bona fide dispute may arise, and (b) for
which Borrower has made provision, to Bank's satisfaction, for eventual payment
thereof in the event Borrower is obligated to make such payment.
SECTION 4.8 LITIGATION. Promptly give notice in writing to Bank
of any litigation pending or threatened against Borrower with a claim in excess
of $100,000.
SECTION 4.9 FINANCIAL CONDITION. Maintain Borrower's financial
condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein):
(a) Current Ratio not at any quarter end less than 1.0 to
1.0, with "Current Ratio" defined as total current assets divided by total
current liabilities.
(b) Total Liabilities divided by Tangible Net Worth not
greater than 1.0 to 1.0, as of each quarter end, with "Total Liabilities"
defined as the aggregate of current liabilities
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and non-current liabilities, and with "Tangible Net Worth" defined as the
aggregate of total stockholders' equity less costs in excess of assets
acquired.
(c) Debt Service Coverage Ratio defined as EBITDA divided
by Debt Service not less than 1.75 to 1.0 as of each quarter end with "EBITDA"
defined as the prior four quarters net profit before tax plus interest expense,
depreciation and amortization expense and with "Debt Service" defined as prior
four quarter interest expense plus $2,000,000 as determined at the end of each
quarter.
SECTION 4.10 NOTICE TO BANK. Promptly (but in no event more than
five (5) days after the occurrence of each such event or matter) give written
notice to Bank in reasonable detail of: (a) the occurrence of any Event of
Default, or any condition, event or act which with the giving of notice or the
passage of time or both would constitute an Event of Default; (b) any change in
the name of Borrower; (c) the occurrence and nature of any Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any funding deficiency
with respect to any Plan; or (d) any termination or cancellation of any
insurance policy which Borrower is required to maintain, or any uninsured or
partially uninsured loss through liability or property damage, or through fire,
theft or any other cause affecting Borrower's property in excess of an
aggregate of $100,000.
SECTION 4.11 PERFECTION OF COLLATERAL. Cooperate fully and
promptly with the Bank in taking all steps necessary to perfect the Bank's
first priority lien position in the Collateral, including execution of
appropriate UCC-1 forms and assisting in having the Bank's lien noted on the
title to vehicles owned by Borrower.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct
or contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:
SECTION 5.1 USE OF FUNDS. Use any of the proceeds of any of the
Credit except for the purposes stated in Article I hereof.
SECTION 5.2 OTHER INDEBTEDNESS. Except as permitted under
Section 5.6 below, create, incur, assume or permit to exist any indebtedness or
liabilities resulting from borrowings, loans or advances, whether secured or
unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
except (a) the liabilities of Borrower to Bank, and (b) any other liabilities
of Borrower existing as of, and disclosed to Bank prior to, the date hereof
without the prior written consent of the Bank, which may be conditioned on
subordination of the indebtedness to which consent is given to the Borrower's
indebtedness to Bank, or become liable on any capital leases. Make any loans
or advances to or investments in any person or entity, except any of the
foregoing existing as of, and disclosed to Bank prior to, the date hereof not
to exceed an aggregate of $50,000 in any fiscal year.
SECTION 5.3 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into
or consolidate with any other entity; make any substantial change in the nature
of Borrower's
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business as conducted as of the date hereof; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.
SECTION 5.4 GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security
for, any liabilities or obligations of any other person or entity, except any
of the foregoing in favor of Bank.
SECTION 5.5 DIVIDENDS, DISTRIBUTIONS. Declare or pay any
dividend or distribution either in cash, stock or any other property on
Borrower's stock now or hereafter outstanding, nor redeem, retire, repurchase
or otherwise acquire any shares of any class of Borrower's stock now or
hereafter outstanding.
SECTION 5.6 PLEDGE OF ASSETS. Mortgage, pledge, grant or permit
to exist a security interest in, or lien upon, all or any portion of Borrower's
assets now owned or hereafter acquired, except any of the foregoing in favor of
Bank or which is existing as of, and disclosed to Bank in writing prior to, the
date hereof and liens on vending machines purchased from franchises or
affiliates in bona fide arms-length transactions, if the debts associated with
such liens are subordinate to Borrower's debt of the Bank pursuant to a
subordination agreement satisfactory to the Bank and the value of such vending
machines are not included in the Borrowing Base hereunder.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal,
interest, fees or other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to
Bank in connection with, or any representation or warranty made by Borrower or
any other party under this Agreement or any other Loan Document shall prove to
be incorrect, false or misleading in any material respect when furnished or
made.
(c) Any default in the performance of or compliance with
any obligation, agreement or other provision contained herein or in any other
Loan Document (other than those referred to in subsections (a) and (b) above),
and with respect to any such default which by its nature can be cured, such
default shall continue for a period of twenty (20) days from the time Borrower
discovered or with appropriate good faith investigation Borrower should
reasonably have discovered such default.
(d) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of any contract or
instrument (other than any of the Loan Documents) pursuant to which Borrower
has incurred any debt or other liability to any person or entity, including
Bank.
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(e) The filing of a notice of judgment lien in a material
amount in Bank's sole opinion against Borrower; or the recording of any
abstract of judgment against Borrower in any county in which Borrower has an
interest in real property; or the service of a notice of levy and/or of a writ
of attachment or execution, or other like process, against the assets of
Borrower; or the entry of a judgment against Borrower.
(f) Borrower shall become insolvent, or shall suffer or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors
or any other relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time ("Bankruptcy Code"), or
under any state or Federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to the
Bankruptcy Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower, or Borrower shall file an answer admitting the jurisdiction
of the court and the material allegations of any involuntary petition; or
Borrower shall be adjudicated a bankrupt, or an order for relief shall be
entered against Borrower by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors.
(g) There shall exist or occur any event or condition
which Bank in good faith believes impairs, or is substantially likely to
impair, the prospect of payment or performance by Borrower of its obligations
under any of the Loan Documents.
SECTION 6.2 REMEDIES. Upon the occurrence of any Event of
Default: (a) all indebtedness of Borrower under each of the Loan Documents,
any term thereof to the contrary notwithstanding, shall at Bank's option and
without notice become immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are hereby expressly waived by
Borrower; (b) Bank shall have the right to immediately cease or terminate the
obligation, if any, of Bank to extend any further credit under any of the Loan
Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort to any or all
security for any of the Credit and to exercise any or all of the rights of a
beneficiary or secured party pursuant to applicable law. All rights, powers
and remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by
law or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NO WAIVER. No delay, failure or discontinuance of
Bank in exercising any right, power or remedy under any of the Loan Documents
shall affect or operate as a waiver of such right, power or remedy; nor shall
any single or partial exercise of any such right, power or remedy preclude,
waive or otherwise affect any other or further exercise thereof or the exercise
of any other right, power or remedy. Any waiver, permit, consent or approval
of any kind by Bank of any
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breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.
SECTION 7.2 NOTICES. All notices, requests and demands which any
party is required or may desire to give to any other party under any provision
of this Agreement must be in writing delivered to each party at the following
address:
BORROWER: American Coin Merchandising, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: W. Xxxx Xxxx
BANK: XXXXX FARGO BANK (COLORADO),
NATIONAL ASSOCIATION
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit
in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.3 COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall
pay to Bank immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of Bank's in-house counsel),
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents, Bank's continued administration hereof
and thereof, and the preparation of any amendments and waivers hereto and
thereto, (b) the enforcement of Bank's rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding relating to Borrower so long as the Bank prevails in any of its
claims or defenses.
SECTION 7.4 SUCCESSORS, ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties; provided however,
that Borrower may not assign or transfer its interest hereunder without Bank's
prior written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank's rights and benefits under each of the Loan Documents. In connection
therewith, Bank may disclose all documents and information which Bank now has
or may hereafter acquire relating to any of the Credit, Borrower or its
business, or any collateral required hereunder.
SECTION 7.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the
other Loan Documents constitute the entire agreement between Borrower and Bank
with respect to the Credit and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only by a written instrument
executed by each party hereto.
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SECTION 7.6 NO THIRD PARTY BENEFICIARIES. This Agreement is made
and entered into for the sole protection and benefit of the parties hereto and
their respective permitted successors and assigns, and no other person or
entity shall be a third party beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.
SECTION 7.7 TIME. Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.
SECTION 7.8 SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
SECTION 7.9 GOVERNING LAW. Except as specifically provided for
in Section 7.11 below, this Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, except to the extent Bank
has greater rights or remedies under Federal law, whether as a national bank or
otherwise, in which case such choice of Colorado law shall not be deemed to
deprive Bank of any such rights and remedies as may be available under Federal
law.
SECTION 7.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original, and all of which when taken together shall constitute
one and the same Agreement.
SECTION 7.11 ARBITRATION PROGRAM.
(a) Binding Arbitration. Upon the demand of any party
bound to the terms of this Arbitration Program (collectively the "parties"),
whether made before the institution of any judicial proceeding or not more than
60 days after service of a complaint, third party complaint, cross-claim or
counterclaim or any answer thereto or any amendment to any of the above, any
Dispute (as defined below) shall be resolved by binding arbitration in
accordance with the terms of this arbitration clause. A "Dispute" shall
include any action, dispute, claim, or controversy of any kind, whether founded
in contract, tort, statutory or common law, equity, or otherwise, now existing
or hereafter occurring between the parties arising out of, pertaining to or in
connection with this Agreement or any related agreements, documents, or
instruments (the "Documents"). The parties understand that by this Agreement
they have decided that the Disputes may be submitted to arbitration rather than
being decided through litigation in court and that once decided by an
arbitrator the claims involved cannot later be brought, filed, or pursued in
court.
(b) Governing Rules. Arbitrations conducted pursuant to
this Agreement, including selection of arbitrators, shall be administered by
the American Arbitration Association ("Administrator") pursuant to the
Commercial Arbitration Rules of the Administrator. Arbitrations conducted
pursuant to the terms hereof shall be governed by the laws of the State of
Colorado, including the provisions of CRS 00-00-000 et seq, and CRS 00-00-000
(5). Judgment upon any award rendered hereunder may be entered in any court
having jurisdiction; provided, however, that nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C. Section 91 or similar governing state law. Any party
who fails to submit to binding arbitration following a lawful demand by the
opposing party shall bear all costs and expenses, including reasonable
attorney's fees, incurred by the opposing party in compelling arbitration of
any Dispute.
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(c) No Waiver, Preservation of Remedies, Multiple
Parties. No provision of this arbitration clause, nor the exercise of any
rights hereunder, shall limit the right of any party to (1) foreclose against
any real or personal property collateral or other security, (2) exercise
self-help remedies (including repossession and setoff rights), (3) interplead
the instructing parties and deposit the property described in the Agreement in
court, or (4) obtain provisional or ancillary remedies such as injunctive
relief, sequestration, attachment, replevin, garnishment, or the appointment of
a receiver from a court having jurisdiction. Such rights can be exercised at
any time except to the extent such action is contrary to a final award or
decision in any arbitration proceeding. The institution and maintenance of an
action as described above shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the Dispute to arbitration, nor
render inapplicable the compulsory arbitration provisions hereof. Any claim or
Dispute related to exercise of any self-help, auxiliary or other exercise of
rights under this section (c) shall be a Dispute hereunder.
(d) Arbitrator Powers and Qualifications; Awards.
Arbitrators shall resolve all Disputes in accordance with the applicable
substantive law. Arbitrator may make an award of attorneys' fees and expenses
if permitted by law or the agreement of the parties. All statutes of
limitation applicable to any Dispute shall apply to any proceeding in
accordance with this arbitration clause. Any arbitrator selected to act as the
only arbitrator in a Dispute shall be required to be a practicing attorney with
not less than 10 years practice in commercial law in the State of Colorado.
With respect to a Dispute in which the claims or amounts in controversy do not
exceed five hundred thousand dollars ($500,000), a single arbitrator shall be
chosen and shall resolve the Dispute. In such case the arbitrator shall have
authority to render an award up to but not to exceed five hundred thousand
dollars ($500,000) including all damages of any kind whatsoever, costs, fees
and expenses. Submission to a single arbitrator shall be a waiver of all
parties' claims to recover more than five hundred thousand dollars ($500,000).
A Dispute involving claims or amounts in controversy exceeding five hundred
thousand dollars ($500,000) shall be decided by a majority vote of a panel of
three arbitrators ("Arbitration Panel"). An Arbitration Panel shall be
composed of one arbitrator who would be qualified to sit as a single arbitrator
in a Dispute decided by one arbitrator, one who has at least ten years
experience in banking matters and one who has at least ten years experience in
the manufacturing and franchising industries. Arbitrator(s) may, in the
exercise of their discretion to, at the written request of a party in any
Dispute, 1) consolidate in a single proceeding any multiple party claims that
are substantially identical and all claims arising out of a single loan or
series of loans including claims by or against borrower(s), guarantors,
sureties and or owners of collateral if different from the borrower, and 2)
administer multiple arbitration claims as class actions in accordance with Rule
23 of the Federal Rules of Civil Procedure. The arbitrator(s) shall be
empowered to resolve any dispute regarding the terms of this Agreement or the
arbitrability of any dispute or any claim that all or any part (including this
provision) is void or voidable but shall have no power to change or alter the
terms of this Agreement. The award of the arbitrator(s) shall be in writing
and shall specify the factual and legal basis for the award.
(e) Miscellaneous. To the maximum extent practicable,
the Administrator, the Arbitrator(s) and the parties shall take any action
necessary to require that an arbitration proceeding hereunder be concluded
within 180 days of the filing of the Dispute with the Administrator. The
Arbitrator(s) shall be empowered to impose sanctions for any party's failure to
proceed within the times established herein. Arbitration proceedings hereunder
shall be conducted in Denver, Colorado metropolitan area, at a location
determined by the Administrator. In any such proceeding the doctrines of res
judicata and collateral estoppel shall apply and a party shall state as a
counterclaim any claim which arises out of the transaction or occurrence or is
in any way related to the Documents or the Dispute which does not require the
presence of a third party which could not be joined as a party in the
proceeding. The provisions of this arbitration clause shall survive any
termination,
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amendment, or expiration of the Documents and repayment in full of sums owed to
Bank by Borrower unless the parties otherwise expressly agree in writing. Each
party agrees to keep all Disputes and arbitration proceedings strictly
confidential, except for disclosures of information required in the ordinary
course of business of the parties or as required by applicable law or
regulation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
BORROWER:
AMERICAN COIN MERCHANDISING, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Title: President & CEO
-----------------
BANK:
XXXXX FARGO BANK (COLORADO), NATIONAL
ASSOCIATION
By: /s/ Xxxxx Xxxxxxxx
--------------------------
Title: Vice President
------------------
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EXHIBIT A
---------
(Form of Borrowing Base Certificate)
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18
American Coin Merchandising, Inc.
Borrowing Base & Financial Covenant Compliance Certificate
BORROWING BASE CERTIFICATE: - July 31, 1996
Accounts, Inventory, and Equipment
(Provided Monthly)
1 Accounts Receivable $ 771,078.54
2 Less Ineligible Accounts $ 99,167.62
-------------------
3 Total Eligible Accounts $ 671,910.92
4 Applicable Margin 75%
-------------------
5 Accounts Receivable Total $ 503,933.19
6 Inventory Balance $ 3,680,780.86
7 Less Ineligible Inventory $ 841,683.40
-------------------
8 Total Eligible Inventory $ 2,839,097.46
9 Applicable Margin 50.00%
-------------------
10 Inventory Total $ 1,419,548.73
11 Net Book Value of Equipment $ 8,005,219.61
12 Less Ineligible Equipment $ 1,516,264.54
-------------------
13 Total Eligible Equipment $ 6,488,955.07
14 Applicable Margin 75.00%
-------------------
15 Equipment Total $ 4,866,716.30
16 Total Accounts, Inventory, and Equipment $ 6,790,198.22
-------------------
17 Total Availability $ 6,000,000.00
Sum of Lines 5, 10, 15 (Not More than 6000000)
18 Current Loan Balance $ -
19 New Advance Request $ -
20 Outstanding Letters of Credit $ -
21 Net Loan Availability $ 6,000,000.00
Line 17 less lines 18, 19, 20
FINANCIAL COVENANT COMPLIANCE: - June 30, 1996
(Provided Quarterly)
Required Actual
Current Ratio Not Less Than 1.0 to 1 1.08
Total Liabilities to Tangible New Worth Not More Than 1.0 to 1 0.86
Debt Service Coverage Ratio Not Less Than 1.75 to 1 2.03
The above listed collateral is subject to a security agreement in favor of
xxxxx Fargo Bank (Colorado), National Association. The undersigned represents
that the above calculations are in accordance with the credit agreement and
that the undersigned is in full compliance with the terms of the Credit
Agreement and other Loan Documents.
American Coin Merchandising, Inc.
---------------
/s/ W. Xxxx Xxxx
Chief Financial Officer and Vice President
September 23, 1996
19
EXHIBIT B
---------
(Schedule of Subordinated Debt)
20
AMERICAN COIN MERCHANDISING, INC.
SUBORDINATED DEBT SCHEDULE
LEHIGH
CHICAGO GEORGIA INLAND VALLEY PERFORMANCE
TOY TOY MERCHANDISING, TOY MERCHANDISING
CREDITOR COMPANY, INC COMPANY INC. COMPANY INC.
Xxxxxxx X. Xxxxxxx 52,627.85
Xxxx Xxxx Xxxxxxx
X. X. Xxxxx & Associates, Inc.
Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx 84,676.50
Xxxx Xxxx Xxxxxxx and Xxxxx Xxx Xxxxxxx 84,676.50
Xxxxxxx X. Xxxxxxx and Xxxx Xxx Xxxxxxxx 16,133.62 84,676.50 33,066.50
Xxxxx X. Xxxxxxx 52,627.85 16,133.63
Xxxxxxx X. Xxxxx 56,073.06
Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx 59,518.28 16,133.62 33,066.50
Xxxxxxx X. Xxxxx 16,133.63 33,066.51
Xxxx X. Xxxxxxxx 515,295.00
Xxxxx and Sean's Toy Company Inc.
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxx
Redlands Toy Co., Inc.
Total 220,847.04 64,534.50 254,029.50 99,199.51 515,295.00
SOUTHWEST SUGARLOAF
COIN OF UTAH, HOOSIER COIN REDLANDS
CREDITOR COMPANY INC. COMPANY TOY CO., INC. TOTAL
Xxxxxxx X. Xxxxxxx 97,358.00 149,985.85
Xxxx Xxxx Xxxxxxx 48,679.00 48,679.00
X. X. Xxxxx & Associates, Inc. 48,679.00 48,679.00
Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx 84,676.50
Xxxx Xxxx Xxxxxxx and Xxxxx Xxx Xxxxxxx 84,676.50
Xxxxxxx X. Xxxxxxx and Xxxx Xxx Xxxxxxxx 133,876.62
Xxxxx X. Xxxxxxx 56,073.06
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx 108,718.40
Xxxxxxx X. Xxxxx 49,200.14
Xxxx X. Xxxxxxxx 515,295.00
Xxxxx and Sean's Toy Company Inc. 434,000.00 99,000.00 499,000.00
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxx 99,000.00 99,000.00
Redlands Toy Co., Inc. 81,850.00 81,850.00
Total 194,716.00 434,000.00 198,000.00 81,850.00 2,062,471.55
