United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
(Mark one)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 31, 1998
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 1-8460
UNIVERSAL MONEY CENTERS, INC.
(Name of small business issuer in its charter)
Missouri 43-1242819
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
6800 Squibb Road, Shawnee Mission, Kansas 66202
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (913) 831-2055
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.01 par value per share
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |_|
No |X|
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|
Issuer's revenues for the fiscal year ending January 31, 1998 were
$3,822,156.
The issuer is unable to determine the aggregate market value of the voting
stock held by non-affiliates of the issuer as of a date within the past 60 days.
The number of shares of the registrant's Common Stock outstanding as of
April 14, 1999 was 39,293,069.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
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UNIVERSAL MONEY CENTERS, INC.
FORM 10-KSB ANNUAL REPORT
TABLE OF CONTENTS
Section Page
PART I.......................................................................1
ITEM 1. DESCRIPTION OF BUSINESS...........................................1
ITEM 2. DESCRIPTION OF PROPERTIES........................................18
ITEM 3. LEGAL PROCEEDINGS................................................18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............18
PART II.....................................................................18
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........18
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........20
ITEM 7. FINANCIAL STATEMENTS.............................................32
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCCOUNTING AND
FINANCIAL DISCLOSURE.............................................50
PART III....................................................................50
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT...............50
ITEM 10. EXECUTIVE COMPENSATION..........................................51
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..52
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................53
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K................................58
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NOTE CONCERNING THIS FILING
This Annual Report on Form 10-KSB is the first periodic report filed by
Universal Money Centers, Inc. (the "Company") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") since the Company filed its Quarterly
Report on Form 10-Q for the quarter ended April 30, 1987. The Company ceased
filing periodic reports with the SEC in 1987 as a result of severe financial
distress that placed the Company's continued survival in serious doubt. Since
1987, the current senior management of the Company has used the Company's
limited financial resources to attempt to keep the Company operating and to
resolve the Company's serious financial problems. See Item 1, "DESCRIPTION OF
BUSINESS - Summary of Company Operations for Fiscal Years 1988 through 1997" and
Item 1, "DESCRIPTION OF BUSINESS - Summary Unaudited Historical Financial
Information." As a result of recent improvements in the Company's financial
condition, the Company is able to recommence filing periodic reports with the
SEC.
Concurrently with the filing of this Form 10-KSB, the Company is also
filing Quarterly Reports on Form 10-QSB for the fiscal quarters ended April 30,
July 31 and October 31, 1998 with the SEC. The Company intends to file the
Annual Report on Form 10-KSB for the fiscal year ended January 31, 1999 on or
before its due date, May 3, 1999. Unless otherwise indicated herein, this Form
10-KSB provides information concerning the Company as of January 31, 1998 and
for periods prior to January 31, 1998. The discussion in this Form 10-KSB should
be read in conjunction with the discussions of periods subsequent to January 31,
1998 contained in the periodic reports described above.
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-KSB that are
not statements of historical fact constitute forward-looking statements within
the meaning of Section 21E of the Exchange Act. These statements involve risks
and uncertainties that may cause actual results to differ materially from those
in such statements. See Item 6, "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION - Cautionary Statement Concerning Forward-Looking Statements" for
additional information and factors to be considered with respect to
forward-looking statements.
PART I
Item 1. DESCRIPTION OF BUSINESS
Overview
Universal Money Centers, Inc., a Missouri corporation (the "Company"), is
engaged in the business of operating a regional network of automated teller
machines ("ATMs"). The ATMs provide holders of debit and credit cards access to
cash, account information and other services at convenient locations and times
chosen by the cardholder. Debit and credit cards are principally issued by banks
and credit card companies. At January 31, 1998, the network consisted of
approximately 256 ATMs owned by the Company or its affiliate, Universal Funding
Corporation, 54 ATMs owned by banks and 6 ATMs owned by third party merchants.
For a description of the relationship between the Company and Universal Funding
Corporation, see Item 12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -
Universal Funding Corporation."
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ATMs in the Company's network are principally installed in convenience stores
and banks with locations concentrated in the Kansas City and St. Louis, Missouri
and El Paso, Texas metropolitan areas, and the state of Kansas. The Company also
provides ATM network management services to banks and third parties owning ATMs
that are included in the Company's ATM network.
To maximize usage of ATMs in the Company's network, the Company has
relationships with national and regional card organizations (also referred to as
networks) which enable the holder of a card issued by one member of the
organization to use an ATM operated by another member of the organization to
process a transaction. The Company has relationships with Cirrus and Plus, the
two principal national card organizations, whose members are banks and ATM
network operators and other companies sponsored by member banks. The Company
also has relationships with major credit card issuers such as Visa, MasterCard
and Discover which enable the holder of a credit card to use ATMs in the
Company's network to process a transaction.
The Company's revenues are principally derived from two types of fees,
which the Company charges for processing transactions on its ATM network. The
Company receives an interchange fee from the issuer of the credit or debit card
for processing a transaction when a cardholder uses an ATM in the Company's
network. In addition, in most cases the Company receives a surcharge fee from
the cardholder when the cardholder makes a cash withdrawal from an ATM in the
Company's network. The Company expanded its practice of imposing surcharge fees
in April 1996 when national debt and credit card organizations changed rules
applicable to their members to permit these fees. Subsequently, surcharge fees
have become and are expected to continue to be a substantial source of revenue
for the Company and other ATM network operators. In fiscal 1997 and 1998,
surcharge fees represented approximately 33% and 51% of the Company's total
revenues, respectively.
The Company's recent return to profitability coincided with, and has been
substantially dependent upon, the imposition of surcharge fees. Any changes in
laws or card association rules materially limiting the Company's ability to
impose surcharge fees would have a material adverse effect on the Company. See
"--Regulatory Matters - Surcharge Regulation."
In addition to revenues derived from interchange and surcharge fees, the
Company also derives revenues from providing network management services to
banks and third parties owning ATMs included in the Company's ATM network. These
services include 24 hour transaction processing, monitoring and notification of
ATM status and cash condition, notification of ATM service interruptions, in
some cases, dispatch of field service personnel for necessary service calls and
cash settlement and reporting services. The fees for these services are paid by
the owners of the ATMs.
Company Strengths
The Company believes it has important strengths which should enable it to
successfully pursue its business strategy and solidify its position as a
regional ATM network operator:
Competitive Experience. The Company began operating an ATM network in the
early 1980's when ATMs were first being introduced by banks to their customers.
The Company's key executives have been actively involved in the Company's
business for over ten years. As a result, the Company has significant experience
addressing the technical and management challenges that arise in the operation
of an ATM network business. Moreover, the Company
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faced many of these challenges with extremely limited financial resources.
Management believes this experience enhances the Company's ability to
efficiently manage its network and provide reliable service to customers. The
Company believes this experience cannot easily be duplicated by competitors,
many of which have entered the business since the advent of surcharge fees.
Transaction Processing Capability. The Company has the capability to
process (or "drive") transactions both on Company owned ATMs and ATMs operated
for third parties. Transaction processing ("driving") involves maintaining the
information systems capability to interface with card organizations and card
issuers through a computer switch. Management believes this capability provides
the Company many competitive advantages over ATM network operators who pay third
parties to perform this service. Most importantly, the Company believes it has
lower costs than some competitors because it is able to perform this service
less expensively than the service can be purchased from third party processors.
In addition, the Company believes it is able to provide better customer service
because it is less likely to suffer communication delays when there are ATM
breakdowns and network interruptions. Driving capability also improves the
Company's ability to manage its cash collections. See "-ATM Network Technology".
Reliability. The Company believes that the reliability of its ATMs and
information systems technology is critical to the Company's success. ATM
failures and systems breakdowns directly result in lost fee revenue and are
extremely important factors in the selection of an ATM network operator by banks
and other third parties. To ensure reliability, the Company has invested in
system redundancies and advanced monitoring systems which protect against
network interruptions and ensure timely repairs. The Company has also purchased
advanced hardware and developed proprietary software and service systems which
provide state-of-the-art diagnostics and self-testing routines. The Company's
ATMs are monitored through dedicated, dial-up and wireless communication links
to the Company's central processing center in Mission, Kansas. When problems
with an ATM are detected, the Company either dispatches a field technician to
correct the problem, or notifies the customer that a problem exists.
Lower Cost Alternative. The Company believes that it offers banks and
third parties a lower cost alternative to building or operating their own ATM
networks because of the economies of scale associated with purchasing and
maintaining ATMs and network computer equipment, and maintaining the expertise
necessary to keep telecommunication and other services in working order. Banks
and third parties are offered a choice of services that include a connection to
the Company's ATM network as well as connections to national ATM networks. The
Company's ATM management services include transaction driving, 24-hour
monitoring from the Company's processing center of ATM operational status, the
monitoring of cash levels in the ATM, technician dispatch for necessary service
calls, ATM balancing and reconciliation, and transaction research. Management
believes the Company is more flexible than large transaction processing services
in tailoring its services to the specific needs of community oriented banks and
small network operators.
Additional Service Capability. In addition to performing basic functions
such as dispensing cash and retrieving account information, many of the
Company's ATMs are modular and upgradable for additional services in response to
changing technology and consumer demand. The Company plans to continually
develop new products and enhance existing products and is specifically
investigating the ability and financial viability of dispensing postage stamps,
coupons and prepaid calling cards from some of its ATMs.
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Business Strategy
The Company's strategy is to solidify its position as a regional ATM
network operator by expanding its network of Company owned ATMs and its ATM
transaction processing business. This strategy will be implemented by pursuing
the following initiatives:
Strategically Expand ATM Base and Transaction Processing Business. The
Company's principal focus in the near term will be to continue the expansion of
its base of Company owned ATMs in its existing markets. The Company will also
seek to grow its network processing business by establishing relationships with
additional banks and other owners of ATMs who do not have transaction processing
capability.
Continue to Form Strategic Relationships with Card Organizations. To
maximize usage of ATMs in its network, the Company's goal is for the ATMs to be
able to accept all credit and debit cards issued in its markets. The Company
currently has agreements with the leading national issuers of credit cards
(American Express, VISA, MasterCard and Discover), the leading national card
organizations (Cirrus and Plus), and the dominant regional card organization in
its markets (Honor). The Company believes that these relationships enable most
holders of cards in its markets to use ATMs in its network. The Company
continually evaluates these relationships and will add new relationships when
appropriate.
Growth through Acquisitions. While the Company intends to focus
principally on internal expansion of its ATM network, management intends to
selectively evaluate and possibly pursue acquisitions that are complementary to
the Company's existing operations and to explore other geographic markets or
strategic business opportunities where it can make use of its operational
expertise. The Company believes there are many small ATM network operators which
may be attractive acquisition candidates. Other business and network
opportunities that the Company may evaluate include the expansion of its
operations through the acquisition of ATM networks from banks or other
businesses which support or complement its network. The Company believes that
many ATM networks could be run more efficiently and rendered more profitable by
the Company due to economies of scale or through consolidation or reorganization
of the networks. Acquisitions of strategic businesses which support the
Company's activities (including software providers or other transaction
processors) could permit the Company to procure necessary services more
inexpensively, increase network traffic, or expand more rapidly. The Company's
ability to consummate an acquisition and pursue expansion plans will be limited
by its available financial resources.
Capitalize on Additional Revenue Opportunities. The Company plans to take
advantage of the various distribution possibilities of ATMs and credit and debit
cards beyond basic cash withdrawal and balance inquiry functions by providing
value added services through ATMs as new technology develops and the demand for
such services grows in its markets. Currently, the Company is investigating the
ability and financial viability of providing screen advertising and dispensing
postage stamps, coupons and prepaid calling cards. The Company is also
evaluating the possibility of offering point of sale authorization services in
the future. See " - The Company Network - Other Services."
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The Company Network
General. At January 31, 1998 the Company's network consisted of 256 ATMs
owned by the Company or its affiliate, Universal Funding Corporation, 54 ATMs
owned by banks and 6 ATMs owned by third party merchants. ATM locations in the
Company's network are concentrated in the Kansas City metropolitan area
including Topeka and Lawrence Kansas (approximately 100 ATMs), the St. Louis,
Missouri metropolitan area (approximately 50 ATMs), the El Paso, Texas
metropolitan area (approximately 50 ATMs), and other areas in the state of
Kansas (approximately 25 ATMs). Other ATMs are located in Florida, Illinois,
Ohio and New Mexico.
The operation of the network involves the performance of many
complementary tasks and services including principally (i) acquiring ATMs for
the Company or its customers, (ii) selecting locations for ATMs and entering
into leases for access to those locations, (iii) in the case of banks and third
party merchants, establishing relationships with them for processing
transactions on their ATMs, (iv) establishing relationships with national and
regional card organizations and credit card issuers to maximize usage of ATMs in
the network, (v) operating and maintaining the computer system and related
software necessary to process transactions conducted on ATMs, (vi) processing
transactions conducted on ATMs, (vii) supplying ATMs with cash and monitoring
cash levels for resupply, and (viii) managing the collection of fees generated
from the operation of the network.
ATM Locations. The Company believes that the profitable operation of an
ATM is largely dependent upon its location. The Company devotes significant
effort to the selection of locations that will generate high cardholder
utilization. One of the principal factors affecting the Company's further
penetration of existing markets in the Midwest is the availability of attractive
sites. The Company attempts to identify locations in areas with high pedestrian
counts where people need access to cash and where use of the ATM is convenient
and secure. Management believes the identification of locations is supported by
the desire of retailers of all types to offer their customers access to cash as
an alternative to cashing checks, which avoids the financial exposure and added
overhead of cashing checks. Key target locations for the Company's ATMs include
(i) convenience stores and combination convenience stores and gas stations, (ii)
grocery stores, (iii) major regional and national retailers, (iv) hotels, (v)
shopping malls, (vi) airports, (vii) colleges, (viii) amusement parks, (ix)
sports arenas, (x) theaters, and (xi) bowling alleys.
The Company enters into leases for its ATM locations. The leases generally
provide for the payment to the lessor of either a portion of the fees generated
by use of the ATM or a fixed monthly rent. Most of the Company's leases have a
term of approximately three years. The Company generally has the right to
terminate a lease if the ATM does not meet certain performance standards. The
ATM site owner generally has the right to terminate a lease before the end of
the lease term if the Company breaches the lease agreement or becomes the debtor
in a bankruptcy proceeding.
The Company has relationships with two operators of combination convenience
stores and gas stations for whom approximately 44 and 34 ATMs, respectively,
have been installed at their locations as of January 31, 1998. The aggregate
revenues from these companies accounted for approximately 22% of the Company's
revenues in fiscal year 1998. The Company believes that it has good
relationships with these companies. Nevertheless, if one or both of the
relationships was terminated and the Company was unable to find new locations
for the ATMs, the termination could have a material adverse effect on the
Company. The leases for the locations in which 44 ATMs have been installed
expire September 2001, and the lease for the locations in which 34 ATMs have
been installed expires February 2001. Each of these leases automatically renews
for
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successive one-year terms, unless terminated by either party prior to the
commencement of a renewal term. In addition, each site owner has the right to
terminate the respective lease before the end of the lease term under certain
circumstances.
The Company believes that once a cardholder establishes a habitual pattern
of using a particular ATM, the cardholder will generally continue to use that
ATM unless there are significant problems with the location, such as a machine
frequently being out of service. It is the Company's goal to secure key real
estate locations before its competitors can do so, and become the habitual ATM
location of card users in its markets.
Typical ATM Transaction. In a typical ATM transaction processed by the
Company, a debit or credit cardholder inserts a credit or debit card into an ATM
to withdraw funds or obtain a balance inquiry. The transaction is routed from
the ATM to the Company's processing center by dedicated, dial-up and wireless
communication links. The Company's processing center computers identify the card
issuer by the bank identification number contained within the card's magnetic
strip. The transaction is then switched to the local issuing bank or card
organization (or its designated processor) for authorization. Once the
authorization is received, the authorization message is routed back to the ATM
and the transaction is completed.
Some card issuers do not maintain on-line balance information for their
cardholders, but instead periodically send the Company authorization limits on a
daily basis. The Company stores the cardholder authorization limits on its
processing center computers and authorizes transactions on behalf of the card
issuer relying on this information. The Company transmits records of all
transactions processed in this manner to the card issuers which then update
their cardholder account records.
Authorization of ATM transactions processed on ATMs in the Company's
network is the responsibility of the card issuer. The Company is not liable for
dispensing cash in error if it receives a proper authorization message from a
card issuer.
Transaction Fees. The Company's revenues are principally derived from two
types of fees. The Company receives an interchange fee for processing a
transaction when a cardholder uses an ATM in the Company's network. In addition,
in most cases the Company receives a surcharge fee when a cardholder makes a
cash withdrawal from an ATM in the Company's network.
Interchange fees are processing fees that are paid by the issuer of the
credit or debit card used in a transaction. Interchange fees vary for cash
withdrawals, balance inquiries, account transfers or uncompleted transactions,
the primary types of transactions that are currently processed on ATMs in the
Company's network. The maximum amount of the interchange fees is established by
the national and regional card organizations and credit card issuers with which
the Company has a relationship. The Company (or its affiliate, Universal Funding
Corporation) receives the full interchange fee for transactions on Company owned
ATMs, but sometimes rebates a portion of the fees to the owner of the ATM
location under the applicable lease for the ATM site. The Company also receives
the full interchange fee for transactions on ATMs owned by banks or third party
vendors included within the Company's network, but rebates a portion of each fee
to the bank or third party vendor based upon negotiations between the parties.
The interchange fees received by the Company vary from network to network and to
some extent from issuer to issuer, but generally range from $0.35 to $0.75 per
cash withdrawal. Interchange fees for balance inquiries, account transfers and
denied transactions are generally substantially less than fees for cash
withdrawals. The interchange fees received by the Company from the card issuer
are
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independent of the service fees charged by the card issuer to the cardholder in
connection with ATM transactions. Service fees charged by card issuers to
cardholders in connection with transactions through the Company's network range
from zero to as much as $2.50 per transaction. The Company does not receive any
portion of the service fees charged by the card issuer to the cardholder.
In most markets the Company imposes a surcharge fee for cash withdrawals.
The range of surcharge fees for ATMs in the Company's network owned by or
located in banks is between $0.50 and $1.50 per withdrawal. The range of
surcharge fees for other ATMs in the Company's network is between $0.50 and
$2.50 per withdrawal. The Company receives the full surcharge fee for
transactions on Company owned ATMs, but sometimes rebates a portion of the fees
to the owner of the ATM location under the applicable lease for the ATM site.
The Company also receives the full surcharge fee for transactions on ATMs owned
by banks and third party vendors included within the Company's network, but
rebates a portion of each fee to the bank or third party vendor based upon a
variety of factors, including transaction volume and the party responsible for
supplying vault cash to the ATM. See "Regulatory Matters - Surcharge
Regulation."
ATM Network Management Services. The Company offers ATM network management
services to banks and other third party owners of ATMs included in the Company's
ATM network. These services include 24 hour transaction processing, monitoring
and notification of ATM status and cash condition, notification of ATM service
interruptions, in some cases, dispatch of field service personnel for necessary
service calls and cash settlement and reporting services. Banks may choose
whether to limit transactions on their ATMs to cards issued by the bank or to
permit acceptance of all cards accepted on the Company's network The Company
currently provides these network management services to banks and other third
parties owning approximately 54 ATMs and 6 ATMs, respectively, included in the
Company's ATM network.
Other Services. The Company's network has capabilities for services in
addition to cash withdrawal and balance inquiry transactions. These include (i)
the ability to distribute financial and other products and services at a low
incremental cost, (ii) the ability to dispense postage stamps, coupons and
prepaid calling cards, (iii) the ability to provide on screen advertising, and
(iv) the provision of on-line point of sale authorization for purchases made at
retail outlets with credit and debit cards. In addition, a majority of the
Company's ATMs are upgradable for new technologies, including computer chip
"smart cards." Smart cards are electronic debit cards that can be used to
withdraw cash from ATMs and can be "charged up" through the ATM network and then
used to purchase goods from retail locations. The Company is exploring the
viability of these uses and may implement additional services as markets
develop.
Transaction Volumes. The Company monitors the number of transactions which
are made by cardholders on ATMs in its network. The transaction volumes
processed on any given ATM are affected by a number of factors, including
location of the ATM, the amount of time the ATM has been installed at that
location, and market demographics. The Company's experience is that the number
of transactions on a newly installed ATM is initially very low and increases for
a period of three to six months after installation as consumers become familiar
with the location of the machine. The Company processed a total of 7,107,111
transactions on its network in fiscal 1998, of which 1,972,307 were surcharge
transactions. The Company processed a total of 6,390,963 transactions on its
network in fiscal 1997, of which 662,987 were surcharge transactions.
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Vault Cash. An inventory of cash ("vault cash") is maintained in each ATM
which is replenished periodically based upon cash withdrawals. A major factor
limiting the Company's ability to expand its owned ATM network is the Company's
limited available cash to place in the ATMs. Since 1989, vault cash for an
increasing percentage of the Company owned ATMs has been supplied by Universal
Funding Corporation, because the Company has been unable to obtain financing
from commercial lenders at reasonable rates. Universal Funding Corporation
currently supplies vault cash for a majority of the ATMs owned by Funding and
the Company. See Item 12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -
Universal Funding Corporation." Certain Company-owned ATMs are sponsored by
banks. Vault cash for these ATMs is supplied by the sponsoring bank. The Company
does not supply vault cash for the ATMs in its ATM network that are owned by
banks and third party vendors.
ATM Network Technology
ATMs. Most of the ATMs in the Company's network are manufactured by
Fujitsu, IBM/Diebold, NCR, or Triton. As of February 28, 1999, approximately 70%
of the Company owned ATMs have been purchased within the past three years. The
Company intends to phase out the remaining older ATMs that are not Year 2000
compliant before the year 2000. The wide range of advanced technology available
for new ATMs provides the Company's customers with state-of-the-art electronics
features and reliability through sophisticated diagnostics and self-testing
routines. The different machine types can perform basic functions, such as
dispensing cash and displaying account information, as well as provide revenue
opportunities for advertising and selling products through the use of color
monitor graphics, receipt message printing and stamp and coupon dispensing. Many
of the Company's ATMs are modular and upgradable so the Company may adapt them
to provide additional services in response to changing technology and consumer
demand.
The consolidation of the financial services industry is increasing the
Company's opportunity to purchase sound, well tested used equipment. The
Company's field services staff then re-furbishes and tests each ATM prior to
placing it into the network. All ATM models considered for use in the Company's
network are first tested by the manufacturer and by independent testing
laboratories. The Company monitors field testing as well as live actual results
in the market place. Then, if there appears to be practical added value to the
Company, it will start its own internal testing and certification process. Upon
successful completion of this process, the Company will place the new equipment
into a limited number of sites for actual consumer use.
Processing Center. The Company operates a central processing center
located in the Company's headquarters in Mission, Kansas. The processing center
is connected to each ATM in the Company's network through dedicated, dial-up and
wireless communications circuits. The processing center is staffed 24 hours a
day, seven days a week by an experienced staff of information system
specialists. The efficient operation of the Company's processing center is
critical to the successful operation of the Company's ATM network.
At the processing center, the Company maintains a "switch" which links in
a compatible manner ATMs in the Company's network, the processing center and
similar processing or transaction authorization centers operated by card issuers
and card organizations. The switch makes possible the electronic exchange of
information necessary to conduct transactions at ATMs in the Company's network.
The switch consists of a Tandem computer system,
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telecommunications equipment, and proprietary software developed for the
operation of the Company's network.
The Tandem computer system currently used by the Company was leased by the
Company in 1997 and replaced an earlier Tandem computer system that had been in
use for a number of years. Management believes the new computer system has
sufficient capacity to meet any growth in transaction volume achieved over the
next three years and to permit the development of new services being considered
by the Company.
Although the switch translates between computers and makes routing
decisions, it does not execute the transactions. Transactions originated at ATMs
in the Company's network are routed by the switch operated in the Company's
processing center to the card organization and card issuer that processes the
account records for the particular cardholder's financial institution. In turn,
the switch relays reply information and messages from the computer center to the
originating terminal. The processing center also authorizes transactions
executed on the Company's network on behalf of card issuers that do not maintain
on-line balance information for their cardholders.
To protect against power fluctuations or short-term interruptions, the
processing center has full uninterruptable power supply systems with battery
back-up. The processing center's data back-up systems would prevent the loss of
transaction records due to power failure and permit the orderly shutdown of the
switch in an emergency. To provide continued operation in the event of a
catastrophic failure, the Company has an agreement with Sungard Recovery
Systems, Inc.
Competition
Competitive factors in the Company's business are network availability and
response time, price to both the card issuer and to its customers, ATM location
and access to other networks. The market for the transaction processing and
payment services industry and specifically ATM services is highly competitive.
The Company's principal competitors are national ATM companies that have a
dominant share of the market. These companies are based primarily in California,
Oregon, Texas, Minnesota and several east coast states. These companies have
greater sales, financial, production, distribution and marketing resources than
the Company.
The Company has identified the following categories of ATM network
operators:
Financial Institutions. Banks have been traditional deployers of ATMs at
their banking facilities. However, many banks are starting to place ATMs in
retail environments where the bank has an existing relationship with the
retailer. This may limit the availability of locations for the Company's ATMs.
Credit Card Processors. Several of the credit card processors have
diversified their business by taking advantage of existing relationships with
merchants to place ATMs at sites with those merchants.
Third Party Operators. This category includes data processing companies
that have historically provided ATM services to financial institutions, but also
includes small and regional network operators such as the Company.
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Management believes that many of the above providers deploy ATMs to
diversify their operations and that the operation of the ATM network provides a
secondary income source to a primary business.
There can be no assurance that the Company will continue to be able to
compete successfully with national ATM companies. The competitive pricing
pressures that would result from any increase in competition could adversely
affect the Company's margins and may have a material adverse effect on the
Company's financial condition and results of operations. Furthermore, the
Company believes that if the market for retail based ATMs continues to grow, the
national ATM companies will likely devote greater resources to this market
segment and further increase competition in the Company's target market.
Employees
At March 31, 1999, the Company had 25 full time employees. None of the
Company's employees is represented by a labor union or covered by a collective
bargaining agreement. The Company has not experienced work stoppages and
considers its employee relations to be good. The Company's business is highly
automated and the Company outsources specialized, repetitive functions such as
cash delivery and security. As a result, the Company's labor requirements for
operation of the network are relatively modest and are centered on monitoring
activities to ensure service quality and cash reconciliation and control.
Regulatory Matters
Federal Banking Regulation. Because the Company provides transaction
processing services to banks, the Company's procedures and operations are
indirectly subject to federal regulation by, and are monitored by, the Federal
Deposit Insurance Corporation ("FDIC"), the Office of the Comptroller of the
Currency ("Comptroller") and the Federal Reserve Bank ("Fed"). The FDIC, the
Comptroller and the Fed have adopted regulations addressing many aspects of the
Company's operations, including management, data security, computer systems and
programming controls, and electronic funds transfer procedures. The FDIC, the
Comptroller and the Fed conduct periodic examinations to ensure the Company's
compliance with these regulatory requirements. While the Company believes that
it is in material compliance with these regulations, and that it is taking
appropriate action to respond to recommendations made by regulatory authorities
as a result of their examinations, there can be no assurance that the Company
will be able to satisfactorily respond to all matters raised from time to time
by the FDIC, the Comptroller and the Fed.
Surcharge Regulation. The imposition of surcharges is not currently
subject to federal regulation but has been banned by several states in which the
Company presently has no operations. Legislation to ban surcharges has been
introduced but not enacted in many other states as a result of activities of
consumer advocacy groups which believe that surcharges are unfair to consumers.
The Company is not aware of the introduction of this type of legislation in any
of the states in which the Company does business. Nevertheless, there
can be no assurance that surcharges will not be banned in the states where the
Company operates, and such a ban would have a material adverse effect on the
Company.
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<PAGE>
Network Regulations. National and regional networks have adopted extensive
regulations that are applicable to various aspects of the Company's operations
and the operations of other ATM network operators. The Company believes that it
is in material compliance with these regulations and, if any deficiencies were
discovered, that it would be able to correct them before they had a material
adverse impact on the Company's business.
Summary of Company Operations for Fiscal Years 1988 through 1997
Background. The Company last filed a Form 10-K for its fiscal year ended
January 31, 1987 and last filed a Form 10-Q for its quarter ended April 30,
1987. The last Form 10-K disclosed that the Company's net losses (restated) for
the fiscal years ended January 31, 1985, 1986 and 1987 were $11,288,521,
$8,404,493 and $957,866, respectively. As of January 31, 1987, the Company's
negative net worth was $2,849,426. See "- Summary Unaudited Historical Financial
Information."
Fiscal Year Ended January 31, 1988. During the fiscal year ended January
31, 1988 ("fiscal 1988"), the Company was engaged in three lines of business.
Through its Electronic Processing, Inc. ("EPI") subsidiary, the Company provided
computer hardware and related equipment, software and related services to
bankruptcy and court trustees. During fiscal 1988, EPI generated revenues of
$4,353,127, or approximately 66% of total Company revenues. The Company also
installed and operated ATMs in participating financial institutions, shopping
centers, grocery stores, convenience stores and similar high traffic locations.
During fiscal 1988, total revenues from ATM interchange fees were $652,200, or
approximately 10% of total Company revenues. At fiscal year end, there were 224
ATMs in the Company's ATM network, of which 128 were installed in 7-Eleven
convenience stores. ATMs in the Company's network include Company-owned ATMs and
ATMs owned by banks and third parties. In addition, the Company provided ATM
network management services to banks and other financial institutions. Revenues
generated from this source were $1,549,907, or 24% of total company revenues.
The Company had 85 employees.
During fiscal 1988, the Company was unable to pay certain of its current
expenses, and certain of its current or long-term liabilities as they matured.
In response, management eliminated all expenses which were not absolutely
essential to the survival of the Company. Because the Company did not have
audited financial statements, and because of its extremely limited financial
resources, the Company did not complete or file any Forms 10-Q after the quarter
ended April 30, 1987 or a Form 10-K for the year ended January 31, 1988.
During fiscal 1988, the Company eliminated substantially all legal,
accounting and other professional expenses. In addition to ceasing filing
information and reports with the SEC, the Company ceased holding annual meetings
of shareholders and distributing annual reports to shareholders. Management
focused its efforts solely on preserving the Company's business and customers,
conserving its limited cash flow, maintaining its open account arrangements with
suppliers, and negotiating significantly reduced payments of its existing
current and long-term liabilities.
During fiscal 1988, total revenues decreased to $6,555,234 from $6,727,810
for the prior year. The Company had a net loss of $1,087,213 and its negative
net worth increased to $3,535,145. At January 31, 1988, the Company had a
working capital deficit of $8,491,526.
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<PAGE>
Fiscal Year Ended January 31, 1989. During the fiscal year ended January
31, 1989 ("fiscal 1989"), the Company continued to be unable to pay certain of
its current expenses, and certain of its current or long-term liabilities as
they matured. The Company's obligations to NCR Corporation, a supplier of ATMs,
were secured by a pledge of the Company's stock in EPI. After extensive
negotiations, the Company sold EPI and used the proceeds to pay NCR. This
disposition significantly reduced the Company's ongoing revenues, but also
significantly reduced the Company's indebtedness. During fiscal 1989, revenues
from EPI were $1,960,332 or 46% of total Company revenues, down from $4,353,127
in the prior year. Interchange revenues were $1,017,693 or 24% of total Company
revenues. At fiscal year end, there were approximately 216 ATMs in the Company's
ATM network, of which 130 were installed in 7-Eleven stores. Revenues generated
from providing ATM network services to banks and third parties were $1,279,994,
or 30% of total revenues. At year end, the Company had approximately 35
employees, down from 85 in the prior year, reflecting the disposition of EPI.
Total revenues for fiscal 1989 declined to $4,258,019 from $6,555,234 for the
prior year. The Company's net loss increased to $1,114,667, and the Company's
negative net worth increased to $4,649,812. At January 31, 1989, the Company had
a working capital deficit of $5,993,427.
Fiscal Year Ended January 31, 1990. During the fiscal year ended January
31, 1990 ("fiscal 1990"), the Company continued to be unable to pay certain of
its current expenses, and certain of its current or long-term liabilities as
they matured. The Company lost its line of credit with Mission
Hills Bank, which had provided vault cash for the Company's ATM machines in the
Kansas City area. The Company was unable to locate an unrelated lender that
would loan the funds necessary to provide vault cash. In response, in August,
1989, David S. Bonsal, John S. Settles and William Smithson formed Universal
Funding Corporation ("Funding"). Mr. Bonsal was and remains the Chairman and
Chief Executive Officer of the Company and Mr. Settles was the President of the
Company from April, 1989 through October, 1990, and now has no position with the
Company. Under a Management Agreement between Funding and the Company, Funding
agreed to purchase certain ATMs from the Company, to supply the vault cash
necessary to continue the operation of the Company's ATM machines in the Kansas
City area and to provide certain services to the Company in connection with the
Company's ATM network. In exchange, Funding received all interchange fees
generated by the ATMs for which it provided vault cash. The Company agreed to
perform certain services for Funding and received in exchange for such services
management fees equal in amount to the "net income" of Funding, which consisted
of the interchange fees received by Funding less certain expenses and a monthly
payment to its shareholders as a return on their equity investment in Funding.
See Item 12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -Universal Funding
Corporation."
In February, 1989, in order to raise needed cash, the Company sold
2,300,000 shares of Common Stock of the Company at $0.08 per share, generating
cash proceeds of $184,000. The shares sold in the offering included 18,750
shares sold to Jeffrey M. Sperry, a director of the Company.
During fiscal 1990, the Company's total revenues declined to $2,155,752,
from $4,258,019 for the previous year, reflecting the full year's loss of EPI
revenues. Revenues generated from interchange fees were $1,016,609. At fiscal
year end, there were approximately 221 ATMs in the Company's ATM network, of
which 134 were installed in 7-Eleven stores. Management fees received from
Funding under the Management Agreement were $51,989. Revenues earned from
providing network management services to banks and third parties were
12
<PAGE>
$1,087,154. The Company had net income of $449,246 for fiscal year 1990. This
net income included income from debt relief of approximately $189,000 and income
of approximately $819,000 resulting from several accounting adjustments,
including a reduction in accrued liabilities of approximately $217,000 and a
reduction in the inventory allowance of approximately $602,000, which income was
partially offset by a write-down of accounts receivable in the amount of
approximately $202,000. The Company's negative net worth decreased to $4,007,025
in fiscal 1990. At January 31, 1990, the Company had a working capital deficit
of $5,285,437.
During fiscal 1990, an Internal Revenue Service ("IRS") examination of the
Company concluded that the Company owed a substantial unrecorded amount in
federal income taxes, interest and penalties arising from the improper use of
net operating loss carrybacks in the taxable years ended from 1979 through 1983.
The Company's actions in those years had been based upon tax advice provided by
the Company's tax return preparer concerning the use of net operating loss
carrybacks. This advice was later determined to be incorrect.
Fiscal Year Ended January 31, 1991. During the fiscal year ended January
31, 1991 ("fiscal 1991"), the Company continued to be unable to pay certain of
its current expenses, and certain of its current long-term liabilities as they
matured. Management continued to avoid incurring expenses that were not
absolutely essential to the survival of the Company. In May, 1990, the Company
reduced its leased office and warehouse space by approximately 50%. Total
revenues for fiscal 1991 were $2,082,114. Interchange revenues dropped to
$874,533, in part as a result of the Management Agreement entered into in fiscal
1990 between the Company and Funding, pursuant to which the Company assigned the
right to receive certain interchange fees to Funding. Revenues received from
Funding for the first full year under the Management Agreement were $134,646.
Revenues earned from providing network services to banks and third parties were
$1,072,935. At fiscal year end, there were 235 ATMs in the Company's ATM net-
work, including 137 installed in 7-Eleven stores. The Company had a net loss for
fiscal 1991 of $134,924 (which included income from debt relief of approximately
$169,000). The Company had a negative net worth at January 31, 1991 of
$4,132,199. The Company had a working capital deficit of $5,182,034 at January
31, 1991.
Fiscal Year Ended January 31, 1992. During the fiscal year ended January
31, 1992 ("fiscal 1992"), the Company continued to operate its ATM network. At
fiscal year end, there were 226 ATMs in the Company's ATM network, including 121
in 7-Eleven stores. The Company's financial position continued to be tenuous.
The Company had no ability to pay its accumulated liabilities. Management met
with several of the Company's creditors and reviewed the inability of the
Company to pay these debts. As a result of the creditors' analysis of the
Company's operations, the Company was able to settle liabilities and legal
judgments at a substantial discount. However, the Company continued to be unable
to reach a settlement with its largest creditors, The Merchants Bank and the
IRS.
The Company wrote down the value of its ATMs by $782,754 to reflect their
then fair market value. The Company's total revenues declined to $1,986,567,
consisting of $910,426 in interchange revenues, revenues of $160,693 from
Funding under the Management Agreement, and $915,448 in revenues for providing
network services to banks and third parties. The Company's net loss for fiscal
1992 was $645,016 (which included the write-down of the value of the ATMs
described above and income from debt relief of approximately $197,000). At
January 31, 1992, the Company's negative net worth was $4,777,215. The Company
had a working capital deficit of $5,034,434 at January 31, 1992.
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<PAGE>
Fiscal Year Ended January 31, 1993. During the fiscal year ended January
31, 1993 ("fiscal 1993"), the Company continued to operate its ATM network.
However, the Company lost the contract to operate ATMs in 7-Eleven convenience
stores in Oklahoma. In addition, a number of 7-Eleven stores in St. Louis and
Kansas City were closed. The Company was able to offset a portion of these
losses by other installations of ATMs. At year end, there were 204 ATMs in the
Company's ATM network, including 80 in 7-Eleven stores. The Company's largest
customer and creditor, The Merchants Bank, was taken over by the Federal Deposit
Insurance Corporation ("FDIC"). Subsequently, Boatmen's Bank purchased The
Merchants Bank's assets from the FDIC and canceled the Company's services one
year later.
The Company completed an offer in compromise with the IRS by a payment of
$110,000 in November, 1992. Under the terms of the settlement, the Company
reduced its net operating loss carryforwards to $5,000,000. David S. Bonsal,
Chairman and Chief Executive Officer of the Company, loaned the Company $50,000
in order to make that offer in compromise. See Item 12, "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS - Loans from Management to the Company". The Company
did not have sufficient funds to complete the offer in compromise without the
loan.
During fiscal 1993, the Company's total revenues were $1,923,733. The
revenues from interchange fees were $946,587. Revenues from Funding under the
Management Agreement were $178,977 and revenues from banks for network
management services were $798,169. The Company had net income for fiscal 1993 of
$752,799 (which included income from a reduction in accrued liabilities to the
IRS of approximately $858,000 that was partially offset by an increase in income
tax expense related to the completion of the offer in compromise with the IRS of
$110,000). The Company's negative net worth at January 31, 1993 was $4,024,416.
At January 31, 1993, the Company had a working capital deficit of $4,248,589.
Fiscal Year Ended January 31, 1994. During the fiscal year ended January
31, 1994 ("fiscal 1994"), the Company lost its then largest customer, Southland
Corporation, which operated 7-Eleven convenience stores. The Company removed 76
ATMs from 7-Eleven stores. The Company also lost its line of credit with
Boatmen's Bank, which provided vault cash for the Company's ATMs in St. Louis.
The Company was unable to find an unrelated lender to loan it the required vault
cash. Funding agreed to provide vault cash for the additional ATMs. See Item 12,
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Universal Funding
Corporation." To conserve cash, beginning in October of 1993, David S. Bonsal,
Chairman and Chief Executive Officer of the Company, deferred portions of his
salary as necessary in order for the Company to pay its other current expenses
and liabilities. The last deferral was made in October, 1995, and the total
amount of the deferrals was approximately $140,000. During fiscal 1994, the
Company reached an agreement to operate ATMs in Diamond Shamrock convenience
stores located in El Paso, Texas. At fiscal year-end, there were 165 ATMs in
operation in the Company's ATM network, down from 204 at the end of the prior
fiscal year. For fiscal 1994, the Company had total revenues of $1,592,305.
Interchange revenues dropped from the previous year to $756,304. Revenues from
Funding under the Management Agreement increased to $237,802. Interchange
revenues dropped and revenues from Funding increased in part because Funding
supplied vault cash to a greater number of the Company's ATMs under the
Management Agreement. As a result, Funding was entitled to the interchange fees
from a greater number of ATMs, which in turn increased the amount of the
management fee payable to the Company under the Management Agreement. See Item
12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Universal Funding
Corporation." Revenues from providing network services to banks and third
parties dropped to $598,199, continuing a trend of
14
<PAGE>
fewer bank clients due to mergers and acquisitions precipitated by the passage
of federal interstate banking laws. The Company had a net loss of $27,621 in
fiscal 1994 (which included income resulting from a reduction in accrued
liabilities of approximately $128,000, income from debt relief of approximately
$84,000, and a refund of utilities overcharges of approximately $43,500). The
Company's negative net worth at January 31, 1994 was $4,052,037. At January 31,
1994, the Company had a working capital deficit of $4,268,090.
Fiscal Year Ended January 31, 1995. During the fiscal year ended January
31, 1995 ("fiscal 1995"), the Company was able to settle its existing liability
to the FDIC (formerly held by The Merchants Bank) for $40,000, a discount of
$4,077,237 from the total amount due. This amount was recorded as an
extraordinary income item on the Company's financial statements. The payment
depleted the Company's cash, and the Company sold 1,000,000 shares of Common
Stock of the Company to David S. Bonsal, Chairman and Chief Executive Officer of
the Company, for $10,000 in order to meet payroll.
The number of ATMs in the Company's ATM network at fiscal year end
increased to 207 ATMs, but the Company's total revenues declined again from the
previous year to $1,329,746. Interchange revenues dropped to $477,476. Revenues
from Funding under the Management Agreement increased to $395,971, and revenues
from providing network services to banks declined to $456,299. The Company's
loss before extraordinary items was $374,697. The Company's net income (after
extraordinary income from debt relief of $4,077,237) was $3,702,540. This income
reduced the Company's negative net worth to $335,497. The settlement with the
FDIC also reduced the Company's working capital deficit. At January 31, 1995,
the Company had a working capital deficit of $416,368.
Fiscal Year Ended January 31, 1996. During the fiscal year ended January
31, 1996 ("fiscal 1996"), the Board of Directors of the Company approved an
offering of 10,000,000 shares of Common Stock of the Company for $.01 per share
in order to raise working capital and improve the Company's financial condition.
The Company made a commitment to the Office of the Comptroller of the Currency
in January 1995 to raise additional capital to address the Comptroller's
concerns about the Company's weak financial condition. The Board of Directors
approved the offering in May 1995 and the offering was fully subscribed by
September 1995. The sale of the shares was completed in April 1996. David S.
Bonsal, Chairman and Chief Executive Officer of the Company, acquired 8,600,000
shares in the offering. See Item 12, "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS - Certain Sales and Transfers of Common Stock." In fiscal 1996, the
Company achieved its first increase in total revenues in ten years. The
Company's financial performance improved, despite consolidation within the
banking industry that significantly increased the competition within the
Company's industry. The Company's inability, due to its financial circumstances,
to replace and upgrade its older ATM machines with newer machines that could
provide additional services caused the Company to continue to lose individual
ATM locations and limited the Company's ability to secure new locations. Despite
these problems, the Company was able to increase the number of ATMs in the
Company's ATM network to 231 ATMs at fiscal year-end, compared to 207 at the end
of the prior fiscal year. For fiscal 1996, the Company's revenues increased to
$1,772,447. Interchange fees increased 48% from the previous year to $709,604,
reflecting higher transaction volumes on the Company's ATM network. Revenues
received from Funding under the Management Agreement increased to $574,021 and
revenues from providing network services to banks increased to $488,822.
The Company had net income of $157,692 and reduced its negative net worth to
$161,805. At January 31, 1996, the Company had a working capital deficit of
$278,716.
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<PAGE>
Fiscal Year Ended January 31, 1997. During the fiscal year ended January
31, 1997 ("fiscal 1997"), the Company began imposing surcharge fees, which had a
material impact on the Company's revenues and earnings. In addition, as a direct
result of having paid and discharged substantially all of its previous
accumulated liabilities, the Company was able to acquire new ATM machines with
new features which increased its ability to compete. In order to preserve the
Company's relationship with an operator of combination convenience stores and
gas stations, the Company acquired 44 new NCR 5670 ATM machines under an
equipment lease that David S. Bonsal, Chairman and Chief Executive Officer of
the Company, personally guaranteed.
During fiscal 1997, the day-to-day financial pressure on the Company
abated somewhat. However, many of the Company's ATMs continued to be relatively
old and obsolete by industry standards and lacked some of the features available
from the Company's competitors. Nevertheless, the Company was able to increase
the number of ATMs in the Company's ATM network to 278 ATMs at fiscal year-end,
compared to 231 at the end of the prior fiscal year. The Company continued to
have very limited resources to face a consolidating and increasingly competitive
industry. For fiscal 1997, the Company's revenues increased to $2,600,725. The
increase in revenues was principally due to new revenues derived from charging
surcharge fees. Revenues from surcharge fees were $846,012 in fiscal 1997.
Interchange fees increased to $728,791. Revenues received from Funding under the
Management Agreement increased to $664,755 and revenues from providing network
services to banks and third parties declined to $361,167. The Company had
net income of $294,168. For the first time in over ten years, the Company had a
positive net worth of $215,113. At January 31, 1997, the Company had a working
capital deficit of $478,867. See Item 6, "Management's Discussion and Analysis
OR PLAN OF OPERATION - Comparison of Results of Operations for the Fiscal Years
Ended January 31, 1997 and 1998" and Item 7, "FINANCIAL STATEMENTS."
16
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Summary Unaudited Historical Financial Information
The following summary unaudited historical financial information is based
on the unaudited historical financial statements of the Company for its fiscal
years ended January 31, 1988 through January 31, 1996.
<TABLE>
<CAPTION>
Years ended January 31, 1988 1989 1990 1991 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 6,555,234 $ 4,258,019 $ 2,155,752 $ 2,082,114 $ 1,986,567
Operating income (loss) (98,709) (450,873) (58,441) 6,860 157,459
Net income (loss) (1,087,213) (1,114,667) 449,246 (134,924) (645,016)
Net income (loss) per share (0.05) (0.05) 0.02 (0.00) (0.02)
Cash & cash equivalents 925,868 515,625 148,381 287,223 234,087
Working capital (deficit) (8,491,526) (5,993,427) (5,285,437) (5,182,034) (5,034,434)
Total assets 7,574,220 2,401,834 2,050,339 1,704,058 619,331
Total debt 8,727,308 4,874,632 3,487,583 3,216,209 3,230,416
Stockholders' equity (3,535,145) (4,649,812) (4,007,025) (4,132,199) (4,777,215)
(deficit)
Years ended January 31, 1993 1994 1995 1996
------------- ------------- ------------- -------------
Revenues $ 1,923,733 $ 1,592,305 $ 1,329,746 $ 1,772,447
Operating income (loss) 211,292 (61,115) (249,018) 161,554
Net income (loss) 752,799 (27,621) 3,702,540 157,692
Net income (loss) per share 0.03 (0.00) 0.13 0.01
Cash & cash equivalents 354,081 (9,255) (15,261) 46,184
Working capital (deficit) (4,248,589) (4,268,090) (416,368) (278,716)
Total assets 658,690 290,047 147,138 341,480
Total debt 3,258,492 2,839,529 55,249 101,958
Stockholders' equity (4,024,416) (4,052,037) (335,497) (161,805)
(deficit)
</TABLE>
17
<PAGE>
Item 2. DESCRIPTION OF PROPERTIES
As of January 31, 1998 and the date of this Form 10-KSB, the Company's
principal executive offices and its central transaction processing center are
located in 11,138 square feet of leased space located at 6800 Squibb Road,
Shawnee Mission, Kansas. The telephone number for the executive offices is
913-831-2055. The Company leases the facility at rates the Company believes were
consistent with market rates at the time the facility was leased under a lease
that expires in 2001. The Company believes that the facility is adequate for its
needs for the foreseeable future.
The principal properties owned or leased by the Company are the component
assets of its ATM network, including ATMs, the Tandem computer and
telecommunication equipment. The Company believes its existing properties are
adequate to meet its anticipated needs for the foreseeable future and are in
generally good condition. Certain of the Company's ATMs that are not currently
Year 2000 compliant are expected to be upgraded, replaced or phased out before
the year 2000. See Item 6, "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION - Year 2000 Compliance."
Item 3. LEGAL PROCEEDINGS
As of January 31, 1998 and the date of this Form 10-KSB, the Company is
not a party to any material pending legal proceeding. The Company is a party to
routine litigation in the ordinary course of business from time to time.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of stockholders in the fourth
quarter of fiscal year 1998.
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information and Related Stockholder Matters
There is currently no public trading market for the Company's Common
Stock. The Common Stock was delisted by Nasdaq in August 1986 and by the Boston
Stock Exchange in the early 1990's. Management believes that quotes are
sometimes available from brokers in the over-the-counter market but that such
quotes generally have not been available since the stock was delisted.
It is not known whether a public trading market will develop for the
Common Stock now that the Company has recommenced filing periodic reports with
the SEC.
On January 31, 1998, there were 1,420 record holders of the Company's
Common Stock.
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<PAGE>
The Company has never paid any cash dividends on its Common Stock and does
not anticipate that it will pay dividends in the foreseeable future. The Company
intends to retain future earnings, if any, to provide funds for the growth and
development of the Company's business.
Recent Sales of Unregistered Securities
Since the end of fiscal 1987, the Company has issued 17,201,897 shares of
Common Stock in the following transactions that were not registered under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has no
information as to whether the transactions prior to November 1987 qualified for
an exemption from registration under the Securities Act. The Company believes
that the remaining transactions were exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act, based upon the
manner of each offering, the limited number of offerees in each offering, the
level of sophistication of each offeree and the information made available to
each offeree concerning the Company's business.
o Prior to November 1987, the Company issued 157,573 shares of Common
Stock in private transactions. The Company's records do not reflect
the circumstances of the issuance of these shares.
o The Company sold 1,975,362 shares of Common Stock for $.1875 per
share in November 1987 in order to raise cash for current
operations. Of this amount, 724,932 shares were sold to William
Smithson, who became a one-third owner of Funding upon its formation
in 1989.
o The Company sold 2,300,000 shares of Common Stock for $.08 per share
in 1989 in order to raise cash for current operations. Of this
amount, 18,750 shares were sold to Jeffrey M. Sperry, a director
of the Company.
o The Company issued 95,323 shares to Mr. Smithson, a one-third owner
of Funding, in 1989 in exchange for Mr. Smithson's agreement to
pledge a certificate of deposit as collateral for the Company's
outstanding debt. The Company also sold 23,639 shares of Common
Stock to Mr. Smithson in 1989 for $.08 per share.
o In 1990, in order to conserve cash, the Company issued the following
shares of Common Stock to the following directors and executive
officers of the Company at an assumed value of $.01 per share in
lieu of compensation for their services: 625,000 shares to John L.
Settles, President of the Company from April 1989 through late 1990;
150,000 shares to Dave A. Windhorst, then a Senior Vice President of
the Company and now President of the Company; 100,000 shares to
Jeffrey M. Sperry, a director of the Company; and 100,000 shares to
Arthur M. Moglowsky, a director of the Company.
o The Company issued 400,000 shares at an assumed value of $.01 per
share to a former employee in June 1994 in lieu of compensation. In
June 1996, these shares were repurchased for $.01 per share by the
Company as treasury stock as part of a negotiated settlement with
the former employee.
o The Company sold 1,000,000 shares of Common Stock of the Company to
David S. Bonsal, Chairman and Chief Executive Officer of the
Company, in December 1994 for $.01 per share in order to raise cash
to meet payroll.
o The Company sold 10,000,000 shares of Common Stock for $.01 per
share in 1995 and 1996. The offering was approved in May 1995, was
fully subscribed in September 1995 and was completed in April 1996.
The purposes of the offering were to raise working capital and to
improve the Company's financial condition. David S. Bonsal, Chairman
and Chief Executive Officer of the Company, acquired 8,600,000
shares of Common Stock in the offering.
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o In 1995 and 1996, in order to conserve cash, the Company issued the
following shares of Common Stock to the following persons then
serving as directors of the Company, at an assumed value of $.01 per
share, in lieu of compensation for their services: 100,000 shares in
1995 and 25,000 shares in 1996, to Jeffrey M. Sperry; 100,000 shares
in 1995 and 25,000 shares in 1996 to Arthur M. Moglowsky; and 25,000
shares in 1996 to Stephan Gorman.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
The Company operates a regional network of automated teller machines
("ATMs"). The ATMs provide holders of debit and credit cards access to cash,
account information and other services at convenient locations and times. The
network consists of approximately 256 ATMs owned by the Company and its
affiliate, Funding, 54 ATMs owned by banks and 6 ATMs owned by third party
merchants. ATMs in the Company's network are principally installed in
convenience stores and banks with locations concentrated in the Kansas City and
St. Louis, Missouri and El Paso, Texas metropolitan areas, and the state of
Kansas. The Company also provides ATM network management services to banks and
third parties owning ATMs in the Company's ATM network.
The Company's revenues are principally derived from two types of fees,
which the Company charges for processing transactions on its ATM network. The
Company receives an interchange fee from the issuer of the credit or debit card
for processing a transaction when a cardholder uses an ATM in the Company's
network. In addition, in most cases the Company receives a surcharge fee from
the cardholder when the cardholder makes a cash withdrawal from an ATM in the
Company's network.
Interchange fees are processing fees that are paid by the issuer of the
credit or debit card used in a transaction. Interchange fees vary for cash
withdrawals, balance inquiries, account transfers or uncompleted transactions,
the primary types of transactions that are currently processed on ATMs in the
Company's network. The maximum amount of the interchange fees is established by
the national and regional card organizations and credit card issuers with which
the Company has a relationship. The Company (or its affiliate, Funding) receives
the full interchange fee for transactions on Company owned ATMs, but sometimes
rebates a portion of the fees to the owner of the ATM location under the
applicable lease for the ATM site. The Company also receives the full
interchange fees for transactions on ATMs owned by banks or third party vendors
included within the Company's network, but rebates a portion of each fee to the
bank or third party vendor based upon negotiations between the parties. The
interchange fees received by the Company vary from network to network and to
some extent from issuer to issuer, but generally range from $0.35 to $0.75 per
cash withdrawal. Interchange fees for balance inquiries, account transfers and
denied transactions are generally substantially less than fees for cash
withdrawals. The interchange fees received by the Company from the card issuer
are independent of the service fees charged by the card issuer to the cardholder
in connection with ATM transactions. Service fees charged by card issuers to
cardholders in connection with transactions through the Company's network range
from zero to as much as $2.50 per transaction. The Company does not receive any
portion of the service fees charged by the card issuer to the cardholder.
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In most markets the Company imposes a surcharge fee for cash withdrawals.
The Company expanded its practice of imposing surcharge fees in April 1996 when
national debt and credit card organizations changed rules applicable to their
members to permit these fees. Subsequently, surcharge fees have been a
substantial additional source of revenue for the Company and other ATM network
operators. The surcharge fee for ATMs in the Company's network owned by or
located in banks ranges between $0.50 and $1.50 per withdrawal. The surcharge
fee for other ATMs in the Company's network ranges between $0.50 and $2.50 per
withdrawal. The Company receives the full surcharge fee for transactions on
Company owned ATMs, but sometimes rebates a portion of the fees to the owner of
the ATM location under the applicable lease for the ATM site. The Company also
receives the full surcharge fee for transactions on ATMs owned by banks and
third party vendors included within the Company's network, but rebates a portion
of each fee to the bank or third party vendor based upon a variety of factors,
including transaction volume and the party responsible for supplying vault cash
to the ATM.
In addition to revenues derived from interchange and surcharge fees, the
Company also derives revenues from providing network management services to
banks and third parties owning ATMs included in the Company's ATM network. These
services include 24 hour transaction processing, monitoring and notification of
ATM status and cash condition, notification of ATM service interruptions, in
some cases, dispatch of field service personnel for necessary service calls and
cash settlement and reporting services. The fees for these services are paid by
the owners of the ATMs.
Interchange fees are credited to the Company by networks and credit card
issuers on a periodic basis which is generally either daily or monthly depending
upon the party. Surcharge fees are charged to the cardholder and credited to the
Company by networks and credit card issuers on a daily basis. The Company
periodically rebates the portion of these fees owed to ATM owners and owners of
ATM locations. Fees for network management services are generally paid to the
Company on a monthly basis.
Comparison of Results of Operations for the Fiscal Years Ended January 31, 1997
and 1998.
Revenues. The Company's total revenues increased to $3,822,156 for the
fiscal year ended January 31, 1998 ("fiscal 1998") from $2,600,725 for the
fiscal year ended January 31, 1997 ("fiscal 1997"). This increase is primarily
attributable to an increase in the number of ATMs in the Company's network on
which the Company imposed surcharge fees for cash withdrawals to 284 in fiscal
1998 from 153 in fiscal 1997. Surcharge fees increased to $1,967,594 or 51% of
total revenues in fiscal 1998 from $846,012 or 33% of total revenues in fiscal
1997. The increase is also partially due to an increase in the number of ATMs in
the Company's network to 316 in fiscal 1998 from 278 in fiscal 1997. The
increase in the number of ATMs resulted in an increase in the number of
transactions processed on ATMs in the Company's network. Revenues derived from
interchange fees increased to $768,504 in fiscal 1998 from $728,791 in fiscal
1997. Revenues received from Funding under the Management Agreement between the
Company and Funding increased to $726,389 in fiscal 1998 from $664,755 in fiscal
1997. See the discussion below under "Revenues from Funding." The Company's
revenues from network services provided to banks and third parties declined
slightly to $359,669 in fiscal 1998 from $361,167 in fiscal 1997.
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Revenues from Funding. The Company derives management fees from its
affiliate, Funding, pursuant to a Management Agreement between the Company and
Funding. Under the Management Agreement, Funding receives all interchange fees
for transactions processed on ATMs owned by the Company or Funding for which
Funding provides vault cash. At January 31, 1998 and 1997, Funding had vault
cash located in approximately 209 and 197 ATMs, respectively, owned by Funding
or the Company. In exchange for services provided to Funding, the Company
receives a management fee equal to Funding's "net income." Funding's "net
income" is defined in the Management Agreement as revenues from interchange
fees, less armored security charges, interest expense on funds borrowed to
provide vault cash, ATM location expenses, debt service related to the purchase
of the ATMs, taxes or insurance on ATMs, and a monthly payment to each of
Funding's shareholders representing a return on their equity investment in
Funding. The revenues received by the Company from Funding under the Management
Agreement were $726,389 in fiscal 1998, equal to Funding's "net income" under
the Management Agreement for the same period. Funding's "net income" of $726,389
consisted of $1,328,530 in revenues from interchange fees earned by Funding,
less Funding's expenses in the amount of $577,247 and Funding's return on equity
payment to shareholders of Funding in the amount of $24,894. Pursuant to the
Management Agreement, Funding's expenses for purposes of computing its "net
income" did not include Funding's depreciation, amortization and bad debt
expenses, which were $4,702 for the respective period. The revenues received by
the Company from Funding under the Management Agreement were $664,755 in fiscal
1997. Funding's "net income" of $664,755 under the Management Agreement
consisted of $1,283,375 in revenues from interchange fees earned by Funding,
less Funding's expenses in the amount of $593,726 and Funding's return on equity
payment to shareholders of Funding in the amount of $24,894. Not included in the
computation of "net income" for this period were depreciation and amortization
expenses of $3,068 and miscellaneous income of $185. See Item 12, "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS - Universal Funding Corporation."
Cost of Revenues. The Company's total cost of revenues increased to
$2,354,751 in fiscal 1998 from $1,384,769 in fiscal 1997. The principal
components of cost of revenues are salaries, telecommunication services and
transaction processing charges, interchange and surcharge rebates, ATM site
rentals, maintenance and repairs, and depreciation and amortization. This
increase is principally due to an increase in interchange and surcharge rebates
paid to third party owners of ATMs included in the Company's ATM network and to
ATM site owners. These rebates increased to $952,070 in fiscal 1998 from
$478,753 in fiscal 1997. Rebates generally increase approximately in proportion
to increases in total revenues from interchange and surcharge fees. The increase
is also attributable to increased depreciation associated with the larger number
of ATMs owned by the Company, and increased telecommunications expenses
associated with the larger number of ATMs in the Company's network.
Gross Margin. Gross profit as a percentage of revenues was 38.4% in fiscal
1998 and 46.8% in fiscal 1997. The decrease in fiscal 1998 was caused by a
number of factors, including increased interchange and surcharge rebates,
increased depreciation expense resulting from the purchase of new ATMs,
increased personnel expense and telecommunications charges resulting from growth
in the ATM network and costs associated with the lease of the Tandem computer
system in fiscal 1998.
Operating Expenses. The Company's total operating expenses increased to
$1,070,976 in fiscal 1998 from $912,387 in fiscal 1997. The principal components
of operating expenses are administrative salaries and benefits, occupancy costs,
sales and marketing expenses and
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administrative expenses. This increase is principally attributable to salary
increases and other personnel expenses.
Other Income (Expense). The Company extends short-term loans to Funding,
which uses the proceeds as vault cash in the ATMs owned by the Company and
Funding. These loans generally have a term of one month and bear interest at 12%
per annum. Interest income primarily represents the interest paid by Funding to
the Company on the outstanding balance of these loans. Interest income increased
to $22,016 in fiscal 1998 from $19,093 in fiscal 1997 as a result of higher
average outstanding balances.
Interest Expense. Interest expense increased $40,485 to $69,021 in fiscal
1998 from $28,536 in fiscal 1997. This increase was attributable to increased
capital lease obligations and notes payable related to the acquisition of
additional ATMs.
Net Income before Taxes. The Company's net income before taxes increased
to $349,424 during the fiscal year ended January 31, 1998 from $294,168 during
the year ended January 31, 1997 as a result of the factors discussed above.
Income Taxes. The Company paid no income taxes in 1998 and 1997, utilizing
operating loss carryforwards to reduce taxable income to zero. In addition, the
Company has recorded a deferred tax credit of $315,000 at January 31, 1998,
which is primarily a result of operating loss carryforwards which management
believes are more likely than not to be realized prior to their expiration
between 2005 and 2012. Realization is dependent on generating sufficient future
taxable income to absorb the carryforwards. The amount of the deferred tax
credit considered realizable could be increased or reduced in the near term if
estimates of future taxable income during the carryforward period change. As of
January 31, 1998, the Company had approximately $195,000 of tax credits
available to offset future federal income taxes. These credits expire between
1999 and 2002. The Company also has unused operating loss carryforwards of
approximately $1,600,000, which expire between 2005 and 2012.
Liquidity and Capital Resources
At January 31, 1998, the Company had a working capital deficit of
$285,736, compared to a working capital deficit of $478,867 at January 31, 1997.
The ratio of current assets to current liabilities improved to .62 at January
31, 1998 from .47 at January 31, 1997. The decrease in the working capital
deficit and increase in the ratio of current assets to current liabilities was
due mainly to lower current payment obligations under long-term debt and capital
leases at January 31, 1998.
The Company has funded its operations and capital expenditures from cash
flow generated by operations, capital leases and borrowings from lenders. Net
cash provided by operating activities was $726,075 and $456,349 in fiscal 1998
and fiscal 1997, respectively. Net cash provided by operating activities in
fiscal 1998 consisted primarily of net income of $664,424, depreciation of
$287,997, and an increase of $83,392 in accounts payable and accrued expenses
offset by deferred income taxes of $315,000. The cash provided by operating
activities in fiscal 1998 and fiscal 1997 allowed the Company to purchase plant
and equipment (principally ATMs) totaling $500,945 and $451,167 in fiscal 1998
and fiscal 1997, respectively. The Company also utilized cash provided by
operating activities in fiscal 1998 to make principal payments on long-term debt
and capital lease obligations due in fiscal 1998. The Company had
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cash and cash equivalents of $374,675 at January 31, 1998, compared to cash and
cash equivalents of $325,646 at January 31, 1997.
The Company leases 42 of its ATMs under capital lease agreements that
expire between 2000 and 2001 and provide for lease payments based upon an
interest rate of 10.5% per annum. See Note 5 to the Consolidated Financial
Statements.
Management believes that the anticipated cash flow from operations will
provide the capital resources necessary to meet the Company's current working
capital needs and existing capital expenditure obligations. The Company expects
that its capital expenditures will increase in the future to the extent that the
Company is able to pursue its strategy of expanding its network and increasing
the number of installed ATMs. These increased expenditures are expected to be
funded from cash flow from operations, capital leases and additional borrowings,
to the extent financing is available. There can be no assurance that the Company
will be able to obtain financing under a credit facility on terms that are
acceptable to the Company or at all. The Company's expansion plans will be
limited if the Company is unsuccessful in obtaining a credit facility or other
financing.
Impact of Inflation and Changing Prices
While subject to inflation, the Company was not impacted by inflation
during the past two fiscal years in any material respect.
Year 2000 Compliance
General Discussion. The Year 2000 issue is the result of computer code
being written using two digits to represent years rather than four digits, which
include the century designation. Without corrective action, it is possible that
computer programs could recognize a date using "00" as the year 1900 rather than
the year 2000. Additionally, certain equipment may contain embedded chips that
include date functions that may be affected by the transition to the Year 2000.
In some systems, Year 2000 problems could result in a system failure or
miscalculations causing disruptions of operations and an inability to process
transactions.
As the operator of an ATM network, the Company relies upon computers and
related telecommunications equipment for the operation of its business. The
Company acts as an intermediary for the transfer of data between its clients and
third parties, and in doing so supplies the operating and technical resources
necessary to cause electronic data to be transmitted. The Company also owns and
operates ATMs, which utilize computer hardware and software to operate.
The Company has initiated a Year 2000 Project ("Project2000") to locate
and address possible Year 2000 problems. The Company has assigned a project
coordinator for Project2000 who generally manages Project2000, ensures that
Project2000 meets or exceeds requirements set forth by banking regulatory
agencies including the Federal Deposit Insurance Corporation, the Federal
Reserve Bank, and the Office of the Comptroller of the Currency, and assists in
identifying points of concern and providing solutions.
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Status of Year 2000 Readiness. The Company's Project2000 consists of the
following five phases: awareness, assessment, corrective action, validation and
implementation.
The awareness phase consists of defining the scope of the Year 2000
problem and establishing a corporate infrastructure and overall strategy to
perform compliance work. In the assessment phase, the Company attempts to
identify all hardware, software, networks, ATMs, other various processing
platforms and customer and vendor interdependencies affected by the Year 2000
problem. This assessment goes beyond information systems and includes equipment
and support systems that may be dependent on embedded microchips. The corrective
action phase involves code enhancements, hardware and software upgrades, system
replacements, vendor certification and other associated changes. The validation
phase involves the testing of incremental changes to hardware and software
components. In the implementation phase, systems are to be certified as Year
2000 compliant. For any systems that are not determined to be compliant, the
consequences must be assessed, and corrective actions or contingency plans put
into effect.
Awareness Phase. The Company's Project2000 encompasses an overall
strategy to address Year 2000 problems. The Company's Project2000 focuses
chiefly upon the in-house, real-time, on-line systems, but also includes
assessing and assuring year 2000 compliance from third parties. Because of the
seriousness of the year 2000 issues, the Company appointed a Project2000
Coordinator and established a Project2000 team consisting of the Coordinator,
all officers of the Company and the Accounting Manager.
To determine the size of the compliance project relating to internal
systems, the Company searched all of its production computer programs for
references to, and actions taken by reference to, the date (year in particular),
and compiled a list of those programs for evaluation for Project2000 issues. The
Company searched for date references that related to performing calculations or
that provided application program logic affecting the decision path of the
application, and date-driven calculations using "00" as an operand.
The Company also identified all third parties whose ability to
comply with Year 2000 problems might affect the Company's operations, which
include product and service vendors and suppliers, including card issuers and
other real-time connections, and clients.
The Company has completed the awareness phase.
Assessment Phase. The assessment phase involves three components:
(1) determining Year 2000 compliance of the Company's internal systems used to
process data and to transfer data between its clients and third parties,
including the Company's computer switch, (2) determining Year 2000 compliance of
its individual ATMs and (3) determining Year 2000 compliance of third party
vendors and clients.
Internal Systems. With respect to the Company's internal data
processing and transfer systems, in January 1985, as a result of incorrect
year-end date processing, the Company implemented a policy requiring all
production programs making date-related processing decisions to do so using
Julian dates. This form of date processing should not be sensitive to the
century rollover. Consequently, the Company's computer switch was developed
using a year 2000 compliant philosophy. The principal piece of equipment
comprising the computer switch is a Tandem computer. In 1997, the Company
entered into a lease for a new Tandem computer that the Company believes is Year
2000 compliant. The Company also
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believes that the operating software for the new system is Year 2000 compliant.
To assess its internal systems, the Company evaluated all references to, and
actions taken by reference to, the date (year in particular), in its internal
systems. The Company also examined systems and equipment that may be dependent
upon embedded microprocessors. The Company concluded from the evaluation that
its internal systems were Year 2000 compliant. In order to verify this
conclusion, a comprehensive test was completed on September 30, 1997 of all of
the Company's critical applications. Prior to cutting over from its old
production system to its new production system on that date, the Company had the
opportunity to set the clock forward in a controlled environment to test all
internal systems and program functionality with regard to the year 2000
rollover. The test revealed no Year 2000 problems.
The Company believes its conclusion is supported by the fact
that the Company's system is not highly date-dependent. The Company processes
transactions in segments from 2:00 p.m. one day through 2:00 p.m. the next day.
Consequently, the Company believes that the window of risk for the Company's
internal systems from the year 2000 rollover should be limited to a maximum of
24 hours. Furthermore, the Company processes dates and makes all programmatic
date decisions based on a Julian representation of the date which should not be
vulnerable to the year 2000 rollover. The Company believes that its conclusion
is further supported by the fact that all of the application code was developed
in-house, all source code is intact and available, and the Company has the
in-house expertise to revise and maintain the software as needed for the year
2000 rollover.
Individual ATMs. The Company has assessed whether its
individual ATMs are Year 2000 compliant and determined that as of February 28,
1999 approximately 70% of the Company's individual ATMs are Year 2000 compliant
or can be made Year 2000 compliant with the purchase of software upgrades from
the manufacturer.
Third Party Compliance. The Company has attempted to obtain
initial certification from its "higher risk" vendors as to Year 2000 Compliance.
The Company has mailed questionnaires to these vendors to identify and, to the
extent possible, to resolve issues involving Year 2000 issues. Responses to
these questionnaires have been verified against information included with
current releases of vendors' products and services and on vendor web sites and
are shared with the Company's clients upon request. In addition, the Company has
engaged in joint testing with most of these vendors and service providers,
testing each party's system and the interface between the systems. The Company
believes that all mission critical vendors and service providers have completed
their internal Year 2000 corrective actions. Service providers, vendors and
suppliers whom the Company deems "no risk" will not be contacted. The Company is
also coordinating with its clients regarding their activities related to the
Year 2000 problem. Most of the Company's clients maintain their own application
programs, although they utilize the Company's computer and network resources.
The Company conducted its own testing on the systems of its largest clients, and
did not discover any Year 2000 problems.
The assessment phase is complete.
Corrective Action Phase. The corrective action phase involves
addressing compliance problems identified during the assessment phase.
Internal Systems. Because the assessment phase revealed no
material Year 2000 problems, the Company does not plan any system replacements,
code enhancements
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or hardware or software upgrades. However, the Company does plan to implement
"mature" releases of the Tandem operating system and to monitor Tandem Year 2000
Compliance statements regarding such releases.
Individual ATMs. With respect to those ATMs that can be made
Year 2000 compliant with the purchase of software upgrades from the
manufacturer, the Company expects to obtain software upgrades at no charge
because of the recent date of purchase of these ATMs. However, in the event the
Company must purchase ATM software upgrades, management estimates that the cost
should not exceed $50,000. With respect to the 30% of its ATMs that are not Year
2000 compliant and cannot be upgraded, the Company expects to replace
approximately half of these ATMs prior to the Year 2000 as part of an ongoing
program of replacing ATMs and other equipment for technology and maintenance
reasons. Some of these ATMs may be replaced with used Year 2000 compliant ATMs
to minimize cost. The balance of the ATMs that are not Year 2000 compliant are
located in marginally profitable locations, will not be replaced and will be
phased out.
Third Party Compliance. Because no material Year 2000 problems
have been discovered to date, the Company does not currently plan any corrective
action with respect to service providers, vendors, suppliers and clients.
The corrective action phase has been completed as to the Company's
internal systems and third party vendors, although as described below, the
Company intends to continue testing in these areas. The corrective action phase
with respect to individual ATMs will be completed prior to the Year 2000 when
all replacement or upgraded ATMs are expected to be in operation.
Validation Phase. During the validation phase, the Company will
continue to test its internal systems, test its new and upgraded ATMs for Year
2000 compliance and engage in further testing with certain third parties.
Internal Systems. The Company will test and validate all
incremental changes to hardware, software, and connections with other systems as
those changes (or additions) occur in the ordinary course of business prior to
Year 2000. All users of the Company's products and services have been asked to
validate the Company's Year 2000 compliance. All such testing should be complete
by August 31, 1999.
Individual ATMs. Year 2000 compliance of all replacement and
upgraded ATMs will be tested prior to or at the time such ATMs are brought on
line.
Third Party Compliance. During the first half of 1999, the
Company intends to review and possibly "re-validate" certifications from outside
service providers, vendors, and suppliers for compliance and will request each
to provide quarterly statements of compliance through the end of 1999.
The validation phase will be completed at the times described above.
Implementation Phase. The Company plans a final full internal system
test on or about September 1, 1999. Any resulting component failure (internal
and external) will be resolved to the Company's satisfaction prior to December
30, 1999, or the component will be
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(1) eliminated or replaced or (2) suspended from production on December 30, 1999
and implemented after January 1, 2000 and after re-certification.
Regulatory and Independent Assessment. In addition to developing an
internal risk assessment methodology with respect to Year 2000 issues, the
Company is subject to external examinations and project reviews by regulatory
agencies and governmental bodies of the federal government. To date, these
examinations have not identified any material issues regarding the Company's
Year 2000 compliance efforts.
At this time, the Company does not anticipate obtaining verification or
validation by independent third parties to assess Year 2000 risk. The Company's
Project2000 team continues to review the Company's readiness for the Year 2000.
Year 2000 Compliance of Support Systems. In addition to computers and
related systems, the operation of office and facilities equipment, such as fax
machines, photocopiers, security systems, air conditioning, fire systems and
other common devices may be affected by Year 2000 problems. The Company does not
expect to devote substantial resources or time to evaluating potential Year 2000
problems with respect to these systems, other than contacting the manufacturer
or provider of these systems to determine Year 2000 compliance and taking or
arranging for appropriate corrective action.
Costs of Year 2000 Compliance. The principal cost incurred by the Company
in connection with Project2000 will be the cost of replacing obsolete ATM
equipment as part of the Company's ongoing process of upgrading and modernizing
its ATMs. As of April, 1999, approximately 70 NCR model 1773 ATMs currently in
operation are not and will not be made Year 2000 compliant. These ATMs are
predominately in low volume sites, many of which do not support the expense of
replacement with new equipment. The Company expects to simply pull out of the
lowest tier of these sites, replace the medium volume sites with low cost
pre-owned equipment, and replace the highest volume sites with new and higher
end pre-owned equipment. The expected total cost of this project is
approximately $400,000 and the expected cost in fiscal year 2000 (prior to
December 31, 1999) is approximately $225,000.
The Company has not identified any other significant costs directly
relating to the Year 2000 problem. The cost of compliance testing of external
client systems is billed to the Company clients. Testing and repair, and the
day-to-day burden of Project2000 has consumed incremental overhead of managers
and executive officers of the Company. Such overhead has been effectively
absorbed with no material effect on budgets and operations.
Possible Consequences of Year 2000 Problems. It is not possible to predict
with any certainty the extent and nature of Year 2000 problems that the Company
may encounter. Management believes that the following are possible consequences
of Year 2000 problems that could arise:
o operational inconveniences and inefficiencies for the Company and its
clients which will divert management's time and attention and
financial and human resources from ordinary business activities;
o serious system failures that will cause material business disruptions
or require significant efforts by the Company or its clients to
prevent or alleviate material business disruptions;
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o routine business disputes and claims for pricing adjustments or
penalties due to Year 2000 Problems incurred by clients, which would
be resolved in the ordinary course of business; and
o serious business disputes alleging that the Company failed to comply
with the terms of contracts or industry standards of performance,
some of which could result in litigation or contract termination.
Contingency Plans. The Company has developed department-by-department
contingency plans to be implemented if its efforts to identify and correct Year
2000 Problems affecting its internal systems are not effective. Depending upon
the systems affected, these plans include accelerated replacement of affected
equipment or software; short- to medium-term use of backup sites, equipment, and
software, increased work hours for Company personnel; and similar approaches.
Disclaimer. Management of the Company believes that it is not possible to
determine with complete certainty that all Year 2000 problems affecting the
Company or its clients have been or will be identified or corrected. The number
of devices that could be affected and the interactions among these devices are
simply too numerous. In addition, no one can accurately predict how many Year
2000-related failures will occur or the severity, duration, or financial
consequences of any such failure.
The Company's policy is not to acquire hardware, software or other
technology that is not contractually represented by the vendor as Year 2000
compliant. However, the Company cannot be sure that all of these products are in
fact Year 2000 compliant. In addition, although the Company does not have any
contractual responsibility to ensure that its clients' application programs are
compliant, if its clients experience Year 2000 problems with such applications,
such clients may reduce or cease use of the Company's products and computing
resources. The successful operation of the Company's data processing and
transfer systems is dependent upon the proper functioning of the systems of
third parties that utilize the Company's services. Any failure of third parties
to resolve Year 2000 problems in a timely manner could materially adversely
affect the Company's operations.
There can be no assurance that the Company will identify and resolve all
Year 2000 issues in a timely manner. Any failure by the Company to adequately
resolve all Year 2000 issues could have a material adverse effect on the
Company's business, financial condition, and results of operation.
Forward-Looking Statements. Many of the statements contained in this
discussion of Year 2000 issues are "forward-looking statements." These
statements are not guarantees of future performance or results. They involve
risks, uncertainties and assumptions. Consequently, actual results may differ
materially from those discussed in these forward-looking statements. See Item 6
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - Cautionary
Statement Concerning Forward-Looking Statements" for additional information and
factors to be considered with respect to forward-looking statements.
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Future Changes in Accounting Principles
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and display of
comprehensive income and its components. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from non-owned sources. It includes all changes
in equity except those resulting from Investments by owners and distributions to
owners. This statement is effective for financial statements for fiscal years
beginning after December 15, 1997. Management believes the impact of this
Statement on the Company's financial reporting will not be material.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information." This Statement establishes standards for
reporting information about operating segments in annual financial statements of
public business enterprises and requires disclosure of selected information
about operating segments in interim financial reports. The Statement is
effective for financial statements for periods beginning after December 15,
1997. Management believes that the adoption of this Statement will not have a
material effect on the Company's financial report.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this Annual Report on Form 10-KSB that are
not statements of historical fact constitute "forward-looking statements" within
the meaning of Section 21E of the Exchange Act. These statements are subject to
risks and uncertainties, as described below.
Examples of forward-looking statements include, but are not limited to:
(i) projections of revenues, income or loss, earnings or loss per share, capital
expenditures, the payment or non-payment of dividends, capital structure and
other financial items, (ii) statements of plans and objectives of the Company or
its management or Board of Directors, including plans or objectives relating to
the products or services of the Company, (iii) statements of future economic
performance, and (iv) statements of assumptions underlying the statements
described in (i), (ii) and (iii). Forward-looking statements can often be
identified by the use of forward-looking terminology, such as "believes,"
"expects," "may," "will," "should," "could," "intends," "plans," "estimates" or
"anticipates," variations thereof or similar expressions.
Forward-looking statements are not guarantees of future performance or
results. They involve risks, uncertainties and assumptions. The Company's future
results of operations, financial condition and business operations may differ
materially from those expressed in these forward-looking statements. Investors
are cautioned not to put undue reliance on any forward-looking statement.
There are a number of factors that could cause actual results to differ
materially from those discussed in the forward-looking statements, including
those factors described below. Other factors not identified herein could also
have such an effect. Among the factors that could cause actual results to differ
materially from those discussed in the forward-looking statements are the
following:
30
<PAGE>
o Changes in laws or card association rules affecting the Company's ability
to impose surcharge fees, and continued customer willingness to pay
surcharge fees;
o The ability of the Company to form new strategic relationships and
maintain existing relationships with issuers of credit cards and national
and regional card organizations;
o The ability of the Company to expand its ATM base and transaction
processing business;
o The availability of financing at reasonable rates for vault cash and for
other corporate purposes, including funding the Company's expansion plans;
o The ability of the Company to maintain its existing relationships with two
operators of combination convenience stores and gas stations at which the
Company maintains 44 and 34 ATMs, respectively, as of January 31, 1998;
o The ability of the Company to keep its ATMs at other existing locations at
reasonable rental rates and to place additional ATMs in preferred
locations at reasonable rental rates;
o The extent and nature of competition from financial institutions, credit
card processors and third party operators, many of whom have substantially
greater resources than the Company;
o The ability of the Company to maintain its ATMs and information systems
technology without significant system failures or breakdowns;
o The ability of the Company to cause its ATMs and information systems to be
Year 2000 compliant and the extent to which the systems of card issuers,
card organizations, banks and other companies on which the Company's
systems rely are Year 2000 compliant;
o The extent of losses from errors and omissions, employee dishonesty and
vault cash losses, for which the Company does not maintain insurance;
o The ability of the Company to develop new products and enhance existing
products to be offered through ATMs, and the ability of the Company to
successfully market these products;
o The ability of the Company to identify suitable acquisition candidates, to
finance and complete acquisitions and to successfully integrate acquired
assets and businesses into existing operations;
o The ability of the Company to retain senior management and other key
personnel;
o Changes in general economic conditions.
Any forward-looking statement contained herein is made as of the date of this
document. The Company does not undertake to publicly update or correct any of
these forward-looking statements in the future.
31
<PAGE>
Item 7. FINANCIAL STATEMENTS
UNIVERSAL MONEY CENTERS, INC.
JANUARY 31, 1998 AND 1997
CONTENTS
Page
----
INDEPENDENT ACCOUNTANTS' REPORT............................................33
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets........................................................34
Liabilities and Stockholders' Equity..................................35
Statements of Income..................................................36
Statements of Changes in Stockholders' Equity.........................37
Statements of Cash Flows..............................................38
Notes to Financial Statements.........................................39
32
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Universal Money Centers, Inc.
Mission, Kansas
We have audited the accompanying consolidated balance sheets of
UNIVERSAL MONEY CENTERS, INC. as of January 31, 1998 and 1997, and the related
consolidated statements of income, changes in stockholders' equity (deficit) and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
UNIVERSAL MONEY CENTERS, INC. as of January 31, 1998 and 1997, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
As described in Note 3, the Company has not filed the financial and
other information required by the Securities and Exchange Act of 1934 with the
Securities and Exchange Commission (SEC) and its stockholders since 1987. The
Company has recently initiated the process of resuming its periodic reporting to
the SEC and its stockholders. No provision for costs or other adjustments which
could ultimately result from the outcome of this uncertainty has been recorded
in the accompanying financial statements.
BAIRD, KURTZ & DOBSON
Kansas City, Missouri
April 10, 1998
33
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1998 AND 1997
ASSETS
1998 1997
----------- -----------
CURRENT ASSETS
Cash $ 374,675 $ 325,646
Accounts receivable - trade, less allowance for 87,256 60,130
doubtful accounts: 1998 - $21,380; 1997 -
$3,345
Accounts receivable - affiliate 2,340 24,271
Inventories 300 8,173
Prepaid expenses and other 9,176 12,592
Interest receivable - affiliate 2,059 1,539
----------- -----------
Total Current Assets 475,806 432,351
----------- -----------
PROPERTY AND EQUIPMENT, At cost
Equipment 2,578,635 2,509,126
Leasehold improvements 117,803 117,803
Vehicles 9,722 17,760
----------- -----------
2,706,160 2,644,689
Less accumulated depreciation 1,475,325 1,727,520
----------- -----------
1,230,835 917,169
----------- -----------
OTHER ASSETS
Deferred income taxes 315,000 0
Other 12,383 11,773
----------- -----------
327,383 11,773
----------- -----------
$2,034,024 $1,361,293
=========== ===========
See Notes to Consolidated Financial Statements
34
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
1998 1997
------------ ------------
CURRENT LIABILITIES
Current maturities of long-term debt and $ 206,040 $ 439,108
capital lease obligations
Accounts payable 296,455 229,408
Accounts payable - affiliate 35,551 15,217
Accrued expenses 223,496 227,485
------------ ------------
Total Current Liabilities 761,542 911,218
------------ ------------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 392,945 234,962
------------ ------------
STOCKHOLDERS' EQUITY
Common stock; no par value; $.01 stated value;
40,000,000 shares authorized; 39,851,380
issued for 1998 and 1997 398,514 398,514
Additional paid-in capital 18,593,430 18,593,430
Retained earnings (deficit) (16,450,099) (17,114,52)
------------- ------------
2,541,845 1,877,421
Less treasury stock, at cost; common;
558,311 shares for 1998 and 1997 (1,662,308) (1,662,308)
------------- ------------
879,537 215,113
------------- ------------
$ 2,034,024 $ 1,361,293
============= ============
See Notes to Consolidated Financial Statements
35
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JANUARY 31, 1998 AND 1997
1998 1997
------------- -------------
NET REVENUES $ 3,822,156 $ 2,600,725
COSTS OF REVENUES 2,354,751 1,384,789
------------- -------------
GROSS PROFIT 1,467,405 1,215,956
OPERATING EXPENSES 1,070,976 912,387
------------- -------------
INCOME FROM OPERATIONS 396,429 303,569
------------- -------------
OTHER INCOME (EXPENSE)
Interest income 22,016 19,093
Interest expense (69,021) (28,536)
Other 42
------------- -------------
(47,005) (9,401)
------------- -------------
INCOME BEFORE INCOME TAXES 349,424 294,168
INCOME TAX PROVISION (CREDIT) (315,000) 0
------------- -------------
NET INCOME $ 664,424 $ 294,168
============= =============
BASIC AND DILUTED EARNINGS PER SHARE $ 0.02 $ 0.01
============= =============
See Notes to Consolidated Financial Statements
36
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED JANUARY 31, 1998 AND 1997
<TABLE>
<CAPTION>
Additional Retained
Common Paid-In Earnings Treasury
Stock Capital (Deficit) Stock Total
--------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE (DEFICIT),
JANUARY 31, 1996 $ 311,764 $18,593,430 $ (17,408,691) $ (1,658,308) $ (161,805)
Net income 294,168 294,168
Issuance of 8,675,000 shares 86,750 86,750
Purchase of 400,000
shares of treasury stock (4,000) (4,000)
--------- ----------- -------------- ------------- -----------
BALANCE (DEFICIT), JANUARY 31, 1997 398,514 18,593,430 (17,114,523) (1,662,308) 215,113
Net income 664,424 664,424
--------- ----------- -------------- ------------- -----------
BALANCE (DEFICIT), January 31, 1998 $ 398,514 $18,593,430 $ (16,450,099) $ (1,662,308) $ 879,537
========= =========== ============== ============= ===========
</TABLE>
See Notes to Consolidated Financial Statements
37
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JANUARY 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 664,424 $ 294,168
Items not requiring (providing) cash:
Depreciation 287,997 100,884
Loss on disposal of property and
equipment 298
Deferred income taxes (315,000)
Changes in:
Accounts receivable (5,715) (2,938)
Inventories 7,873 1,252
Prepaid expenses and other 2,806 (7,800)
Accounts payable and accrued expenses 83,392 70,783
------------ ------------
Net cash provided by operating
activities 726,075 456,349
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (500,945) (451,167)
Proceeds from notes receivable - affiliate 62,000
Proceeds from sale of property and equipment 150
------------ ------------
Net cash used in investing activities (500,795) (389,167)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under long-term debt and capital (227,251) (173,694)
lease obligations
Proceeds from issuance of long-term debt 51,000 303,224
Proceeds from issuance of common stock 86,750
Purchase of treasury stock (4,000)
------------ ------------
Net cash provided by (used in)
financing activities (176,251) 212,280
------------ ------------
INCREASE IN CASH 49,029 279,462
CASH, BEGINNING OF YEAR 325,646 46,184
------------ ------------
CASH, END OF YEAR $ 374,675 $ 325,646
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
38
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is engaged primarily in providing network and switching
services for automated teller machines (ATMs) in the states of Kansas, Missouri,
Ohio, Illinois, Florida and Texas. Fees are received from the members of the
Company's network as well as card users from other ATM networks using the
Company's network. The Company grants unsecured credit to its customers. As of
January 31, 1998 and 1997, the Company had approximately 316 and 278 ATMs in the
network, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and Equipment
Property and equipment are depreciated over the estimated useful life of
each asset, primarily five to seven years. Annual depreciation is computed using
the straight-line method.
Principles of Consolidation
The consolidated financial statements include the accounts of Universal
Money Centers, Inc., and its wholly-owned subsidiaries, Electronic Funds
Transfer, Inc., Corporate Payments Systems, Inc., (inactive) and A.M.
Corporation (inactive). All significant intercompany accounts and transactions
have been eliminated in consolidation.
Income Taxes
Deferred income tax liabilities and assets are recognized for the tax
effects of differences between the financial statement and tax bases of assets
and liabilities. A valuation allowance is established to reduce deferred tax
assets if it is more likely than not that a deferred tax asset will not be
realized.
Inventory
All inventories are stated at the lower of cost or market. As of January
31, 1998 and 1997, inventory consisted primarily of repair parts for ATMs, with
the cost of such parts being determined using the FIFO (first-in, first-out)
method.
39
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Future Changes in Accounting Principles
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and display of
comprehensive income and its components. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources. It includes all changes in
equity except those resulting from investments by owners and distributions to
owners. This statement is effective for financial statements for fiscal years
beginning after December 15, 1997. Management believes the impact of this
Statement on the Company's financial reporting will not be material.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This Statement establishes standards for
reporting information about operating segments in annual financial statements of
public business enterprises and requires disclosure of selected information
about operating segments in interim financial reports. The Statement is
effective for financial statements for periods beginning after December 15,
1997. Management believes that the adoption of this Statement will not have a
material effect on the Company's financial reporting.
NOTE 2: RELATED PARTY TRANSACTIONS
The chairman and chief executive officer (CEO), who is the largest
stockholder of the Company, is also the CEO and a stockholder of Universal
Funding Corporation (UFC). In addition, the other two stockholders of UFC are
also stockholders of the Company.
The Company receives management and leasing fees from UFC to provide
administrative services, computer switching, maintenance and software for the
ATMs. Such fees totaled $726,389 and $664,755 for the years ended January 31,
1998 and 1997, respectively. Under the agreement, these fees are paid on a
monthly basis subsequent to UFC meeting all other monthly cash flow obligations.
The Company assumes the risks of theft or other shortages of cash from the
ATMs funded by UFC. As of January 31, 1998 and 1997, UFC had vault cash of
approximately $1,900,000 (located in approximately 209 ATMs) and $1,750,000
(located in approximately 197 ATMs), respectively. During the years ended
January 31, 1998 and 1997, the Company incurred losses of $22,616 and $42,354
from vault cash shortages. Included in accounts payable - affiliate on the
accompanying consolidated balance sheets for both years is a payable of $35,551
and $15,217, respectively, to UFC for such shortages.
The agreement with UFC for management fees provides that the fee will
equal the net income of UFC (excluding depreciation, amortization and
stockholder return on original capital investment, which are treated as
distributions). As of January 31, 1998 and 1997, the Company had a receivable of
$2,340 and $24,271, respectively, for these fees.
40
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 2: RELATED PARTY TRANSACTIONS (Continued)
Certain members of the Company's management extended loans to UFC. UFC
used the proceeds from these loans to provide vault cash to the ATMs. The
interest UFC pays on these loans directly reduces UFC's income subject to the
management fee. As of January 31, 1998 and 1997, the balance of these loans was
approximately $1,350,000 and $1,200,000, respectively, with interest rates
ranging from 12% to 18%. Additionally, the Company extended loans to UFC to
provide vault cash. For the years ended January 31, 1998 and 1997, the maximum
balance of the loans was $202,000 and $211,000, respectively. During the years
ended January 31, 1998 and 1997, the Company earned interest income of $21,718
and $18,943, respectively, from these loans.
The Company has the option to purchase UFC from its current stockholders
for approximately $165,000.
Since its last filing with the Securities and Exchange Commission (1987),
the Company has issued 17,201,897 shares which have not been registered with the
Securities and Exchange Commission. Of the shares issued, 12,112,644 were issued
to related parties as follows:
o 9,600,000 shares were sold to the president of the Company for $.01
per share in two separate transactions; 1,000,000 shares in December
1994 and 8,600,000 shares authorized in a 1995 Board of Directors
meeting and subsequently issued in April 1996.
o 75,000, 200,000 and 975,000 shares were issued to the Board of
Directors and officers in 1996, 1995 and 1990, respectively, in lieu
of compensation for their services.
o 400,000 shares were issued to a former employee in June 1994 in lieu
of compensation. These shares were then repurchased by the Company
as treasury stock in June 1996 as part of a negotiated settlement
with the former employee.
o 843,894 shares were issued to an individual who is a one-third owner
of UFC. Of the 843,894 shares, 724,932 and 23,639 were sold to the
individual in 1987 and 1989 for $.1875 and $.08 per share,
respectively. The remaining 95,323 shares were issued in 1989 to the
individual as consideration for pledging a certificate of deposit as
collateral for the Company's outstanding debt.
o 18,750 shares were sold to a director of the Company in 1989 for
$.08 per share.
The Company has a liability for back wages due to the chairman and CEO of
the Company of approximately $140,000. This represents an informal, negotiated
deferral in compensation from 1993-1995 in an attempt to improve the Company's
cash flow during those years.
41
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 3: FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
Although the Company is a publicly traded company, it has not filed any
information required by the Securities and Exchange Act of 1934 including, but
not limited to, Forms 10-K, 10-Q and 8-K and other reports to stockholders since
1987.
The Company is in the process of determining the necessary filings and
disclosures which would be required by the Securities and Exchange Commission to
bring the Company back in compliance. The effect on the Company's financial
statements, if any, from any stockholder disputes or other corrective measures
arising from these delinquent filings have not been determined.
The Company had a retained deficit balance of $19,461,552 as of January
31, 1987. This is the last year the Company's audited financial statements were
filed with the Securities and Exchange Commission. The Company's retained
deficit as of January 31, 1998 is $16,450,099.
NOTE 4: OPERATING LEASES
The Company leases office space under non-cancellable operating leases
which expire through August 2001. Rent expense for office space for the years
ended January 31, 1998 and 1997 was $76,310 and $76,160, respectively.
The Company leases computer equipment under non-cancellable operating
leases which expire through February 2001. The Company also leases locations to
place ATMs under non-cancellable operating leases which expire through March
2001. Total rent expense related to the lease of computer equipment and
locations to place ATMs for the years ended January 31, 1998 and 1997 was
$86,522 and $28,811, respectively.
Future minimum lease payments at January 31, 1998 are as follows:
1999 $146,909
2000 146,909
2001 117,058
2002 47,000
----------
Future minimum lease payments $457,876
42
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 5: LONG-TERM DEBT
1998 1997
--------- ----------
Installment notes payable (A) $ 224,278 $ 271,065
Capital lease obligations (B) 286,100 349,073
Installment notes payable (C) 79,212 42,195
Installment note payable (D) 9,395 11,737
----------- -----------
598,985 674,070
Less current maturities 206,040 439,108
----------- -----------
$ 392,945 $ 234,962
=========== ===========
(A) Various installment notes payable; due on demand; if no demand made, due
at various dates through November 2001; with interest at 10.25%;
collateralized by equipment and personally guaranteed by the Company's
Chairman and CEO. Subsequent to the year ended January 31, 1998, the
demand feature was waived through January 31, 1999.
(B) Capital leases covering ATMs and office equipment with monthly payments
through January 2001 with such amounts being personally guaranteed by the
Company's Chairman and CEO.
(C) Various installment notes payable; due at various dates through February
2001, with interest at 10%; collateralized by equipment.
(D) Installment note payable; due in monthly payments of $311 including
interest at 10% through December 2000; collateralized by equipment.
43
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 5: LONG-TERM DEBT (Continued)
Aggregate annual maturities of long-term debt and payments on capital
lease obligations at January 31, 1998 are as follows:
Long-Term Debt Capital Lease
(Excluding Leases) Obligations
------------------ -------------
1999 74,175 155,924
2000 82,290 120,216
2001 86,218 45,923
2002 63,950 838
2003 6,252
----------- -----------
$ 312,885 322,901
===========
Less amount representing interest 36,801
-----------
Present value of future minimum lease 286,100
payments
Less current maturities 131,865
-----------
$ 154,235
===========
Property and equipment including the following property under capital leases:
1998 1997
--------- ----------
Equipment cost $ 558,054 $ 456,848
Less accumulated depreciation 164,659 28,250
--------- -----------
$ 393,395 $ $428,598
=========== ===========
As of January 31, 1998 and 1997, the carrying amount of long-term debt
approximates its fair value.
44
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 6: EARNINGS PER SHARE
The details of the basic and diluted earnings per share calculations for the
years ended January 31, 1998 and 1997 are as follows:
1998
---------------------------------------------
Weighted
Net Average Shares Per Share
Income Outstanding Amount
-------------- -------------- ------------
Net income $664,424
--------------
Basic and diluted earnings per share:
Income available to common
Stockholders $664,424 39,293,069 $ .02
============== ============== ============
1997
---------------------------------------------
Weighted
Net Average Shares Per Share
Income Outstanding Amount
-------------- -------------- ------------
Net income $294,168
--------------
Basic and diluted earnings per share:
Income available to common
Stockholders $294,168 37,031,768 $ .01
============== ============== ============
NOTE 7: INCOME TAXES
The provision (credit) for income taxes includes these components:
1998 1997
------------ ------------
Deferred income taxes $ 21,000 $ 32,000
Utilization of net operating loss
carryforwards 110,000 73,000
Change in deferred tax asset valuation
allowance (446,000) (105,000)
----------- -----------
$(315,000) $ 0
=========== ===========
45
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 7: INCOME TAXES (Continued)
A reconciliation of income tax expense (credit) at the statutory rate to the
Company's actual income tax expense (credit) is shown below.
1998 1997
------------ -----------
Computed at the statutory rate $ 119,000 $ 100,000
Increase (decrease) resulting from:
Change in deferred tax asset (446,000) (105,000)
valuation allowance
Other 12,000 5,000
----------- -----------
Actual tax provision (credit) $($315,00) $ 0
=========== ===========
The tax effects of temporary differences related to deferred taxes were:
1998 1997
------------ -----------
Deferred tax assets:
Allowance for doubtful accounts $ 8,000 $ 1,000
Accumulated depreciation 80,000 108,000
Accrued expenses 17,000 17,000
Net operating loss carryforwards 620,000 730,000
General tax credits 195,000 195,000
----------- -----------
Net deferred tax asset before valuation 920,000 1,051,000
allowance
=========== ===========
Valuation allowance:
Beginning balance (1,051,000) (1,156,000)
Decrease 446,000 105,000
----------- -----------
Ending balance (605,000) (1,051,000)
----------- -----------
Net deferred tax asset $ 315,000 $ 0
=========== ===========
As of January 31, 1998, the Company had approximately $195,000 of tax credits
available to offset future federal income taxes. These credits expire between
1999 and 2002. The Company also has unused operating loss carryforwards of
approximately $1,600,000, which expire between 2005 and 2012.
46
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 8: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles required disclosure of certain
significant estimates and current vulnerabilities due to certain concentrations.
Those matters include the following:
Significant Agreements
Approximately 19% and 26% for 1998 and 1997, respectively, of the
Company's revenue comes from services provided for Universal Funding Corporation
(UFC), a related party (see Note 2). Additionally, the Company earned
approximately 70% of its surcharging fees from ATMs containing UFC's vault cash
during the years ended January 31, 1998 and 1997. Currently, UFC obtains cash to
fund its ATMs primarily from short-term borrowings from various private
investors, including members of Universal Money Center's management. UFC is
uncertain if additional sources of cash would be available if these notes were
not renewed.
Significant Customers
The Company has relationships with two operators of combination
convenience stores and gas stations for whom approximately 44 and 34 ATMs,
respectively, have been installed at their locations. The aggregate revenues
from these companies accounted for approximately 22% of the Company's revenues
in fiscal year 1998.
Fees
Currently, the Company is permitted to charge a "surcharge" to users of
the Company's network who are members of other networks. Such surcharges are
being challenged at various governmental levels. Successful litigation to
eliminate these surcharges could have a material adverse effect on the results
of operations and financial condition of the Company. During the years ended
January 31, 1998 and 1997, the Company recognized revenue of $1,967,594 and
$846,012, respectively, from surcharges.
Filings with the Securities and Exchange Commission
As discussed in Note 3, the Company is delinquent in required filings with
the Securities and Exchange Commission and its stockholders.
Year 2000
Like all entities, the Company is exposed to risks associated with the
Year 2000 Issue, which affects computer software and hardware; transactions with
customers, vendors and other entities; and equipment dependent on microchips.
Management believes it has addressed all critical issues and has begun, but not
yet completed, remediating any potential Year 2000 problems. It is not possible
for any entity to guarantee the results of its own remediation efforts or to
accurately predict the impact of the Year 2000 Issue on third parties with which
the Company does business. If remediation efforts of the Company or third
parties with which it does business are not successful, the Year 2000 problem
could have negative effects on the Company's financial condition and results of
operations in the near term.
47
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 8: SIGNIFICANT ESTIMATES AND CONCENTRATIONS (Continued)
Insurance
The Company does not insure against possible losses from errors and
omissions, employee dishonesty or vault cash losses (see Note 2).
Deferred Income Taxes
The company has recorded a deferred tax asset of $315,000 at January 31,
1998, which is primarily a result of operating loss carryforwards which
management believes are more likely than not to be realized prior to their
expiration between 2005 and 2012. Realization is dependent on generating
sufficient future taxable income to absorb the carryforwards. The amount of the
deferred tax assets considered realizable could be increased or reduced in the
near term if estimates of future taxable income during the carryforward period
change.
Litigation
Subsequent to January 31, 1998, a shareholder of the Company requested
that the Board of Directors of the Company immediately call meetings of the
shareholders and directors to consider a variety of matters, including the
voiding of certain related party stock transactions described in Note 2. The
shareholder also requested that the Company purchase the shareholder's shares of
the Company stock and threatened litigation against several parties, including
the Company. If these issues are litigated, now or in the future, management and
legal counsel believe that the Company has reasonable defenses.
NOTE 9: SUBSEQUENT EVENTS
Subsequent to January 31, 1998, the Company completed the financing for
approximately 39 new ATMs at a total cost of approximately $290,000.
48
<PAGE>
UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 10: ADDITIONAL CASH FLOW INFORMATION
1998 1997
----------- -----------
Noncash Investing and Financing Activities
Capital lease obligations incurred for
equipment $101,166 $442,582
Additional Cash Payment Information
Interest paid $69,021 $41,222
49
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in the Company's accountants during the two most
recent fiscal years or any subsequent interim period.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors and Executive Officers
Name Age Position
---- --- --------
David S. Bonsal 59 Chairman and Chief Executive Officer;
Director
Dave A. Windhorst 46 President
Pamela A. Glenn 37 Vice President and Corporate Secretary
Jeffrey M. Sperry 55 Director
Arthur M. Moglowsky 61 Director
The terms of office of the directors of the Company will expire upon the
election of their successors at the 1999 Annual Meeting of Shareholders.
Executive officers serve at the pleasure of the Board of Directors.
David S. Bonsal has served as the Chairman and Chief Executive Officer of
the Company since 1988. Mr. Bonsal is also a principal shareholder of Funding.
Mr. Bonsal also serves on the Board of Directors and the Audit Committee of
Ferrite Components.
Dave A. Windhorst has served as President of the Company since May 1995.
Mr. Windhorst served as Senior Vice President of the Company from August 1986 to
May 1995, as Vice President of Development and Operations from August 1984 to
August 1986, and as Systems Manager of the Company from August 1982 to August
1994.
Pamela A. Glenn has served as Vice President since May 1995. Ms. Glenn
served as a Sales Representative and Account Manager of the Company from 1991 to
May 1995 and held various positions with the Company from 1982 to 1991.
Jeffrey M. Sperry has served as a director since 1982. Mr. Sperry is an
Executive Vice President with Robert Cohn Associates, Inc., Albany, New York, a
real estate company, and has held that position since 1978.
Arthur M. Moglowsky has served as a director since 1981. Mr. Moglowsky is
an attorney and a shareholder in the law firm of Bass & Moglowsky, S.C.,
Milwaukee, Wisconsin.
50
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Directors, executive officers and greater than ten percent
beneficial shareholders are required by SEC regulation to furnish the Company
with copies of all reports they file. To the Company's knowledge, no such
reports have been filed by any of such persons for many years as a result of the
delisting of the Company's Common Stock and the Company's discontinuance of
filing periodic reports with the SEC. The Company has communicated with such
persons concerning their reporting obligations and expects reports to be filed
concurrently with the filing of this Form 10-KSB.
Item 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain summary information concerning the
compensation paid and awarded for the years indicated to the Company's Chief
Executive Officer and the President (the "Named Executive Officers") as of the
end of the Company's 1998 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------- --------------
Other Annual Securities All Other
Name and Compensation Underlying Compensation
Principal Position Year Salary($) Bonus($)(1) ($)(2) Options(#) ($)
------------------ ---- --------- ----------- ------------ ---------- ---
<S> <C> <C> <C> <C> <C> <C>
David S. Bonsal, Chief 1998 125,000 1,000 -- -- --
Executive Officer (3),(4) 1997 108,333 1,000
1996 100,000 100
Dave A. Windhorst, 1998 107,752 2,500 -- -- --
President (5) 1997 87,129 5,900
1996 82,000 100
</TABLE>
- --------------------------
(1) Includes bonuses received in the reported year. The payment of bonuses is
at the discretion of the Board of Directors.
(2) The Company has not included in the Summary Compensation Table the value of
incidental personal perquisites furnished by the registrant to the Named
Executive Officers since such value did not exceed the lesser of $50,000 or
10% of the total of annual salary and bonus reported for any of such Named
Executive Officers.
(3) David S. Bonsal received the following compensation from the Company in
each of the following fiscal years: (1) 1995 - Salary, $100,000; Bonus, $0;
(2) 1994 - Salary, $100,000; Bonus, $0; (3) 1993 - Salary, $100,000; Bonus,
$0; (4) 1992 - Salary, $89,919; Bonus $0; (5) 1991 - Salary, $98,879;
Bonus, $0; (6) 1990 - Salary, $100,000; Bonus, $0; (7) 1989 - Salary,
$100,000; Bonus, $0; (8) 1988 - Salary, $4,167; Bonus $0 (Mr. Bonsal was
hired by the Company in January 1988).
51
<PAGE>
(4) The amount of compensation shown as paid to Mr. Bonsal for fiscal years
1994 to 1996 includes approximately $140,000 that has been deferred due to
cash flow problems experienced by the Company. Interest accrues on the
deferred amount at the rate of 5% per annum.
(5) Dave A. Windhorst received the following compensation from the Company in
each of the following fiscal years: (1) 1995 - Salary, $82,000; Bonus,
$100; (2) 1994 - Salary, $82,000; Bonus, $0; (3) 1993 - Salary, $82,000;
Bonus, $0; (4) 1992 - Salary, $71,000; Bonus $0; (5) 1991 - Salary,
$69,583; Bonus, $0; (6) 1990 - Salary, $65,000; Bonus, $0; (7) 1989 -
Salary, $65,000; Bonus, $50; (8) 1988 - Salary, $67,000; Bonus $0. Mr.
Windhorst received 150,000 shares of Common Stock of the Company, valued at
$.01 per share, in partial payment of the compensation shown for fiscal
year 1990.
Stock Option Plan
The Company currently does not have any stock option plans. All options
outstanding under stock option plans referred to in the Company's Form 10-K for
fiscal year 1987 expired unexercised.
Director Compensation
The Company currently pays each non-employee director a cash fee of $750
for each Board meeting attended in person and a cash fee of $250 for each Board
meeting attended by telephone. Directors are reimbursed for certain reasonable
expenses incurred in attending meetings. Officers of the Company do not receive
any additional compensation for serving as members of the Board of Directors.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Common Stock Ownership of Directors and Executive Officers
The following table sets forth information regarding the beneficial
ownership of the outstanding Common Stock as of January 31, 1998 by each person
or entity who is known by the Company to beneficially own 5% or more of the
Common Stock, each director, each Named Executive Officer and all of the
directors and executive officers of the Company as a group. Each of such persons
has sole voting and investment power with respect to the shares shown as
beneficially owned.
52
<PAGE>
Name of Beneficial Owner Number of Percent of
Shares Common Stock
Beneficially Owned Outstanding(1)
------------------ --------------
12,424,150 31.62%
Jeffrey M. Sperry 250,000 *
Arthur M. Moglowsky 297,753 *
David A. Windhorst 171,882 *
Pamela A. Glenn 100,000 *
Directors and executive officers as a 13,243,785 33.71%
group (5 persons)
* Represents beneficial ownership of less than one percent.
(1) Percentages are determined in accordance with Rule 13d-3 under
the Exchange Act.
(2) The address of Mr. Bonsal is c/o Universal Money Centers, Inc.,
6800 Squibb Road, Shawnee Mission, Kansas 66202.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Universal Funding Corporation
The Company has maintained a business relationship with Universal Funding
Corporation, a Missouri corporation ("Funding"), since August 1989. The
relationship began in 1989 as a result of the Company's severe financial
problems. The operation of the Company's ATM network generally requires that the
Company supply vault cash to ATMs owned by the Company to fund cash withdrawals.
However, as a result of the Company's financial problems, in 1989 the Company
lost its line of credit with Mission Hills Bank, which had provided vault cash
for the Company's ATM machines in the Kansas City area. New lenders were
unwilling to extend loans partly because of the concern that the Company's
existing lenders and other creditors would assert claims against cash physically
located in ATM's owned by the Company. The Company did not have sufficient cash
to supply the vault cash for these ATMs.
In order to resolve this problem and to permit the Company to continue to
operate these ATMs, Funding was formed by David S. Bonsal, the Chairman of the
Company's Board of Directors, John L. Settles, the President of the Company from
April 1989 through late 1990, and William Smithson, a shareholder of the
Company. Each of these individuals has a one-third ownership interest in
Funding.
In August 1989, the Company sold to Funding the 60 ATMs owned by the
Company and operated in the Kansas City area, for which Mission Hills Bank had
previously provided financing for vault cash. The ATMs were sold to Funding at
prices at or above the machines' fair value, as determined by management of the
Company based upon prices the Company had recently paid to independent third
parties for similar ATMs. Funding requested the sale of the
53
<PAGE>
ATMs to Funding as a condition to providing vault cash, in order to provide
additional protection against seizure of Funding's vault cash by the Company's
creditors.
In connection with the sale of the ATMs to Funding, the Company entered
into a management agreement (the "Management Agreement") with Funding in August
1989. The Management Agreement was designed to provide the Company with the
economic benefits of ownership and operation of the ATMs sold to Funding, while
providing to shareholders and lenders of Funding the protection from the
Company's creditors and the investment return necessary to attract their
investment. In the Management Agreement, Funding agreed to enter into contracts
with site owners for the placement of the ATMs acquired from the Company, to
provide vault cash necessary for the operation of the ATMs and to contract for
an armored security service for deliveries of cash to ATMs. In exchange for
these services, Funding received all interchange fees for transactions processed
on the ATMs for which it provided vault cash. Under the Management Agreement,
the Company agreed to "drive" the ATMs sold to Funding and to provide
accounting, maintenance and communication services. In exchange for these
services, Funding agreed to pay the Company a management fee equal to Funding's
"net income". Funding's "net income" is defined in the Management Agreement as
revenues from interchange fees, less armored security charges, interest expense
on funds borrowed to provide vault cash, ATM location expenses, debt service
related to the purchase of the ATMs, taxes or insurance on ATMs, and a monthly
payment to each of Funding's shareholders representing a return on their equity
investment in Funding. The management fee is to be paid to the Company on a
monthly basis after Funding has met all of its other cash expenses, including
the payment of interest on outstanding borrowings and the monthly payment to
Funding's shareholders. In addition, in the Management Agreement, the
shareholders of Funding grant the Company an option to purchase all of the
outstanding stock of Funding at any time for an amount equal to 110% of the
capital contributed by the shareholders to Funding plus any arrearages in the
payment of expenses due under the Management Agreement. Management believes that
the amount of the exercise price would have been $165,000 as of January 31,
1998. The Management Agreement extends for successive twelve (12) month terms,
unless either party provides written notice of termination to the other party at
least thirty (30) days prior to the end of a twelve (12) month term.
The proposed sale of the ATMs to Funding and the proposed Management
Agreement with Funding have been unanimously approved by the Board of Directors
of the Company, including by the independent directors comprising a majority of
the Board of Directors of the Company. The Company believed that the arrangement
with Funding was the best alternative available to the Company to enable the
Company to continue the operation of its ATM network.
Since 1989, the relationship between the Company and Funding has expanded
to cover additional ATMs. In 1994, the Company lost its line of credit with
Boatmen's Bank, which provided vault cash for Company-owned ATMs located in St.
Louis. Funding has provided the vault cash for these ATMs under the Management
Agreement since that time. The Company had the opportunity to place ATMs in
locations in El Paso, Texas, but needed vault cash in order to place these ATMs.
The Company and Funding amended the Management Agreement to cover vault cash for
ATMs in these locations. In order to take advantage of other opportunities, the
Company has requested Funding to provide vault cash for additional ATMs under
the Management Agreement.
Funding currently supplies vault cash for a majority of the ATMs owned by
Funding and the Company. Funding currently owns 41 ATMs in the Company's ATM
network. The
54
<PAGE>
remaining Company-owned ATMs are leased to Funding for rent of $10.00 per month.
Funding requested the leasing arrangement for the remaining ATMs in order to
provide protection against seizure of its vault cash by the Company's creditors.
Funding does not provide vault cash for ATMs owned by banks or ATMs owned by
third party vendors. At January 31, 1998 and 1997, Funding had vault cash of
approximately $1,900,000 and $1,750,000, respectively, located in approximately
209 and 197 ATMs, respectively, owned by Funding and the Company. Funding
receives all interchange fees for transactions processed on ATMs for which it
supplies vault cash and these fees are included in net income for purposes of
determining the amount of the management fee paid to the Company.
Funding paid the Company management fees of $726,389 and $664,755 in
fiscal years 1998 and 1997, respectively. At January 31, 1998 and 1997, the
Company had a receivable for accrued and unpaid management fees of $2,340 and
$24,271, respectively. Pursuant to the Management Agreement, the Company assumes
the risk of theft or other shortages of cash from the ATMs for which Funding
supplies vault cash. The Company incurred losses of $22,616 and $42,354 from
vault cash shortages in fiscal 1998 and 1997, respectively.
Funding borrows the funds that are used to supply vault cash principally
from (i) Electronic Funds Transfer, Inc., a wholly owned subsidiary of the
Company ("EFT"), (ii) David S. Bonsal, Chairman and Chief Executive Officer of
the Company, and a limited partnership in which Mr. Bonsal is the general
partner, (iii) employees of the Company, and (iv) other unaffiliated investors.
The loans generally have a term of 30 days and typically are rolled over at
maturity. During the period that Funding has borrowed funds from these parties,
Funding has paid interest on outstanding loans at rates ranging from 9 - 18% per
annum. As of January 31, 1998, Funding paid interest on loans at rates ranging
from 9 - 18% per annum. At January 31, 1998, the aggregate outstanding amount of
the loans was approximately $1,756,029, of which $202,000 was owed to EFT,
$859,226 was owed to Mr. Bonsal and the related limited partnership, and $22,044
was owed to Dave A. Windhorst, President of the Company. The maximum outstanding
balances of the loans made by EFT to Funding in fiscal 1998 and 1997 were
$202,000 and $211,000, respectively. The total interest earned by the Company on
loans from EFT to Funding in fiscal 1998 and 1997 was $21,718 and $18,943,
respectively.
The interest rates paid by Funding on outstanding loans to Funding from
David S. Bonsal and the related limited partnership have ranged from 9 - 18% per
annum since 1989. The interest rate on loans from David S. Bonsal and the
related limited partnership that were outstanding during fiscal 1998 and 1997
and at January 31, 1998 was 15% per annum, except for a small portion of the
loans relating to ATMs in El Paso, Texas, for which the interest rate was 9%
during fiscal 1998 and 1997 and at January 31, 1998. The total interest paid by
Funding to David S. Bonsal and the related limited partnership for loans to
Funding was $122,948 in fiscal 1998, $93,439 in fiscal 1997, $56,489 in fiscal
1996, $45,495 in fiscal 1995, $20,846 in fiscal 1994, $9,279 in fiscal 1993,
$6,036 in fiscal 1992, $7,491 in fiscal 1991 and $1,584 in fiscal 1990. The
interest rate on loans from Dave A. Windhorst outstanding during fiscal 1998,
1997 and 1996 ranged from 12 - 18% per annum, and on loans outstanding at
January 31, 1998 was 12% per annum. The total interest paid by Funding to Dave
A. Windhorst for loans to Funding was $3,344 in fiscal 1998, $4,792 in fiscal
1997 and $3,541 in fiscal 1996. No loans from Mr. Windhorst to Funding were
outstanding prior to fiscal 1996.
As noted above, the shareholders of Funding receive a return on their
equity investment in Funding each month before Funding pays the management fee
to the Company. The amount of the monthly payment to the shareholders is based
upon the amount of their equity investment
55
<PAGE>
in Funding and is paid on the equity investment at a rate of 18% per annum. For
fiscal 1990, the amount paid by Funding to the shareholders of Funding as a
return on equity investment was approximately $12,000, and since fiscal 1990,
the amount paid each year by Funding to the shareholders of Funding as a return
on equity investment has been approximately $25,000. David S. Bonsal, as the
owner of 1/3 of the outstanding shares of Funding, has received 1/3 of the
amount paid each year to the shareholders of Funding.
The Company has investigated and will continue to investigate other
sources of lending for vault cash and may replace the relationship with Funding
in whole or in part to the extent that alternative sources of funds become
available on acceptable terms. The Company attempted to negotiate a financing
arrangement with Boatmen's Bank of Kansas City, under which Boatmen's would
finance vault cash for a number of the Company's ATMs. Boatmen informed the
Company in December 1996 that it was terminating negotiations, primarily because
of the difficulty of tracking cash collateral through an ATM network. The
Company entered into an agreement with Pinnacle Cash Systems, L.L.C.
("Pinnacle") in August 1997 pursuant to which Pinnacle loaned the Company funds
for vault cash at an interest rate equal to the rate published from time to time
as the prime rate by the Wall Street Journal plus 2.5%. In addition to the
payment of interest, the agreement required the Company to pay monthly "bank"
fees and insurance charges to Pinnacle. As of January 31, 1998, Pinnacle
provided vault cash for approximately 11 ATMs. The agreement was terminated by
Pinnacle in March 1999. Pinnacle informed the Company that Pinnacle's lender
would no longer fund loans by Pinnacle for vault cash, because of losses
suffered by the lender on other loans for vault cash due to problems the lender
encountered in monitoring cash transfers through ATM networks.
Deferred Compensation
The Company has a liability of approximately $140,000 due to David S.
Bonsal, Chairman and Chief Executive Officer of the Company, representing
compensation informally deferred during fiscal years 1994 through 1996 in an
attempt to improve the Company's cash flow during those years. The Company has
agreed to pay interest on the deferred compensation at a rate of 5% per annum.
Personal Guarantees of Company Obligations
As a result of the Company's financial problems, certain lenders have
required the personal guarantee of David S. Bonsal, Chairman and Chief Executive
Officer of the Company, as a condition to loaning funds to the Company to
finance the purchase of new and replacement ATMs. The Company's payment of the
following obligations of the Company has been personally guaranteed by Mr.
Bonsal:
1. Capital Lease dated December 30, 1996, between the Company and
Newcourt Communications Finance Corporation (formerly AT&T Credit
Corporation), in the principal amount of $440,365. The lease
requires monthly payments by the Company through November 2000.
2. Capital Lease dated October 30, 1996, between the Company and
Newcourt Communications Finance Corporation (formerly AT&T Credit
Corporation), in the principal amount of $66,427. The lease requires
monthly payments by the Company through September 2000.
56
<PAGE>
3. Capital Lease dated February 28, 1997, between the Company and
Newcourt Communications Finance Corporation (formerly AT&T Credit
Corporation), in the principal amount of $119,594. The lease
requires monthly payments by the Company through January 2001.
4. A promissory note dated June 3, 1996, issued by the Company to Bank
21 (formerly The Farmers Bank) in the principal amount of $57,570.
The note is due on demand, and if no demand is made, the note is due
in installments through January 2001.
5. A promissory note dated August 20, 1996, issued by the Company to
Bank 21 (formerly The Farmers Bank) in the principal amount of
$222,200. The note is due on demand, and if no demand is made, the
note is due in installments through November 2001.
Under the terms of each of the capital leases described in Items 1-3 above, Mr.
Bonsal's personal guarantee is to be released under each lease if the Company
complies with its obligations under the respective lease for twenty-four (24)
months after the date of such lease and is not in default under the respective
lease at the end of the twenty-four (24) month period.
Loans from Management to the Company
In November 1992, David S. Bonsal, Chairman and Chief Executive Officer of
the Company, loaned the Company $50,000 so that the Company could complete an
offer in compromise with the IRS by payment of $110,000. The IRS had taken the
position that the Company owed a substantial amount in federal income taxes,
interest and penalties arising from the improper use of net operating loss
carrybacks in the taxable years ended from 1979 through 1983. The Company did
not have sufficient funds without the loan to complete the offer in compromise.
Interest accrued on the loan at rates ranging from 5 - 9% per annum from
November 1992 until the principal and accrued interest was paid in full in 1996.
The total amount of interest paid on the loan was $12,498.
Certain Sales and Transfers of Common Stock
Since the end of fiscal 1987, the Company has issued 17,201,897 shares of
Common Stock. See Item 5, "MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS - Recent Sales of Unregistered Securities." Of these shares, the Company
issued 12,112,644 shares of Common Stock to directors and executive officers of
the Company and to certain other parties, as described below.
o In November 1987, the Company sold 724,932 shares to William
Smithson for $.1875 per share as part of an offering of 1,975,362
shares by the Company to raise cash. Mr. Smithson became a one-third
owner of Funding in 1989.
o In 1989, as part of an offering of 2,300,000 shares by the Company
for $.08 per share to raise cash, the Company sold 18,750 shares to
Jeffrey M. Sperry, a director of the Company.
o In 1989, the Company issued 95,323 shares to Mr. Smithson in
exchange for Mr. Smithson's agreement to pledge a certificate of
deposit as collateral for the Company's outstanding debt. In
addition, in 1989 the Company sold 23,639 shares to Mr. Smithson
for $.08 per share in cash.
57
<PAGE>
o In 1990, in order to conserve cash, the Company issued the following
shares of Common Stock to the following directors and executive
officers of the Company at an assumed value of $.01 per share in
lieu of compensation for their services: 625,000 shares to John L.
Settles, President of the Company from April 1989 through late 1990;
150,000 shares to Dave A. Windhorst, then a Senior Vice President of
the Company and now President of the Company; 100,000 shares to
Jeffrey M. Sperry, a director of the Company; and 100,000 shares to
Arthur M. Moglowsky, a director of the Company.
o The Company issued 400,000 shares at an assumed value of $.01 per
share to a former employee in June 1994 in lieu of compensation.
These shares were then repurchased by the Company as treasury stock
in June 1996 for $.01 per share as part of a negotiated settlement
with the former employee.
o The Company sold 1,000,000 shares of Common Stock of the Company to
David S. Bonsal, Chairman and Chief Executive Officer of the
Company, in December 1994 for $.01 per share in order to raise cash
to cover payroll.
o The Company sold 8,600,000 shares of Common Stock of the Company to
David S. Bonsal, Chairman and Chief Executive Officer of the
Company, in April 1996 for $.01 per share. The sale was part of an
offering of 10,000,000 shares in May 1995 to raise working capital
and improve the Company's financial condition. Mr. Bonsal subscribed
for the shares prior to September 1995.
o In 1995 and 1996, in order to conserve cash, the Company issued the
following shares of Common Stock to the following persons then
serving as directors of the Company, at an assumed value of $.01 per
share, in lieu of compensation for their services: 100,000 shares in
1995 and 25,000 shares in 1996 to Jeffrey M. Sperry; 100,000 shares
in 1995 and 25,000 shares in 1996 to Arthur M. Moglowsky; and 25,000
shares in 1996 to Stephan Gorman.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits required by this item are listed in the Index to
Exhibits set forth on page E-1.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the fourth
quarter of the year ended January 31, 1998.
58
<PAGE>
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL MONEY CENTERS, INC.
Date: April 28, 1999 By: /s/ David S. Bonsal
---------------------------------------
David S. Bonsal
Chairman of the Board
and Chief Executive Officer
In accordance with the requirements of the Securities Exchange Act
of 1934, as amended, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David S. Bonsal Chairman of the Board, Chief April 28, 1999
- ------------------------ Executive Officer and Director
David S. Bonsal (Principal Executive Officer)
/s/Dave A. Windhorst President April 28, 1999
- ------------------------ (Principal Financial and
Dave A. Windhorst Accounting Officer)
*/s/ Jeffrey M. Sperry Director April 28, 1999
- ------------------------
Jeffrey M. Sperry
*/s/ Arthur M. Moglowsky Director April 28, 1999
- ------------------------
Arthur M. Moglowsky
*By: /s/ David S. Bonsal
----------------------
David S. Bonsal
Attorney-in-fact
59
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
3.1 Articles of Incorporation of the Company, as amended
3.2 Amended and Restated Bylaws of the Company
4.1 Promissory Note dated June 3, 1996 issued by the Company to Bank 21
(formerly The Farmers Bank)
4.2 Business Loan Agreement dated June 3, 1996 between the Company and
Bank 21 (formerly The Farmers Bank)
4.3 Promissory Note dated August 26, 1996 issued by the Company to Bank
21 (formerly The Farmers State Bank)
4.4 Business Loan Agreement dated August 26, 1996 between the Company
and Bank 21 (formerly The Farmers State Bank)
4.5 Commercial Security Agreement dated August 26, 1996 between the
Company and Bank 21 (formerly The Farmers State Bank)
10.1 Agreement dated August 15, 1989 among the Company, Funding,
David S. Bonsal, John L. Settles and William Smithson
10.2 Addendum dated August 29, 1989 among the Company, Funding, David S.
Bonsal, John L. Settles and William Smithson
10.3 Letter Agreement dated June 12, 1997 between the Company and Funding
10.4 Master Equipment Lease Agreement dated October 18, 1996 between the
Company and New Court Communications Finance Corporation (formerly
AT&T Credit Corporation)
10.5 Master Equipment Lease Agreement Schedule dated December 30, 1996
between the Company and Newcourt Communications Finance Corporation
(formerly AT&T Credit Corporation), as amended
10.6 Master Equipment Lease Agreement Schedule dated October 30, 1996
between the Company and Newcourt Communications Finance Corporation
(formerly AT&T Credit Corporation)
10.7 Master Equipment Lease Agreement Schedule dated February 28, 1997
between the Company and Newcourt Communications Finance Corporation
(formerly AT&T Credit Corporation)
21 List of Subsidiaries
24 Powers of Attorney
27 Financial Data Schedule
E-1
ARTICLES OF INCORPORATION,
AS AMENDED,
OF
UNIVERSAL MONEY CENTERS, INC.
-----------------------------
ARTICLE I
---------
The name of the Corporation is Universal Money Centers, Inc.
ARTICLE II
----------
The address of its registered office in the State Missouri is 222 E.
Dunklin Street, Jefferson City, MO 65101; and the name of its initial
registered agent at such address is Corporation Service Company.
ARTICLE III
-----------
The aggregate number of shares which the corporation shall have authority
to issue shall be forty million (40,000,000) common shares of the par value of
one cent ($0.01) per share, amounting in the aggregate to Four Hundred Thousand
and No/100 Dollars ($400,000.00), and there shall be no preferences,
qualifications, limitations or restrictions whatsoever, nor any special or
relative rights in respect to the shares, except as provided in the Articles.
ARTICLE IV
----------
The name and residence of the incorporator is Larry G. Schulz, 10312 NE
Reinking Road, Kansas City, Missouri 64156.
ARTICLE V
---------
The number of Directors to constitute the First Board of Directors and to
be elected at the meeting of the incorporators shall be ten (10). The
number of Directors to constitute the Board of Directors thereafter shall be
determined by or in the manner provided in the By-Laws of the Corporation,
except that the number of Directors to constitute the Board of Directors shall
not be decreased to less than three (3) nor more than twenty-one (21), and
further provided that any change in the number of Directors to constitute the
Board of
<PAGE>
Directors shall be reported in writing to the Secretary of State within thirty
(30) calendar days of the change.
ARTICLE VI
----------
The duration of the Corporation is perpetual.
ARTICLE VII
-----------
The Corporation is formed for the following purposes:
A. To engage in the business of buying, selling, leasing and servicing
automated teller machines and related products and services.
B. To buy, utilize, lease, rent, import, expert, franchise, operate,
manufacture, produce, design, prepare, assemble, fabricate, improve, develop,
sell, lease, mortgage, pledge, hypothecate, distribute and otherwise deal in, at
wholesale, retail or otherwise, and as principal, agent or otherwise, all
commodities, goods, wares, merchandise, devices, apparatus, equipment and all
other personal property, whether tangible or intangible, of every kind, without
limitation as to description, location or amount.
C. To apply for, obtain, purchase, lease, take licenses in respect of or
otherwise acquire, and to hold, own, use, operate, enjoy, turn to account, grant
franchises or licenses in respect of, manufacture under, introduce, sell,
assign, mortgage, pledge or otherwise dispose of:
(1) Any and all inventions, devices, methods, processes and formulae
and any improvements and modifications thereof;
(2) Any and all letters patent of the United States or of any other
country, state or locality, and all rights connected therewith or
appertaining thereto;
(3) Any and all copyrights, granted by the United States or any other
country, state or locality; and
(4) Any and all trademarks, tradenames, trade symbols and other
indications of origin and ownership granted by or recognized under the laws
of the United States or of any other country, state or locality; and to
conduct and carry on its business in any or all of its various branches
under any trade name or trade names.
D. To engage in, carry on and conduct research, experiments,
investigations, analyses, studies and laboratory work, for the purpose of
discovering new products or to improve products or services.
E. To buy, lease, rent or otherwise acquire, own, hold, use, divide,
partition, develop, improve, operate and sell, lease, mortgage or otherwise
dispose of, deal in and turn to account, real estate, leaseholds and any and all
interests or estates appertaining thereto.
<PAGE>
F. To enter into any lawful contract or contracts with persons, firms,
corporations, other entities, governments or any agencies or subdivision
thereof, including guaranteeing the performance of any contract or any
obligation of any person, firm, corporation or other entity.
G. To purchase and acquire, as a going concern or otherwise, and to carry
on, maintain and operate all or any part of the property or business of any
corporation, firm, association, entity, syndicate or persons whatsoever, deemed
to be of benefit to the Corporation, or of use in any manner in connection with
any of its purposes; and to dispose thereof upon such terms as may seem
advisable to the Corporation.
H. To invest, lend and deal with monies of the Corporation in any lawful
manner, and to acquire by purchase, by the exchange of stock or other securities
of the Corporation, by subscription or otherwise, and to invest in, to hold for
investment or for any other purpose, and to use, sell, pledge, or otherwise
dispose of, and in general to deal in any interest concerning, or enter into any
transaction with respect to (including "long" and "short" sales of), any stocks,
bonds, notes, debentures, certificates, receipts and other securities and
obligations of any government, state, municipality, corporation, association, or
other entity, including individuals and partnerships and, while owner thereof,
to exercise all of the rights, pointers and privileges of ownership including,
among other things, the right to vote thereon for any and all purposes and to
give consents with respect thereto.
I. To borrow or raise money for any purpose of the Corporation and to
secure any loan, indebtedness or obligation of the Corporation and the interest
accruing thereon, and for that or any other purpose, to mortgage, pledge,
hypothecate or change all or any part of the present or hereafter acquired
property, rights and franchises of the Corporation, real, personal, mixed or of
any character whatever, subject only to limitations specifically imposed by law.
J. To do any or all of the things hereinabove enumerated, alone for its
own account, or for the account of others, or as the agent for others, or in
association with others or by or through others, and to enter into all lawful
contracts and undertakings in respect thereof.
K. To have one or more offices, to conduct its business, carry on its
operations and promote its objectives within and without the State of Missouri,
in other states, the District of Columbia, the territories, colonies and
dependencies of the United States, in foreign countries and anywhere in the
world, without restriction as to place, manner or amount, but subject to the
laws applicable thereto; and to do any or all of the things herein set forth to
the same extent as a natural person might or could do and in any part of the
world, either alone or in company with others.
L. In general, to carry on any other business in correction with each and
all of the foregoing or incidental thereto, and to carry on, transact and engage
in any and every lawful business or other lawful thing calculated to be of gain,
profit or benefit to the Corporation, as fully and freely as a natural person
might do, to the extent and in the manner, and anywhere within and without the
State of Missouri, as it may from time to time determine; and to have and
exercise each and all of the powers and privileges, either direct or incidental,
which are given and provided by or are available under the laws of the State of
Missouri in respect of general and business corporations organized for profit
thereunder; provided, however, that the Corporation shall not engage in any
activity for which a corporation may not be formed under the laws of the State
of Missouri.
<PAGE>
M. It is intended that each of the purposes and powers specified in each
of the paragraphs of this ARTICLE VII shall be in no way limited or restricted
by reference to or inference from the terms of any other paragraph, but that the
purposes and powers specified in each of the paragraphs of this ARTICLE VII
shall be regarded as independent purposes and powers. The enumeration of
specific purposes and powers in this ARTICLE VII shall not be construed to
restrict in any manner the general purposes and powers of this Corporation, nor
shall the expression of one thing be deemed to exclude another, although it be
of like nature. The enumeration of purposes and powers herein shall not be
deemed to exclude or in any way limit by inference any purposes or powers which
this Corporation has power to exercise, whether expressly by the laws of the
State of Missouri, now or hereafter in effect, or implied by any reasonable
construction of such laws.
ARTICLE VIII
------------
The Board of Directors shall have the power to make, and from time to time
repeal, amend and alter the By-Laws of the Corporation; provided, however, that
the paramount power to repeal, amend and alter the By-Laws or to adopt new
By-laws shall always be vested in the Shareholders, which power may be exercised
by a vote of a majority thereof present at any annual or special meeting of the
Shareholders and the Directors thereafter shall have no power to suspend,
repeal, amend or otherwise alter any By-laws or portion thereof so enacted by
the Shareholders, unless the Shareholders in enacting such By-Laws or portion
thereof shall otherwise provide. Notwithstanding the foregoing, if the
Shareholders adopt any provision in the By-laws which contains restrictions on
the transferability of shares, such provision must be unanimously approved by
all Shareholders of the Corporation and any amendment or repeal thereof must be
authorized by unanimous vote of all Shareholders at any annual or special
meeting of the Shareholders.
ARTICLE IX
----------
A. The Corporation will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or contemplated action,
suit or proceeding whether civil, criminal, administrative or investigative,
other than an action by or in the right of the Corporation, by reason of the
fact that he is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal sanction or
proceeding, had reasonable cause to believe that his conduct was unlawful.
B. The Corporation will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a Director, officer, employee, or agent of
the Corporation, or is or was serving at the request of the
<PAGE>
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the court in which
the action or suit was brought determines upon application that, despite the
adjudication of liability and in view of all the circumstances of the case, the
person is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper.
C. To extent that a Director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections A and B of this Section,
or in defense of any claim, issue or matter herein, he shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the action, suit or proceeding.
D. Any indemnification under subsections A and of this section, unless
ordered by a court, shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the Director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in this section. The determination
shall be made by the Board of Directors of the Corporation by a majority vote of
a quorum consisting of Directors who wee not parties to the action, suit, or
proceeding, or, if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion, or by the Shareholders or the corporation.
E. Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
the action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the Director,
officer, employee or agent to repay such amount unless it shall untimely be
determined that he is entitled to be indemnified by the Corporation as
authorized in this section.
F. The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any By-law, agreement, vote of Shareholders or disinterested
Directors or others, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person.
G. The Corporation may purchase and maintain insurance on behalf of any
person who is or was a Director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a Director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this section.
ARTICLE X
---------
The preemptive right of a holder of common shares of this Corporation is
hereby denied and no such shareholder shall be entitled as of right to subscribe
for, purchase, or receive any part of any new or additional issue of shares of
any class, whether now or hereafter authorized, or of any bonds, debentures, or
other securities convertible into shares of any class; and all such additional
shares, bonds, debentures, or other securities convertible into shares may be
issued and disposed of by the Board of Directors to such person or persons and
on such terms and for such consideration (so far as may be permitted by law) as
the Board of Directors, in their absolute discretion, may deem advisable. These
provisions shall be stated or summarized upon each certificate of stock issued
by this Corporation.
AMENDED AND RESTATED
BY-LAWS
of
UNIVERSAL MONEY CENTERS, INC.
(A Missouri Corporation)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the corporation
shall be located at such place in the State of Missouri as the Board of
Directors may from time to time authorize by duly adopted resolution.
Section 2. Other Offices. The corporation may also have offices at such
other places, either within or without the State of Missouri, as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
Shareholders
Section 1. Place of Meetings. Meetings of shareholders shall be held at
such place, either within or without the State of Missouri, as shall be
designated from time to time by the Board of Directors and stated in the notice
of meeting.
Section 2. Annual Meetings. Annual meetings of shareholders shall be
held once each year on such date and at such time as shall be designated from
time to time by the Board of Directors. At each annual meeting the shareholders
shall elect a Board of Directors and transact such other business as may be
properly brought before the meeting.
Section 3. Special Meetings. Special meetings of the shareholders
may be called only by the Board of Directors.
Section 4. Notice of Meetings. Written or printed notice of each meeting
of shareholders stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given not less than ten (10) or more than seventy (70) days before the date
of the meeting, by or at the direction of the Board of Directors, the President,
or the Secretary to each shareholder of record entitled to vote at such meeting.
Written notice may include, but is not limited to, notice by electronic
transmission, which means any process of communication not directly involving
the physical transfer of paper
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<PAGE>
that is suitable for the retention, retrieval and reproduction of information by
the recipient. Any notice of a shareholders' meeting sent by mail shall be
deemed given when deposited in the United States mail with postage thereon
prepaid addressed to the shareholder at his or her address as it appears on the
records of the corporation.
Section 5. List of Shareholders. At least ten (10) days before each
meeting of shareholders, the Secretary shall prepare a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each shareholder and the number of shares registered
in the name of each shareholder, and such list shall be kept on file at the
registered office of the corporation and shall be subject to inspection by any
shareholder during usual business hours for a period of at least ten (10) days
prior to the meeting. Such list shall also be produced and kept open at the time
and place of the meeting and shall be subject to inspection by any shareholder
during the whole time of the meeting.
Section 6. Quorum. Except as otherwise provided by law or in the
articles of incorporation, the holders of a majority of the outstanding shares
entitled to vote at a meeting of shareholders, present in person or represented
by proxy, shall constitute a quorum at such meeting for the transaction of
business. If, however, such quorum shall not be present or represented at any
such meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have the right successively to
adjourn the meeting to another time and place as provided in Section 7 hereof.
Section 7. Adjournment and Postponement of Meetings.
(a) Any meeting of shareholders may be successively adjourned to
a specified date not longer than ninety (90) days after such adjournment or to
another place. Notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
ninety (90) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the date and place of the adjourned meeting shall
be given to each shareholder of record entitled to vote at the meeting.
(b) A shareholders' meeting may be successively postponed by
resolution of the Board of Directors to a specified date up to ninety (90) days
after such postponement or to another place, provided public notice of such
postponement is given prior to the date previously scheduled for such meeting.
Such notice shall state the new date and place of such postponed meeting. Public
notice shall be deemed to have been given if a public announcement is made by
press release reported by a national news service or in a publicly available
document filed with the United States Securities and Exchange Commission.
Section 8. Proxies. Each shareholder entitled to vote at a meeting of
shareholders may authorize another person or persons to act for him by proxy,
but no such proxy shall be valid after eleven months from the date of its
execution, unless the proxy provides otherwise.
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<PAGE>
Section 9. Voting. Except as otherwise provided by law or by the
articles of incorporation and subject to the provisions of these By-laws, each
shareholder shall be entitled to one vote for each share of common stock held by
such shareholder; provided, however, that at all elections for directors, each
shareholder shall have the right to cast as many votes in the aggregate as shall
equal the number of voting shares so held by such shareholder, multiplied by the
number of directors to be elected at such election, and each shareholder may
cast the whole number of votes, either in person or by proxy, for one candidate,
or distribute them among two or more candidates.
Section 10. Organization. The Chairman of the Board or, in his absence,
the President shall preside at all meetings of the shareholders. In the absence
of both the Chairman of the Board and the President, a majority of the members
of the Board of Directors present in person at such meeting may appoint any
officer or director to act as chairman of the meeting. The Secretary of the
corporation shall act as secretary of all meetings of the shareholders. In the
absence of the Secretary, the chairman of the meeting shall appoint any other
person to act as secretary of the meeting. The chairman of the meeting shall
have the authority on his or her own motion to adjourn the meeting from time to
time as provided in these By-laws.
Section 11. Order of Business. All meetings of shareholders shall be
conducted in accordance with such rules as are prescribed by the chairman of the
meeting. The order of business at all meetings of the shareholders shall be
determined by the chairman of the meeting.
Section 12. Advance Notice of Shareholder Nominations and
Shareholder Proposals.
(a) Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
corporation at any meeting of shareholders at which directors are to be elected.
Nominations of persons for election to the Board of Directors may be made at any
such meeting of shareholders (i) by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (ii) by any shareholder
of record of the corporation who is entitled to vote in the election of
directors at such meeting and who complies with the notice procedures set forth
in Section 12(b).
(b) If a shareholder proposes to nominate one or more candidates
for election as directors at a meeting of shareholders at which directors are to
be elected, the shareholder must give timely notice thereof in proper written
form to the Secretary of the corporation, in addition to complying with any
other applicable requirements. To be timely, the shareholder's notice must be
delivered to the Secretary at the principal executive offices of the corporation
not less than sixty (60) days prior to the date scheduled for such meeting;
provided, however, that if notice or public announcement of the scheduled date
of the meeting is not given or made at least seventy (70) days prior to the date
scheduled for the meeting, such shareholder's notice must be so delivered to the
Secretary not more than ten (10) days following the day on which such notice of
meeting was mailed or such public announcement was made, whichever is earlier.
In no event shall the postponement, deferral or adjournment of a shareholders'
meeting commence a new time period for the giving of notice by a shareholder as
described above. For purposes of this Section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
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<PAGE>
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended from
time to time (the "Exchange Act").
To be in proper written form, a shareholder's notice to the
Secretary must set forth (i) as to each person whom the shareholder proposes to
nominate for election as a director (A) the name, age, business address and
residence address of the person, (B) the principal occupation or employment of
the person, (C) the class and number of shares of capital stock of the
corporation that are owned beneficially and owned of record by the person and
(D) any other information concerning the person that would be required to be
disclosed in a proxy statement or other filings in connection with the
solicitation of proxies for the election of such person as a director under
Exchange Act and the rules and regulations promulgated thereunder; and (ii) as
to the shareholder giving the notice (A) the name and address, as they appear on
the corporation's books, of such shareholder, (B) the name and address of the
beneficial owner, if any, on whose behalf the nomination(s) are made, (C) the
class and number of shares of capital stock of the corporation that are owned
beneficially and owned of record by such shareholder and any such beneficial
owner, (D) a description of all arrangements or understandings between such
shareholder or beneficial owner and each proposed nominee or any other person or
persons (including their names) pursuant to which the nomination(s) are to be
made by such shareholder and (E) any other information relating to such
shareholder or beneficial owner that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for the election of directors pursuant to Section 14 of
the Exchange Act and the rules and regulations promulgated thereunder. Such
notice must be accompanied by a written consent of each proposed nominee to
being named as a nominee and to serve as a director if elected.
(c) No business may be transacted at an annual meeting of
shareholders, other than business that is either (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (ii) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (iii) otherwise properly
brought before the annual meeting by any shareholder of record of the
corporation who is entitled to vote at such meeting and who complies with the
notice procedures set forth in Section 12(d). Any business to be brought before
the annual meeting by any shareholder must also be a proper matter for
shareholder action.
(d) If a shareholder proposes to bring business before an annual
meeting of shareholders, the shareholder must give timely notice thereof in
proper written form to the Secretary of the corporation, in addition to
complying with any other applicable requirements. To be timely, a shareholder's
notice must be delivered to the Secretary at the principal executive offices of
the corporation within the period specified in Section 12(b) hereof. In no event
shall the postponement, deferral or adjournment of a shareholders' meeting
commence a new time period for the giving of notice by a shareholder.
To be in proper written form, a shareholder's notice to the
Secretary must set forth (i) a brief description of the proposal desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
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<PAGE>
corporation's books, of such shareholder, (iii) the name and address of the
beneficial owner, if any, on whose behalf the proposal is made, (iv) the class
and number of shares of capital stock of the corporation that are owned
beneficially and owned of record by such shareholder and any such beneficial
owner, (v) a description of all arrangements or understandings between such
shareholder or beneficial owner and any other person or persons (including their
names) in connection with the proposal of such business by such shareholder,
(vi) a description of any material financial or other interest of such
shareholder or beneficial owner in such proposal and (vii) any other information
that would be required to be disclosed in a proxy statement soliciting proxies
for approval of the proposal pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder.
(e) The Board of Directors, or a designated committee thereof,
may reject any shareholder's nomination or shareholder's proposal which is not
timely made in accordance with the provisions of this Section 12. If the Board
of Directors, or a designated committee thereof, determines that the information
provided in a shareholder's notice does not comply with the requirements of this
Section 12 in any material respect, the Secretary of the corporation shall
notify the shareholder of the deficiency. The shareholder shall have an
opportunity to cure the deficiency by providing additional information to the
Secretary within ten (10) days from the date such deficiency notice is given to
the shareholder, or such shorter time as may reasonably be deemed appropriate by
the Board of Directors or committee. Without limiting the methods that the
Company may use to give such deficiency notice, any such deficiency notice shall
be deemed to be given to the shareholder when deposited in the United States
mail with postage thereon prepaid addressed to the shareholder at the
shareholder's address as it appears on the records of the corporation. If the
deficiency is not cured within such period, or if the Board of Directors or such
committee determines that the additional information provided by the
shareholder, together with the information previously provided, does not satisfy
the requirements of this Section 12 in any material respect, then the Board of
Directors or committee may reject such shareholder's notice.
(f) Notwithstanding the procedures set forth in Section 12(e)
hereof, if the Board of Directors or any committee thereof does not make a
determination as to whether a shareholder's notice complies with the provisions
of this Section 12, the chairman of the meeting shall make the determination and
declare at the meeting whether the shareholder has so complied. If the chairman
determines that the shareholder has not so complied, then unless the chairman in
his or her sole and absolute discretion waives such noncompliance, the chairman
shall declare at the meeting that the shareholder's nomination or proposal was
not properly made and the defective nomination or shareholder proposal shall be
disregarded.
ARTICLE III
Board of Directors
Section 1. Power and Authority. The property and business of the
corporation shall be controlled and managed by the Board of Directors. The Board
of Directors may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute, or by the articles of
incorporation, or by these By-laws directed or required to be exercised or done
by the shareholders.
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<PAGE>
Section 2. Number and Election. The number of directors which shall
constitute the Board of Directors shall be determined from time to time by
resolution of the Board of Directors, provided that no reduction by the Board of
Directors in the number of directors shall affect the term of any incumbent
director. The directors shall be elected at the annual meeting of shareholders,
except as provided in Article III, Section 3 hereof, and each director elected
shall hold office until his or her successor is elected and has qualified or
until his or her earlier death, resignation or removal.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. Any director so chosen to fill any such vacancy or
newly created directorship shall hold office until the next election of
directors and until his or her successor is elected and has qualified, or until
his or her earlier death, resignation or removal.
Section 4. First Meeting of Each Board. The first meeting of each newly
elected Board of Directors, of which no notice shall be necessary, shall be held
immediately following the annual meeting of shareholders or any adjournment
thereof at the place where the annual meeting of shareholders was held, or at
such other place as a majority of the members of the newly elected Board who are
then present shall determine, for the election or appointment of officers for
the ensuing year and the transaction of such other business as may be brought
before such meeting. In the event the meeting is not held at that time and
place, such first meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver of notice
signed by all of the directors.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such times and places as the Board of
Directors may from time to time determine.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be called by order of the Chairman of the Board and Chief Executive Officer
or any two directors. Notice of the time and place of each special meeting shall
be given by or at the direction of the person or persons calling the meeting as
hereinafter provided. Notice of the meeting shall be mailed to each director,
addressed to such director at his or her residence or usual place of business,
at least three (3) days before the meeting, or shall be sent to him or her at
such place by telegraph, telecopy or facsimile transmission or be delivered
personally or by telephone at least twenty-four hours before the meeting. The
notice shall state the date, time and place of the meeting but need not state
the purpose thereof, except as otherwise expressly provided in these By-laws.
Section 7. Waiver of Notice. A written waiver of notice, signed by the
director entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Neither the business to be transacted at,
nor the purpose of any regular or special meeting need be specified in any
written waiver of notice unless so required by the articles of incorporation or
these By-laws. Attendance of a director at any meeting, whether regular or
special, shall constitute a waiver of notice of such meeting except where a
director attends a
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meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 8. Quorum; Voting. A majority of the full Board of Directors
shall constitute a quorum for the transaction of business, unless a greater
number is required by the articles or incorporation or these By-laws. The act of
a majority of the directors present at a meeting at which a quorum shall be
present shall be the act of the Board of Directors, unless the act of a greater
number is required by the articles of incorporation or these By-laws. If less
than a quorum shall be present at any meeting, the directors present at such
meeting shall have the right successively to adjourn the meeting to another time
and place as provided in Section 9 hereof.
Section 9. Adjournment of Meetings. The directors present at any meeting
of directors shall have the right to successively adjourn the meeting to another
date, time and place. Notice need not be given of the adjourned meeting if the
date, time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the directors may transact any
business which might have been transacted at the original meeting.
Section 10. Organization. Every meeting of the Board of Directors shall
be presided over by the Chairman of the Board, or, in his absence, the
President. In the absence of the Chairman of the Board and the President, a
presiding officer shall be chosen by a majority of the directors present. The
Secretary of the corporation shall act as Secretary of the meeting, but, in the
Secretary's absence, the presiding officer may appoint any person to act as
secretary of the meeting.
Section 11. Committees of Directors. The Board of Directors may by
resolution or resolutions adopted by a majority of the whole Board of Directors
designate two or more directors to constitute an executive committee, finance
committee, audit committee or such other committee or committees as the Board of
Directors may from time to time deem advisable. Except to the extent restricted
by law, any such committee shall have and may exercise all of the authority of
the Board of Directors in the management of the corporation to the extent
provided in said resolutions. All committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors when required.
Section 12. Telephone Meetings. Members of the Board of Directors or any
committee designated by the Board of Directors may participate in meetings by
means of conference telephone or similar communications equipment whereby all
participants can hear each other and such participation shall constitute
attendance in person.
Section 13. Presumption of Assent. A member of the Board of Directors or
any committee thereof who is present at a meeting of the Board or such
committee, as the case may be, at which action on any matter is taken shall be
presumed to have assented to the action taken unless his or her dissent or
abstention shall be entered in the minutes of the meeting or unless he or she
shall file a written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the secretary of the corporation within ten (10)
days after the date a copy of the minutes of the meeting is received. Such right
to dissent shall not apply to a director or committee member who voted in favor
of such action.
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<PAGE>
Section 14. Action by Consent. Except as provided in the articles of
incorporation, any action which is required to be or may be taken at a meeting
of the directors or of any committee thereof may be taken without a meeting if
consents in writing, setting forth the action so taken, are signed by all
members of the Board of Directors or of the committee, as the case may be. Such
consents shall have the same force and effect as a unanimous vote at a meeting
duly held. The Secretary shall file such consents with the minutes of the
meetings of the Board of Directors or the committee, as the case may be.
Section 15. Removal. One or more directors or the entire Board of
Directors may be removed, with or without cause, at a meeting of shareholders by
a vote of the holders of a majority of the shares then entitled to vote at an
election of directors. If the articles of incorporation or these By-laws provide
for cumulative voting in the election of directors, and if less than the entire
Board of Directors is to be removed, no one of the directors may be removed if
the votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire Board of Directors, or, if there
are classes of directors, at an election of the class of directors of which he
is a part. Any director of the corporation may be removed for cause by action of
a majority of the entire Board of Directors if the director to be removed shall,
at the time of removal, fail to meet the qualifications stated in the articles
of incorporation or By-laws for election as a director or shall be in breach of
any agreement between such director and the corporation relating to such
director's services as a director or employee of the corporation. Notice of the
proposed removal by the Board of Directors shall be given to all directors of
the corporation prior to action thereon.
Section 16. Resignations. Any director of the corporation may resign at
any time by giving written notice of his or her resignation to the Chairman of
the Board or the President of the corporation. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 17. Compensation of Directors. Unless otherwise restricted by
law or by the articles of incorporation, the Board of Directors shall have the
authority to fix the compensation, if any, of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors or any committee. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be paid like
compensation for attending committee meetings.
ARTICLE IV
Officers
Section 1. General. The Board of Directors shall elect the officers
of the corporation, which shall include a President and a Secretary and such
other or additional officers (including, without limitation, a Chairman of the
Board, Chief Executive Officer, one or more Vice-Chairmen
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<PAGE>
of the Board, Vice-Presidents, Assistant Vice-Presidents, Assistant Secretaries,
a Treasurer and Assistant Treasurers) as the Board of Directors may designate.
Section 2. Term of Office; Removal and Vacancy. Each officer shall hold
office until his or her successor is elected and has qualified or until his or
her earlier death, resignation or removal. Any officer or agent shall be subject
to removal with or without cause at any time by the Board of Directors. Any
removal shall be without prejudice to the contractual rights, if any, of the
person so removed. Vacancies in any office, whether occurring by death,
resignation, removal or otherwise, may be filled by the Board of Directors.
Section 3. Powers and Duties. Each of the officers of the corporation
shall, unless otherwise ordered by the Board of Directors, have such powers and
duties as generally pertain to his or her respective office, such powers and
duties as are specified below and such powers and duties as from time to time
may be conferred upon him or her by the Board of Directors.
Section 4. Power to Vote Securities. Unless otherwise ordered by the
Board of Directors, the Chairman of the Board and the President each shall have
full power and authority on behalf of the corporation to attend and to vote at
any meeting of shareholders of any other corporation in which this corporation
may hold securities, and may exercise on behalf of this corporation any and all
of the rights and powers incident to the ownership of such securities at any
such meeting and shall have power and authority to execute and deliver proxies,
waivers and consents on behalf of the corporation in connection with the
exercise by the corporation of the rights and powers incident to the ownership
of such securities. The Board of Directors, from time to time, may confer like
powers upon any other person or persons.
Section 5. Chairman of the Board. The Chairman of the Board of Directors
shall preside at all meetings of the shareholders and at all meetings of the
Board of Directors and shall perform such other duties as may be delegated or
assigned to him or her from time to time by the Board of Directors or the
officer designated as Chief Executive Officer.
Section 6. President. The President, in the absence of the Chairman of
the Board, shall preside at all meetings of the shareholders and all meetings of
the Board of Directors; the President may sign certificates for shares of the
corporation, and may sign all notes, agreements or other instruments in writing
made and entered into for or on behalf of the corporation, except in cases where
the signing thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general the President
shall perform all duties incident to the office of president and shall perform
such other duties as may be prescribed from time to time by the Board of
Directors or the officer designated as Chief Executive Officer.
Section 7. Chief Executive Officer. The Chairman of the Board shall be
the Chief Executive Officer, unless the Board of Directors designates the
President as the Chief Executive Officer. The Chief Executive Officer shall be
responsible for the supervision, general control and management of the business
and affairs of the corporation, subject only to the authority of the Board of
Directors, shall insure that all orders and resolutions of the Board of
Directors are
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<PAGE>
carried into effect and in general shall perform all duties incident to the
office of chief executive officer.
Section 8. Vice President. The Vice Presidents, if any, in the order of
their seniority, shall perform all of the duties of the President in the event
of the death, disability or absence of the President and such other duties, if
any, as may be prescribed by the Board of Directors from time to time.
Section 9. Secretary. The Secretary shall keep an accurate record of the
proceedings of the meetings of the stockholders and directors, shall countersign
all certificates of stock, shall attach the corporate seal thereto, and to all
other instruments requiring it, and shall perform such duties as are usually
incident to the office of the Secretary and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 10. Assistant Secretaries. The Assistant Secretaries, if any, in
the order of their seniority, shall perform all of the duties of the Secretary
in the event of the death, disability or absence of the Secretary, and such
other duties, if any, as may be prescribed by the Board of Directors from time
to time.
Section 11. Treasurer. The Treasurer, if any, shall have charge of the
funds of the corporation, shall keep an accurate account of all transactions of
the corporation, of all moneys received and paid out, and shall deposit or cause
to be deposited all funds of the corporation in the corporation's name in such
banking institution or institutions as may be designated by the Board of
Directors. The Treasurer shall, when requested, make a report to the
stockholders at the annual meeting thereof, shall make reports to the Chief
Executive Officer and to the Board of Directors whenever so directed by the
Chief Executive Officer or the Board of Directors, and shall perform such other
duties as are usually incident to the office of the Treasurer and such other
duties as may be prescribed by the Board of Directors from time to time.
Section 12. Assistant Treasurers. The Assistant Treasurers, if any, in
the order of their seniority, shall perform all of the duties of the Treasurer
in the event of the death, disability or absence of the Treasurer and such other
duties, if any, as the Board of Directors may from time to time assign to them.
ARTICLE V
Capital Stock
Section 1. Certificates of Stock. Certificates representing shares of
the corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the President or Vice President
and by the Secretary or an Assistant Secretary, and shall be sealed with the
seal of the corporation. Any or all of the signatures on the certificate may be
a facsimile and the seal may be facsimile, engraved or printed. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it
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<PAGE>
may be issued by the corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.
Section 2. Lost Certificates. The corporation may authorize the issuance
of a new certificate or certificates of stock in place of any certificate
theretofore issued by the corporation and alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
that the certificate of stock has been lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation and
transfer agent a bond in such sum as the corporation may direct sufficient to
indemnify the corporation and transfer agent against any claim that may be made
against the corporation or transfer agent on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new certificate.
Section 3. Transfer of Stock. Shares of capital stock of the corporation
shall be transferable on the books of the corporation only by the holder of
record thereof, in person or by duly authorized attorney, upon surrender and
cancellation of certificates for a like number of shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed, and
with such proof of the authenticity of the signature and of authority to
transfer, and of payment of transfer taxes, as the corporation or its agents may
require.
Section 4. Ownership of Stock. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the owner thereof
in fact and shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise expressly provided by
law.
Section 5. Fixing the Record Date. In order that the corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any postponement or adjournment thereof, shareholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or the date any change, conversion or exchange of stock shall go into
effect, the Board of Directors may fix in advance a record date, which shall not
be more than seventy (70) days before the date of such meeting or such other
action. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any postponement or adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the postponed or adjourned meeting.
ARTICLE VI
Miscellaneous
Section 1. Dividends. Subject to the provisions of applicable law
and the articles of incorporation, dividends upon the shares of capital stock of
the corporation may be declared by the Board of Directors from time to time.
Dividends may be paid in cash, in property or in shares of capital stock of the
corporation, unless otherwise provided by applicable law or the
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<PAGE>
articles of incorporation.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Board of Directors may from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
repairing or maintaining any property of the corporation or for such other
purpose as the Board of Directors may think conducive to the interests of the
corporation. The Board of Directors may modify or abolish any such reserves in
the manner in which they were created.
Section 3. Corporate Seal. The seal of the corporation shall be
circular in form and shall contain the name of the corporation and the year
and state of incorporation.
Section 4. Fiscal Year. The Board of Directors shall have power
to fix, and from time to time change, the fiscal year of the corporation.
Section 5. Checks, Notes, Drafts, Etc.. All checks, notes, drafts or
other orders for the payment of money of the corporation may be signed, endorsed
or accepted in the name of the corporation by such officer, officers, person or
persons as from time to time may be designated by the Board of Directors or by
an officer or officers authorized by the Board of Directors to make such
designations.
Section 6. Execution of Contracts, Deeds, Etc. In addition to the
authority granted in these By-laws, the Board of Directors may authorize any
officer or officers, agent or agents, to enter into or execute and deliver in
the name and on behalf of the corporation any and all deeds, bonds, mortgages,
contracts and other obligations or instruments, and such authority may be
general or confined to specific instances.
Section 7. Indemnification of Directors and Officers.
(a) To the full extent permitted and in the manner prescribed by
the laws of the State of Missouri (except for Section 351.355.6 of the Missouri
General and Business Corporation Law) as the same presently exists, the
corporation shall (i) indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit, or proceeding (except that
the corporation shall not indemnify any such person against judgments, fines and
amounts paid in settlement with respect to an action by or in the right of the
corporation) and (ii) pay to such person expenses incurred in defending any such
action, suit or proceeding in advance of the final disposition of such action,
suit, or proceeding upon receipt of an undertaking by or on behalf of such
person to repay such amount unless it shall ultimately be determined that such
person is entitled to be indemnified by the corporation as authorized in this
Section 7.
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<PAGE>
(b) All rights provided any person by this Section 7 shall be
contract rights. No amendment, alteration, addition, change or repeal of this
Section 7, of any other provisions of the articles of incorporation or of these
By-laws shall in any way impair or reduce the rights to indemnification or
advancement of expenses provided by this Section 7 to such person with respect
to any acts or omissions of such person occurring prior to the time of such
amendment, alteration, addition, change or repeal.
(c) The right to indemnification and payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Section 7 shall not be exclusive of any other right to which any person may have
or hereinafter acquire under any statute, provision of the articles of
incorporation or these By-laws, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(d) Without limiting the foregoing, the corporation is authorized
to enter into indemnification agreements with such of the persons specified in
subsection (a) as the Board of Directors may from time to time determine, to
provide greater rights to indemnification and advancement of expenses than that
expressly permitted under the Missouri General and Business Corporation Law,
except that no such agreement shall indemnify any person from or on account of
such person's conduct which was finally adjudged to have been knowingly
fraudulent, deliberately dishonest or willful misconduct.
(e) The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against or
incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
such person against such liability under the provisions of this Section 7 or the
Missouri General and Business Corporation Law.
(f) Notwithstanding the provisions of subsection (a) hereof, if
the Missouri General and Business Corporation Law is amended after the formation
of the corporation to permit greater rights to indemnification or advancement of
expenses than that provided in this Section 7, then the persons specified in
subsection (a) shall be indemnified to the full extent permitted by the Missouri
General and Business Corporation Law as so amended.
(g) In the event that any part of this Section 7 shall be found
in any action, suit or proceeding to be invalid or ineffective, the validity and
the effect of the remaining parts shall not be affected and the corporation
shall indemnify the persons specified in subsection (a) to the full extent
required by the remaining parts of this Section 7, and to the full extent
permitted by the General and Business Corporation Law of the State of Missouri.
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ARTICLE VII
Amendment
The Board of Directors shall have the power to make, alter or repeal the
By-laws of the corporation, subject to the power of the shareholders to alter or
repeal the By-laws made or altered by the Board of Directors.
CERTIFICATE
I, the undersigned, hereby certify that I am the Secretary of Universal
Money Centers, Inc., and that these Amended and Restated By-laws were duly
adopted by the Board of Directors of said corporation as the By-laws of said
corporation, effective April 19, 1999.
April 19, 1999
/s/ Pamela A. Glenn
___________________________________
Secretary
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PROMISSORY NOTE
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$57,570.00 6-03-1996 08-01-2001 65175 60 24 65175 CK
- --------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- --------------------------------------------------------------------------------
Borrower: UNIVERSAL MONEY CENTERS, INC. Lender: THE FARMERS BANK
TIN: 43-1242819 ONE WEST WASHINGTON AVENUE
6800 SQUIBB ROAD CARROLLTON, MO 64633-1257
MISSION, KS 66202
================================================================================
Principal Amount: $57,570.00 Date of Note: June 3, 1996
PROMISE TO PAY. UNIVERSAL MONEY CENTERS, INC. ("Borrower") promises to pay to
THE FARMERS BANK ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Fifty Seven Thousand Five Hundred Seventy &
00/100 Dollars ($57,570.00), together with interest on the unpaid principal
balance from June 3, 1996, until paid in full.
- --------------------------------------------------------------------------------
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in
accordance with the following payment schedule:
3 consecutive monthly interest payments, beginning July 1, 1996, with
interest calculated on the unpaid principal balances at an interest rate
of 10.250% per annum; 59 consecutive monthly principal and interest
payments of $1,250.00 each, beginning October 1, 1996, with interest
calculated on the unpaid principal balances at an interest rate of 10.250%
per annum; and 1 principal and interest payment of $18.60 on August 1,
2001, with interest calculated on the unpaid principal balances at an
interest rate of 10.250% per annum. This estimated final payment is based
on the assumption that all payments will be made exactly as scheduled; the
actual final payment will be for all principal and accrued interest not
yet paid, together with any other unpaid amounts under this Note.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments until the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
2.000% of the regularly scheduled payment or $25.00, whichever is less.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statements made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (I) Lender
in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within twenty one (21) days; or (b)
if the cure requires more than twenty one (21) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the interest rate on this Note 2.000 percentage points.
The interest rate will not exceed the maximum rate permitted by applicable law.
Lender may hire or pay someone else to help collect this Note if Borrower does
not pay. Borrower also will pay lender that amount. This includes, subject to
any limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. If not prohibited by applicable law, Borrower also will pay
any court costs, in addition to all other sums provided by law. This Note has
been delivered to Lender and accepted by Lender in the State of Missouri. If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of CARROLL County, the State of Missouri. Lender and
Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. This Note
shall be governed by and construed in accordance with the laws of the State of
Missouri.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to any other than the party
with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE NOTE.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
BORROWER:
UNIVERSAL MONEY CENTERS, INC.
By: /S/ Dave Windhorst By: /s/ Pamela A. Glenn
------------------------------------ -----------------------------------
DAVE WINDHORST, PRESIDENT PAMELA A. GLENN, SECRETARY
================================================================================
Fixed Rate. Irregular. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.21(c)
1996 CFI ProServices, Inc. All rights reserved. [MO-D20 UNIVM6A.LN]
BUSINESS LOAN AGREEMENT
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$57,570.00 6-03-1996 08-01-2001 65175 60 24 65175 CK
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
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Borrower: UNIVERSAL MONEY CENTERS, INC. (TIN:Lender: THE FARMERS BANK
43-1242819 ONE WEST WASHINGTON AVENUE
6800 SQUIBB ROAD CARROLLTON, MO 64633-1257
MISSION, KS 66202
================================================================================
THIS BUSINESS LOAN AGREEMENT between UNIVERSAL MONEY CENTERS, INC. ("Borrower")
and THE FARMERS BANK ("Lender") is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.
TERM. This Agreement shall be effective as of May 31, 1996, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence
of insurance as required below; and (e) any other documents required under
this Agreement or by Lender or its counsel, including without limitation
any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds; as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Missouri and
is validly existing and in good standing in all states in which Borrower
is doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged
or presently proposes to engage. Borrower also is duly qualified as a
foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its
businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
by Borrower, to the extent to be executed, delivered or performed by
Borrower, have been duly authorized by all necessary action by Borrower;
do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all liens and security interests,
and has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are titled in
Borrower's legal name, and Borrower has not used, or filed a financing
statement under, any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to Lender in writing, no
property of Borrower ever has been, or ever will be so long as this
Agreement remains in effect, used for the generation, manufacture,
storage, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the "CERCLA,"
"SARA," applicable state or Federal laws, or regulations adopted pursuant
to any of the foregoing. The representations and warranties contained
herein are based on Borrower's due diligence in investigating the
properties for hazardous waste and hazardous substances. Borrower hereby
(a) releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach of
this provision of this Agreement. This obligation to indemnify shall
survive the payment of the Indebtedness and the satisfaction of this
Agreement.
Commercial Purposes. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any guarantor of the Loan which
could materially affect the financial condition of Borrower or the
financial condition of any guarantor of the Loan.
Financial Records. Maintain its books and records in accordance with
accounting principles acceptable to lender, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
<PAGE>
06-03-1996 BUSINESS LOAN AGREEMENT Page 2
Loan No. 65175 (Continued)
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Financial Statements. Furnish Lender with, as soon as available, but in no
event later than sixty (60) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, prepared
by Borrower, and, as soon as available, but in no event later than thirty
(30) days after the end of each fiscal quarter, Borrower's balance sheet
and profit and loss statement for the period ended, prepared and certified
as correct to the best knowledge and belief by Borrower's chief financial
officer or other officer or person acceptable to Lender. All financial
reports required to be provided under this Agreement shall be prepared in
accordance with accounting principles acceptable to Lender, applied on a
consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, on Lender's forms,
and in the amounts and by the guarantors named below:
Guarantors Amounts
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DAVID BONSAL $57,570.00
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: 575.00.
Loan Proceeds. Use all Loan proceeds solely for the following specific
purposes: FOR THE PURCHASE OF NCR ATM'S AND TO RE-EMBURSE BORROWER FOR
INITIAL DOWN PAYMENT.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans With Disabilities Act
and with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party
to permit Lender free access to such records at all reasonable times and
to provide Lender with copies of any records it may request, all at
Borrower's expense.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c)
pay any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended), Borrower
may pay cash dividends on its stock to its shareholders from time to time
in amounts necessary to enable the shareholders to pay income taxes and
make estimated income tax payments to satisfy their liabilities under
federal and state law which arise solely from their status as Shareholders
of a Subchapter S Corporation because of their ownership of shares of
stock of Borrower, or (d) purchase or retire any of Borrower's outstanding
shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money
or assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan advances or to disburse Loan proceeds if:
(a) Borrower or any guarantor is in default under the terms of this Agreement or
any other agreement that Borrower or any guarantor has with Lender; (b) Borrower
or any Guarantor becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
guarantor, or in the value of any collateral securing any Loan; (d) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guaranty of the Loan or any other loan with Lender; or (e) Lender in
good faith deems itself insecure, even though no Event of Default shall have
occurred.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without imitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and al such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an event of
default ("Event of Default") under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when
due on the Loans.
Other Defaults. Failure of Borrower to comply with or to perform when
due any other term, obligation, covenant or condition contained in this
Agreement.
Default in Favor of Third Parties. Should Borrower default under any loan,
extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's ability to
repay the Loans or perform Borrower's obligations under this Agreement or
any related document.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower is false or misleading in
any material respect at the time made or furnished, or becomes false or
misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
<PAGE>
06-03-1996 BUSINESS LOAN AGREEMENT Page 3
Loan No. 65175 (Continued)
================================================================================
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any grantor of collateral for the Loan. This includes a
garnishment, attachment or levy on or of any of Borrower's deposit
accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. Lender, at its option,
may, but shall not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender and, in doing so, cure the Event of Default.
Change in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement immediately will terminate and,
at Lender's option, all Indebtedness immediately will become due and payable,
all without notice of any kind to Borrower, except that in the case of an Event
of Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents or available at
law, in equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
BORROWER ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS BUSINESS
LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
AS OF JUNE 3, 1996.
BORROWER:
UNIVERSAL MONEY CENTERS, INC.
By: /s/ Dave Windhorst /s/ Pamela A. Glenn
____________________________ By: _____________________________________
DAVE WINDHORST, PRESIDENT PAMELA A. GLENN, SECRETARY
LENDER:
THE FARMERS BANK
By: /s/ The Farmers Bank
----------------------------
Authorized Officer
================================================================================
LASER PRO, Reg. U.S. Pat. & M.M. Off., Ver. 3.21 (c) 1996 CFI ProServices,
Inc. All rights reserved. {MO-C40 UNIVM6A.LN]
PROMISSORY NOTE
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Principal Loan Date Maturity Loan Call Collateral Account Officer
$222,200.00 08-26-1996 11-25-2001 6517596-002 60 24 65175 CK
Initials
- --------------------------------------------------------------------------------
Reference in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- --------------------------------------------------------------------------------
Borrower: UNIVERSAL MONEY CENTERS, INC. (TIN: Lender: THE FARMERS BANK
43-1242819) ONE WEST WASHINGTON AVENUE
6800 SQUIBB ROAD (P.O. BOX 29153) CARROLLTON, MO 64633-1257
SHAWNEE MISSION, KS 66201-9153
================================================================================
Principal Amount: $222,200.00 Date of Note: August 26, 1996
PROMISE TO PAY. UNIVERSAL MONEY CENTERS, INC. ("Borrower") promises to pay THE
FARMERS BANK ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Two Hundred Twenty Two Thousand Two Hundred &
00/100 Dollars ($222,200.00), together with interest on the unpaid principal
balance from August 26, 1996, until paid in full.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in
accordance with the following payment schedule:
3 consecutive monthly interest payments, beginning September 25, 1996,
with interest calculated on the unpaid principal balances at an interest
rate of 10.250% per annum; 59 consecutive monthly principal and interest
payments of $4,800.00 each, beginning December 25, 1996, with interest
calculated on the unpaid principal balances at an interest rate of 10.250%
per annum; and 1 principal and interest payment of $1,955.25 on November
25, 2001, with interest calculated on the unpaid principal balances at an
interest rate of 10.250% per annum. This estimated final payment is based
on the assumption that all payments will be made exactly as scheduled; the
actual final payment will be for all principal and accrued interest not
yet paid, together with any other unpaid amounts under this Note.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
2.000% of the regularly scheduled payment or $25.00, whichever is less.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (I) Lender
in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within twenty one (21) days; or (b)
if the cure requires more than twenty one (21) days, immediately initiates steps
which lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the interest rate on this Note 2.000 percentage points.
The interest rate will not exceed the maximum rate permitted by applicable law.
Lender may hire or pay someone else to help collect this Note if Borrower does
not pay. Borrower also will pay Lender that amount. This includes, subject to
any limits under applicable law, Lender's attorney's fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collections services. If not prohibited by applicable law, Borrower also will
pay any court costs, in additions to all other sums provided by law. This Note
has been delivered to Lender and accepted by lender in the State of Missouri. If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of CARROLL County, the State of Missouri. Lender and
Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. This Note
shall be governed by and construed in accordance with the laws of the State of
Missouri.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorized Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, the extent allowed
by law, waive presentment, demand for payment, protest and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeated and for any length of
time) this loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE NOTE.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
BORROWER:
UNIVERSAL MONEY CENTERS, INC.
By: /s/ Dave A. Windhorst By: /s/ Pamela A. Glenn
________________________________ ____________________________________
DAVE A. WINDHORST, PRESIDENT PAMELA A. GLENN, SECRETARY
================================================================================
Fixed Rate. Irregular. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.
3.22 (c) 1996 CFI ProServices, Inc. All rights reserved. [Mo-D20 UNIVM6A.LN]
BUSINESS LOAN AGREEMENT
- ------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer
$222,200.00 08-26-1996 11-25-2001 6517596-002 60 24 65175 CK
Initials
- --------------------------------------------------------------------------------
Reference in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- --------------------------------------------------------------------------------
Borrower: UNIVERSAL MONEY CENTERS, INC. (TIN: Lender: THE FARMERS BANK
43-1242819) ONE WEST WASHINGTON AVENUE
6800 SQUIBB ROAD (P.O. BOX 29153) CARROLLTON, MO 64633-1257
SHAWNEE MISSION, KS 66201-9153
- --------------------------------------------------------------------------------
THIS BUSINESS LOAN AGREEMENT between UNIVERSAL MONEY CENTERS, INC. ("Borrower")
and THE FARMERS BANK ("Lender") is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.
TERM. This Agreement shall be effective as of August 26, 1996, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note; (b) Security
Agreements granting to Lender security interests in the Collateral; (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence
of insurance as required below; and (e) any other documents required under
this Agreement or by Lender or its counsel, including without limitation
any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the Sate of Missouri and
is validly existing and in good standing in all states in which Borrower
is doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged
or presently proposes to engage. Borrower also is duly qualified as a
foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its
businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
by Borrower, to the extent to be executed, delivered or performed by
Borrower, have been duly authorized by all necessary action by Borrower;
do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by borrower when delivered will constitute
legal, valid and binding obligations of borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all liens and security interests,
and has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are titled in
Borrower's legal name, and Borrower has not used, or filed a financing
statement under, any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to Lender in writing, no
property of Borrower ever has been, or ever will be so long as this
Agreement remains in effect, used for the generation, manufacture,
storage, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the "CERCLA,"
"SARA," applicable state or Federal laws, or regulations adopted pursuant
to any of the foregoing. The representations and warranties contained
herein are based on Borrower's due diligence in investigating the
properties for hazardous waste and hazardous substances. Borrower hereby
(a) releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach of
this provision of this Agreement. This obligation to indemnify shall
survive the payment of the Indebtedness and the satisfaction of this
Agreement.
Commercial Purposes. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any guarantor of the Loan which
could materially affect the financial condition of Borrower or the
financial condition of any guarantor of the Loan.
Financial Records. Maintain its books and records in accordance with
accounting principles acceptable to Lender, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than sixty (60) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, prepared
by Borrower, and, as soon as available, but in no event later than thirty
(30) days after the end of each fiscal quarter, Borrower's balance sheet
and profit and loss statement for the period ended, prepared and certified
as correct to the best knowledge and belief by Borrower's chief financial
officer or other officer or person acceptable to Lender. All financial
reports required to be provided under this Agreement shall be prepared in
accordance with accounting principles acceptable to Lender, applied on a
consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, on Lender's forms,
and in the amount and by the guarantor named below:
Guarantor Amount
--------- ------
DAVID S. BONSAL $222,200.00
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: 2200.00.
Loan Proceeds. Use all Loan proceeds solely for the following specific
purposes: FOR THE PURPOSE OF NCR ATM'S.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
<PAGE>
08-26-1996 BUSINESS LOAN AGREEMENT Page 2
Loan No. 6517596-0002 (Continued)
================================================================================
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans With Disabilities Act
and with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party
to permit Lender free access to such records at all reasonable times and
to provide Lender with copies of any records it may request, all at
Borrower's expense.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c)
pay any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue code of 1986, as amended), Borrower
may pay cash dividends on its stock to its shareholders from time to time
in amount necessary to enable the shareholders to pay income taxes and
make estimated income tax payments to satisfy their liabilities under
federal and state law which arise solely from their status as Shareholders
of a Subchapter S Corporation because of their ownership of shares of
stock of Borrower, or (d) purchase or retire any of Borrower's outstanding
shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest or in advance money
or assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan advances or to disburse Loan proceeds if:
(a) Borrower or any guarantor is in default under the terms of this Agreement or
any other agreement that Borrower or any guarantor has with Lender; (b) Borrower
or any Guarantor becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
guarantor, or in the value of any collateral securing any Loan; (d) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guaranty of the Loan or any other loan with Lender; or (e) Lender in
good faith deems itself insecure, even though no Event of Default shall have
occurred.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an event of
default ("Event of Default") under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when
due on the Loans.
Other Defaults. Failure of Borrower to comply with or to perform when
due any other term, obligation, covenant or condition contained in this
Agreement.
Default In Favor of Third Parties. Should Borrower default under any loan,
extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's ability to
repay the Loans or perform Borrower's obligations under this Agreement or
any related document.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower is false or misleading in
any material respect at the time made or furnished, or becomes false or
misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by and creditor of Borrower, any
creditor of any grantor of collateral for the Loan. This includes a
garnishment, attachment, or levy on or of any of Borrower's deposit
accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. Lender, at its option,
may, but shall not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure the Event of Default.
Change in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement immediately will terminate and,
at Lender's option, all Indebtedness immediately will become due and payable,
all without notice of any kind to Borrower, except that in the case of an Event
of Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents or available at
law, in equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower or of an Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
AUGUST 26, 1996.
BORROWER:
UNIVERSAL MONEY CENTERS, INC.
By: /s/ Dave A. Windhorst /s/ Pamela A. Glenn
____________________________ ___________________________________
DAVE A. WINDHORST, PRESIDENT PAMELA A. GLENN, SECRETARY
LENDER:
THE FARMERS BANK
By: /s/ The Farmers Bank
______________________________
Authorized Officer
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.22 (c) 1996 CFI ProServices,
Inc. All rights reserved. [MO-C40 UNIVM6A.LN]
COMMERCIAL SECURITY AGREEMENT
- --------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer
$222,200.00 08-26-1996 11-25-2006 6517596-002 60 24 65175 CK
Initials
- --------------------------------------------------------------------------------
Reference in the shaded area are for Lender's use only and do not
limit the applicability of this document to any particular loan or
item.
- --------------------------------------------------------------------------------
Borrower: UNIVERSAL MONEY CENTERS, INC. (TIN: Lender: THE FARMERS BANK
43-1242819) ONE WEST WASHINGTON AVENUE
6800 SQUIBB ROAD (P.O. BOX 29153) CARROLLTON, MO 64633-1257
SHAWNEE MISSION, KS 66201-9153
Bus. Phone: (913) 831-2055
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THIS COMMERCIAL SECURITY AGREEMENT is entered into between UNIVERSAL MONEY
CENTERS, INC. (referred to below as "Grantor"); and THE FARMERS BANK (referred
to below as "Lender"). For valuable consideration, Grantor grants to Lender a
security interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money to the United States of
America.
Agreement. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
Collateral. The word "Collateral" means the following described property
of Grantor, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located:
All equipment and general intangibles, together with the following
specifically described property: PURCHASE MONEY INTEREST IN NCR
AUTOMATED TELLER MACHINE(S) MODEL 5670
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising,
and wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or
other disposition of any of the property described in this Collateral
section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing,
photograph, microfilm, microfiche, or electronic media, together with
all of Grantor's right, title, and interest in and to all computer
software required to utilize, create, maintain, and process any such
records or data on electronic media.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."
Guarantor. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents.
Note. The word "Note" means the note or credit agreement dated August 26,
1996, in the principal amount of $222,200.00 from UNIVERSAL MONEY CENTERS,
INC. to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of and substitutions for
the note or credit agreement.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.
RIGHTS OF SETOFF. Grantor hereby grants Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor may open in the future,
excluding, however, all IRA and Keogh accounts, and all trust accounts for which
the grant of a security interest would be prohibited by law. Grantor authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
Indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to perfect
and continue Lender's security interest in the Collateral. Upon request of
Lender, Grantor will deliver to Lender any and all of the documents evidencing
or constituting the Collateral, and Grantor will note Lender's interest upon any
and all chattel paper if not delivered to Lender for possession by Lender.
Removal of Collateral. Grantor shall keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Missouri, without the prior written consent of Lender.
Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall
not pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent of
Lender.
Title. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.
Maintenance and Inspection of Collateral. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral. Lender
and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Grantor shall immediately notify Lender of all cases involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.
<PAGE>
08-26-1996 COMMERCIAL SECURITY AGREEMENT Page 2
Loan No. 6517596-0002 (Continued)
================================================================================
Compliance With Governmental Requirements. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral, including without limitation payment when due of all
taxes, assessments and liens upon the Collateral.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least
ten (10) days' prior written notice to Lender and not including any disclaimer
of the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission or default of
Grantor or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require. In no
event shall the insurance be in an amount less than the amount agreed upon in
the Agreement to Provide Insurance.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
REINSTATEMENT OF SECURITY INTEREST. If payment is made by Grantor, whether
voluntarily or otherwise, or by guarantor or by any third party, on the
Indebtedness and thereafter Lender is forced to remit the amount of that payment
(a) to Grantor's trustee in bankruptcy or to any similar person under any
federal or state bankruptcy law or law for the relief of debtors, (b) by reason
of any judgment, decree or order of any court or administrative body having
jurisdiction over Lender or any of Lender's property, or (c) by reason of any
settlement or compromise of any claim made by Lender with any claimant
(including without limitation Grantor), the Indebtedness shall be considered
unpaid for the purpose of enforcement of this Agreement and this Agreement shall
continue to be effective or shall be reinstated, as the case may be,
notwithstanding any cancellation of this Agreement or of any note or other
instrument or agreement evidencing the Indebtedness and the Collateral will
continue to secure the amount repaid or recovered to the same extent as if that
amount never had been originally received by Lender, and Grantor shall be bound
by any judgment, decree, order, settlement or compromise relating to the
Indebtedness or to this Agreement.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or in any other agreement between Lender and Grantor.
Default in Favor of Third Parties. Should Borrower default under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect any of Borrower's property or Borrower's ability to repay the Loans or
perform Borrower's obligations under this Agreement or any related document.
False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Grantor under this Agreement, or the Related Documents
is false or misleading in any material respect, either now or at the time made
or furnished.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any time
and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a going
business, the insolvency of Grantor, the appointment of a receiver for any part
of Grantor's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency against
the Collateral or any other collateral securing the Indebtedness. This includes
a garnishment of any of Grantor's deposit accounts with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Grantor as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Grantor gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Missouri Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
Sell the Collateral. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in its
own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor reasonable notice of the time after which any
private sale or any other intended disposition of the Collateral is to be
made. The requirements of reasonable notice shall be met if such notice is
given at least ten (10) days before the time of the sale or disposition.
All expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring, preparing
for sale and selling the Collateral, shall become a part of the
Indebtedness secured b this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.
Other Rights and Remedies. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In addition, Lender shall have and
may exercise any or all other rights and remedies it may have available at
law, in equity, or otherwise.
Cumulative Remedies. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement,
after Grantor's failure to perform, shall not affect Lender's right to
declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
Applicable Law. This Agreement has been delivered to Lender and accepted
by Lender in the State of Missouri. If there is a lawsuit, Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of
CARROLL County the State of Missouri. Lender and Grantor hereby waive the
right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Grantor against the other. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Missouri.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or not there
is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (and
<PAGE>
08-26-1996 BUSINESS LOAN AGREEMENT Page 3
Loan No. 6517596-0002 (Continued)
================================================================================
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor
also shall pay all court costs and such additional fees as may be directed
by the court.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Grantor, shall
constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
AS OF AUGUST 26, 1996.
GRANTOR:
UNIVERSAL MONEY CENTERS, INC.
By: /s/ Dave A. Windhorst By: /s/ Pamela A. Glenn
___________________________ _______________________________
DAVE A. WINDHORST,PRESIDENT PAMELA A. GLENN, SECRETARY
- -------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.22 (c) 1996 CFI ProServices,
Inc. All rights reserved. [MO-E40 UNIVM6A.LN]
AGREEMENT
This Agreement ("Agreement") is made and entered into this 15th day of
August, 1989, by and between UNIVERSAL FUNDING CORP., a Missouri corporation
("UFC"), its stockholders, David S. Bonsal, John L. Settles and William Smithson
("Stockholders") and UNIVERSAL MONEY CENTERS, INC., a Missouri corporation
("UMC").
In consideration of the mutual promises, undertakings and understandings
of the parties hereto, it is hereby agreed as follows:
I. SERVICES.
A. SERVICES OF UMC. UMC, or its designees, shall provide the services
described below, within the metropolitan Kansas City area (the "Market
Area"), for sixty (60) NCR Model 1773, or other suitable, automatic
teller machines (the "Equipment").
1. Switching. UMC, or its designee, shall provide on a
7-day-a-week/24-hour-a-day basis, computer switching of the
Equipment through communication circuits to permit the withdrawal
of funds and balance inquiries, permit access to the Equipment by
all cards of participating financial institutions, provide access
to all interconnecting switches (i.e. Bankmate, CIRRUS, Discover
and American Express) and reconcile transactions occurring on or
through the Equipment.
2. On-Call Remedial Maintenance. UMC, or its designee, shall provide
on a 7-day-a-week/24-hour-a-day basis, on-call remedial
maintenance services including, by means of example but not
limitation, repair or replacement of failed parts, replacing ink
ribbons and receipt paper, cleaning money and card reader jams
and rebooting software.
3. Preventive Maintenance. UMC, or its designee, shall provide
preventive maintenance during the hours of 9:00 AM to 5:00
Pacific Mutual, Local Time, Monday through Friday, excluding
holidays, to keep the Equipment in good operating condition.
4. Parts. UMC's services shall include replacement of all
unserviceable parts.
5. Communications. UMC, or its designee, shall provide communication
circuits between the Equipment and UMC's switching center,
including necessary modems for communications. UMC, or its
designee, shall provide on a 7-day-a-week/24 hours-a-day basis,
monitoring and diagnostic analysis of circuits and interface with
telephone companies to identify and resolve problems.
6. Exclusions. Maintenance services do not include:
<PAGE>
a) electrical work external to the Equipment;
b) repair of damage resulting from accident, transportation,
neglect, misuse, or failure of electrical power, air
conditioning or humidity control;
c) furnishing platens, supplies or accessories, painting or
refinishing the Equipment or furnishing material therefor;
making specification changes or performing services
connected with relocation of the Equipment; or adding or
removing accessories, attachments or other devices; and
d) such services which are impracticable to render because of
alterations to the Equipment or their connection by
mechanical or electrical means to other devices.
B. SERVICES OF UFC.
1. Placement of the Equipment. UFC shall contract with the Southland
Corporation ("Southland") and grocery stores in the Market Area
to place the Equipment in Southland's 7-11 Stores and
participating grocery stores in the Market Area.
2. Vault Cash. UFC shall supply cash necessary to operate the
Equipment at such locations by depositing or advancing cash (the
"Security") in order to obtain vault cash to place in the
Equipment.
3. Armored Service. UFC shall contract with a security service such
as Brinks, Incorporated or Wells Fargo Armored Services
Corporation, for an armored security service to supply the
Equipment with cash.
II. COMPENSATION.
A. UFC's Compensation. In consideration of UFC's services, UFC shall
receive all revenues and fees paid by participating financial
institutions for transactions performed on or occurring through the
Equipment ("UFC's Compensation").
B. UMC's Compensation. In consideration of UMC's services, UMC shall
receive all of UFC's net income which shall consist of UFC's
Compensation minus: the expenses paid by UFC for the armored service;
interest expense on the Vault Cash; debt service on the Equipment; any
fees paid to Southland, participating grocery stores and financial
institutions; taxes or insurance on the Equipment; and a cumulative 18
percent return on the Security outstanding as determined on a daily
basis (the sum of such items shall be referred to herein as the
"Expenses"). Any arrearages for the Expenses in excess of UFC's
compensation shall be paid by UMC to UFC before any amounts are paid
to UMC ("UMC's Compensation").
2
<PAGE>
III. WARRANTY.
A. UMC represents and warrants that Equipment which is maintained by UMC
or its designee will perform in accordance with its manufacturer's
published specifications. This warranty shall not extend to Equipment
that has been subjected to misuse, neglect or accident or which shall
have been altered or repaired (other than by UMC or its designee) in
such a manner as to affect adversely its performance, stability or
reliability. Parts on Equipment not covered by this warranty which are
replaced by UMC, or its designee, shall be replaced by UMC, or its
designee, at its then standard hourly rates for such replacement
services.
B. EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLID
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND
ARE IN LIEU OF ALL OTHER OBLIGATIONS OR WARRANTIES ON THE PART OF THE
LESSOR FOR DAMAGES INCLUDING, BUT NOT LIMITED TO, CONSEQUENTIAL
DAMAGES.
IV. LIMITATION OF LIABILITY.
A. UMC's sole obligation in case of any breach of its representations and
warranties set forth herein shall be to repair or replace, at UMC's
option, any defective item of Equipment and UMC will promptly
reimburse UFC for all funds which, as a result of any deficiencies in
UMC's software or otherwise, cause funds to be dispersed without a
corresponding credit to UFC's settlement account. UMC will act as
UFC's agent in recovering funds from interconnecting switches and
financial institutions from which UFC is due credits. Except as set
forth above, UMC's liability hereunder from any and all causes
relating to the maintenance services provided pursuant hereto shall be
limited to general money damages in an amount not to exceed UMC's
Compensation. The foregoing limitations shall be the extent of UMC's
liability under this Agreement regardless of the form in which any
legal or equitable action may be brought against UMC (e.g. contract,
negligence or otherwise) and the foregoing shall constitute UFC's sole
remedies.
B. IN NO EVENT WILL UMC BE RESPONSIBLE FOR SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES WHICH UFC MAY INCUR OR EXPERIENCE ON ACCOUNT
OF ENTERING INTO OR RELYING ON THIS AGREEMENT, EVEN IF UMC HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
V. CHARGES; TERMS; TAXES; PAYMENTS.
A. Compensation shall commence on the Installation Date of the Equipment
and shall be due and payable on the first day of each month
thereafter. The first
3
<PAGE>
monthly compensation payment shall include a pro rata amount for any
portion of the preceding month following the Installation Date,
defined below.
B. The Initial Term of this Agreement shall be for twenty-four (24)
months, commencing on the Installation Date. This Agreement shall
automatically renew and continue in full force and effect for
successive twelve (12) month renewal periods unless termination by
written notice by either party is given not less than thirty (30) days
prior to the end of the initial term or any renewal term.
C. There shall be added to all payments hereunder amounts equal to any
applicable taxes levied or based on this Agreement, exclusive of taxes
based on UMC's net income.
D. All invoices shall be paid by UFC in full within ten days of receipt.
If UFC fails to pay any amount due under this Agreement whether by
acceleration or otherwise, UFC shall, upon demand, pay interest at the
highest rate of interest allowable, but in no vent more than 1-1/2%
per month, payable monthly, on such delinquent amount from the due
date until the date of payment. UFC agrees to reimburse UMC for any
and all expenses UMC may incur, including reasonable attorney fees, in
taking action to collect any amounts due UMC hereunder or in enforcing
any of UMC's rights hereunder.
VI. OPTION TO PURCHASE. The Stockholders grant and convey to UMC an Option
("Option") to purchase from the Stockholders and the Stockholders shall
sell to UMC all of the shares of common stock then owned by the
Stockholders if such option is exercised by written notice from UMC, at the
Option Price (defined below) payable by cashier's check on the closing
date. The Option is exercisable by UMC at any time on or after August 15,
1991 with respect to all of the shares then held by the Stockholders, as
reflected on the books and records of UFC. To exercise the Option, UMC
shall give thirty (30) days prior written notice to the Stockholders. Upon
exercise of the Option, the Stockholders shall be obligated to sell all of
their shares at the Option Price. The closing of such purchase and sale
shall take place at the office of UMC on a date designated by UMC, which
date shall be the later of 90 days following (i) the date of written notice
by the Purchasers of his intention to exercise the Option and (ii)
determination of the Option Price (the "Closing Date").
VII. OPTION PRICE. The Option Price to be paid by UMC for all of the shares of
common stock of UFC shall be an amount equal to one hundred and ten percent
(110%) of the sum of the Stockholders' capital contributed to UFC, the
amount paid for the Equipment and restoration of any arrearages in the
Expenses.
VIII.NOTICES. Any notice, request, instrument or other document to be given
hereunder shall be in writing and delivered personally or sent by certified
or registered mail, postage prepaid:
4
<PAGE>
a. If to UFC, addressed as follows:
Universal Funding Corp.
6800 Squibb Road
Shawnee Mission, Kansas 66201
b. If to UMC, addressed as follows:
Universal Money Centers
P.O. Box 29153
Shawnee Mission, Kansas 66201-9153
Or to such other address as any of the parties hereto may designate by notice
given as above provided. Any item sent by registered or certified mail, as above
provided, will be deemed given when deposited in the United States mail.
IX. TERMINATION. The occurrence of any of the following events shall terminate
the Option and this Agreement.
A. Representations. Any representation or warranty made by UMC in this
Agreement or in any Agreement, certificate, document or financial or
other statement furnished at any time in connection herewith shall
prove to have been incorrect in any material respect when made.
B. Insolvency. If UMC (1) makes a general assignment for the benefit of
creditors, (2) admits in writing the inability to pay debts as they
become due, (3) files a petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or regulation,
(4) files an answer admitting or not contesting the material
allegations of a petition against it in any such proceeding, (5) seeks
or consents to or acquiesces in the appointment of any trustee,
receiver or liquidator for it or any material part of its properties,
(6) discontinues to suspends its business as a going concern, (7)
files a petition for bankruptcy, (8) is adjudicated a bankrupt or
insolvent, or (9) is declared insolvent.
C. Involuntary Proceedings. Any involuntary or statutory proceedings
against UMC seeking any reorganization, bankruptcy, arrangements,
composition, readjustment, liquidation, dissolutions, receivership or
similar relief under any present or future statute, law or regulation.
D. Attachment. The attachment, seizure, levy upon or taking of possession
by any receiver, custodian or assignee for the benefit of creditors of
any property of UMC or UFC.
X. RESTRICTED TRANSFER. The Stockholders shall be prohibited from selling
their shares during the term of this Agreement unless their transferee
executes an agreement granting UMC an option to purchase the transferee's
shares on the same basis as the Option provided in this Agreement.
5
<PAGE>
Each Certificate for shares now or hereafter held by the Stockholder (or
any transferee of his) shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"The transfer or encumbrance (by operation of law or otherwise)
of the shares represented by this certificate is restricted by the
terms of an Agreement dated August 15, 1989, a copy of which is on
file at the office of UFC."
XI. MISCELLANEOUS. This Agreement, including the documents, exhibits and
schedules referred to herein, contains the entire understanding of the
parties hereto and supercedes all prior understandings, agreements or
undertakings of the parties with respect to the subject matter herein, and
may be amended only by a written instrument executed by Seller and Buyer.
Whenever possible, each provision of this Agreement shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
provision or the remaining provisions of this Agreement. This Agreement
shall be a contract made under, and shall be governed by and construed
under, the laws of the State of Missouri. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors, assigns and personal representatives, provided, however, that
no assignment by any party hereto of any right hereunder shall be made on
or prior to the Closing Date, and no assignment, by operation of law or
otherwise, shall relieve any party of its obligations hereunder. This
Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall constitute together but
one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the days and year set forth below.
UNIVERSAL MONEY CENTERS, INC. UNIVERSAL FUNDING CORP.
By: /s/ John L. Settles By: /s/ David S. Bonsal
------------------------------- -----------------------------------
Its: President Its: Vice President
-------------------------- ------------------------------
Date: August 15, 1989 Date: August 15, 1989
------------------------------- -----------------------------------
Attest: /s/ Sandra Cain Attest: /s/ Sandra Cain
----------------------------- ---------------------------------
/s/ David S. Bonsal /s/ William Smithson
- ------------------------------------ ----------------------------------------
David S. Bonsal, Stockholder William Smithson, Stockholder
/s/ John L. Settles
- ------------------------------------
John L. Settles, Stockholder
7
ADDENDUM
This Addendum to the Agreement made and entered into the 15th day of
August 1989 ("Agreement") by and between Universal Funding Corp., a Missouri
corporation ("UFC"), and its stockholders, David S. Bonsal, John L. Settles, and
William Smithson ("Stockholders") and Universal Money Centers, Inc., a Missouri
corporation ("UMC"), is intended to further clarify the mutual promises,
intents, and understandings of the parties thereto and therefore it is further
hereby agreed as follows:
I. SERVICES.
A. Services of UMC. In addition to the services outlined in the
Agreement, UMC, or its designee shall provide the services described
below, within the metropolitan Kansas City are (the "Market Area") for
Sixty (60) NCR Model 1773, or other suitable automatic teller machines
(the "Equipment"),
1. Cash Management. UMC, or its designee, shall determine the amount
of cash to be placed in the Equipment, shall order such cash from
the financial institution designated by UFC, and shall
communicate with the financial institutions, armored car service,
or other entities as necessary to ensure the Equipment remains
adequately stocked with vault cash. UMC, or its designee, shall
balance the Equipment to account for all monies placed therein.
2. Customer Service. UMC, or its designee, shall provide customer
service during the hours of 8:15 A.M. to 5:00 P.M. local time,
Monday through Friday, excluding holidays, to handle calls from
financial institutions and retail debit card customers regarding
services and issues related to the Equipment or services provided
by UMC related to the Equipment. UMC, or its designee, shall make
all adjustments transactions for so called "non completions" on
the Equipment.
3. Accounting Service. UMC, or its designee, shall provide all
accounting services necessary to create and maintain financial
books and statements for UFC.
II. Compensation.
UMC's Compensation is hereby clarified and restated as follows:
In consideration of UMC's services, UMC shall receive an amount that
would be equal to UFC's net income which shall consist of UFC's gross
receipts (UFC's compensation) minus: the expenses paid to UFC for the
armoured services; interest expense on the Vault Cash; debt service on
the Equipment; any fees paid to Southland, participating grocery
stores and financial institutions; taxes and insurance on the
Equipment; a cumulative 18 percent return on the Security
<PAGE>
outstanding as determined on a daily basis; and legal fees incurred by
UFC in organizing UFC (the sum of such items shall be referred to
herein as the "Expenses"). Any arrearages for the Expenses in excess
of UFC's compensation shall be paid by UFC before any amounts are paid
to UMC ("UMC's compensation").
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the 29th day of August, 1989.
UNIVERSAL MONEY CENTERS, INC. UNIVERSAL FUNDING CORP.
By: /s/ John L. Settles By: /s/ John L. Settles
------------------------------- -----------------------------------
Its: President Its: Vice President
Date: August 29, 1989 Date: August 29, 1989
------------------------------- -----------------------------------
Attest: /s/ Sandra Cain Attest: /s/ Sandra Cain
----------------------------- ------------------------------
/s/ David S. Bonsal /s/ William Smithson
- ------------------------------------ ----------------------------------------
David S. Bonsal, Stockholder William Smithson, Stockholder
/s/ John L. Settles
- ------------------------------------
John L. Settles, Stockholder
9
<PAGE>
Summary of UMC service for UFC-E1 PASO
$10.00 $55.00 $0.05 $0.06
Date Lease Mngmnt Deluxe Switch Employee Total Paid
1-94
2-94 180.00 0.00 127.75 138.04 445.79
3-94 180.00 0.00 618.00 668.20 1466.20 3719.95
4-94 180.00 0.00 936.90 1001.47 2118.37 0.00
5-94 180.00 0.00 1358.70 1447.75 2986.45 0.00
6-94 180.00 0.00 1356.80 1432.39 2969.19 0.00
7-94 180.00 0.00 1583.95 1688.34 3452.29 4641.90
8-94 190.00 0.00 1789.75 1887.97 3867.72 0.00
9-94 190.00 0.00 1890.20 1986.61 4066.81 0.00
10-94 190.00 0.00 2099.35 2168.50 4457.85 4085.60
$10.00 $50.00 $0.05 $0.06
Lease Mngmnt Deluxe Switch Employee Total
11-94 200.00 0.00 2205.50 2262.26 1378.99 6046.75 5020.75
12-94 200.00 0.00 2232.50 2233.60 1756.99 6423.09 15500.00
----------------------------------------------------------------------
2050.00 0.00 16199.40 16915.13 3135.98 38300.51
$10.00 $50.00 $0.05 $0.06
Date Lease Mngmnt Deluxe Switch Employee Total Paid
1-95 200.00 2100.00 2492.50 2529.28 2078.74 9400.52
2-95 0.00 0.00 0.00 0.00 0.00 0.00
4-95 0.00
5-95 0.00
6-95 0.00
7-95 0.00
8-95 0.00
9-95 0.00
10-95 0.00
11-95 0.00
12-95 0.00
----------------------------------------------------------------------
200.00 2100.00 2492.50 2529.28 88.00 47701.03 32968.20
10
UNIVERSAL MONEY Letterhead
June 12, 1997
Mr. David Bonsal
President
Universal Funding, Corp.
6800 Squibb Road
Mission, Kansas 66202
Dear Mr. Bonsal:
I am writing this Letter of Understanding between Universal Money Centers, Inc.
("UMC") and Universal Funding, Corp. ("UFC") to clarify the relationship between
the Parties as it pertains to the business in El Paso, Texas. Very simply, it is
the intention of this letter to establish that as of January 1, 1996, the
business in the El Paso market will be treated significantly similar to the
business in the Kansas City and St. Louis Markets, thus bringing the El Paso
market in line with the provisions and intentions of the Original Agreement
between the Parties dated August 15, 1989.
The Parties hereby agree that the prior "In good faith" understanding dated
5/8/95 shall be null and void effective January 1, 1996. From that date forward,
UFC shall not pay Management, Deluxe, Switch, or Employee fees.
UMC agrees to lease for the nominal amount of $10 each per month on a
month-to-month basis ("Rental Amounts") all ATMs owned by UMC and to which UFC
is providing vault cash services.
Although not originally provided for by Paragraph II.B. of the Agreement between
the Parties dated August 15th, 1989, UMC hereby agrees to allow UFC to deduct
these Rental Amounts as expenses against UMC's Compensation.
Sincerely, Agreed,
/s/ Dave Windhorst 6/12/97 /s/ David Bonsal
- -------------------------------------- -------------------------------------
Dave Windhorst, President David Bonsal, President
Universal Money Centers, Inc. Universal Funding Corp.
MASTER EQUIPMENT LEASE AGREEMENT
- --------------------------------------------------------------------------------
LESSEE: Universal Money Centers, Inc. LESSOR: AT&T Credit Corporation
- --------------------------------------------------------------------------------
Street Address Address: 2 Gatehall Drive
6800 Squibb Road Parsippany, NJ 07054
- --------------------------------------------------------------------------------
City/State/Zip Lease Number
Mission, KS 66202 T200084
- --------------------------------------------------------------------------------
1. AGREEMENT. Lessor agrees to lease to Lessee and Lessee agrees to lease
from Lessor the equipment (Equipment) described in any schedule (Schedule) that
incorporates this Master Equipment Lease Agreement (Agreement) by reference. A
Schedule shall incorporate this Agreement by reference by listing the
above-referenced Lease Number thereon. Such lease shall be governed by the terms
and conditions of this Agreement, as well as by the terms and conditions set
forth in the applicable Schedule. Each Schedule shall constitute an agreement
separate and distinct from this Agreement and any other Schedule. In the event
of a conflict between the provisions of this Agreement and a Schedule, the
provisions of the Schedule shall govern.
2. ASSIGNMENT OF PURCHASE DOCUMENTS. Lessee shall execute and deliver to
Lessor a writing acceptable to Lessor whereby Lessor is assigned all of Lessee's
rights and interest in and to: (a) the Equipment described in the applicable
Schedule and (b) any purchase order, contract or other documents (collectively,
Purchase Documents) relating thereto that Lessee has entered into with the
Seller (as specified in the applicable Schedule). If Seller is not an affiliate
of Lessor, Lessee shall deliver to Lessor a writing acceptable to Lessor whereby
Seller acknowledges, and provides any required consent to, such assignment. If
Lessee has not entered into any Purchase Document for the Equipment with Seller,
Lessee authorizes Lessor to act as Lessee's agent to issue a purchase order to
Seller for the Equipment and for associated matters, and such purchase order
shall be subject to this Section 2 and all references in this Agreement to
Purchase Documents shall include such purchase order. By executing the
applicable Schedule, Lessee represents and warrants that Lessee either (y) has
reviewed, approved and received a copy of the applicable Purchase Documents or
(z) has been informed by Lessor (i) of the identity of the Seller, (ii) that
Lessee may have rights under the Purchase Documents and (iii) that Lessee may
contact Seller for a description of such rights.
3. DELIVERY; ACCEPTANCE. Lessee shall cause the Equipment to be delivered
to Lessee at the Equipment Location (as specified in the applicable Schedule)
and Lessee shall accept the Equipment as soon as it is delivered or, if
acceptance criteria is specified in the applicable Purchase Documents, as soon
as it has met such criteria. Lessee shall evidence its acceptance of the
Equipment and commencement of the Lease with respect thereto by executing and
delivering to Lessor a commencement certificate (Commencement Certificate) in a
form acceptable to Lessor. By executing and delivering a Commencement
Certificate to Lessor, (a) Lessee represents and warrants that it has selected
the Equipment and Seller specified on the applicable Schedule and (b) Lessee
shall irrevocably accept such Equipment under lease.
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4. PURCHASE OF EQUIPMENT. Provided that no Event of Default (as defined in
Section 19) exists, and no event has occurred and is continuing that with notice
or the lapse of time or both would constitute an Event of Default, Lessor shall
be obligated to purchase the Equipment from Seller and to lease the Equipment to
Lessee if (and only if) Lessor receives on or before the Latest Commencement
Date (as specified in the applicable Schedule) the related Commencement
Certificate and Schedule (both executed by Lessee), and such other documents or
assurances as Lessor may reasonably request.
5. TERM. The initial term of each Schedule (Initial Term) shall begin on
the date specified as the Commencement Date on the Commencement Certificate with
respect to such Schedule and shall continue for the period specified in such
Schedule. Any renewal term of a Schedule (Renewal Term) shall begin on the
expiration of, as applicable, the Initial Term or any preceding Renewal Term
(collectively, Term).
6. RENT; ADVANCE RENT; LATE CHARGES. Lessee shall pay Lessor the first
Rental Payment (as specified in the applicable Schedule) for the Equipment on or
before the Commencement Date of the applicable Schedule, and shall pay Lessor
the remaining periodic rental Payments on or before the periodic payment dates
specified in the applicable Schedule or, if periodic payment dates are not
specified, on or before the corresponding day of each subsequent period during
the Initial Term of the applicable Schedule, regardless of whether Lessee has
received notice that such Rental Payments are due. Additionally, if pursuant to
this Agreement or the applicable Schedule the Term is extended or a renewal
option exercised, Lessee shall also pay all Rental Payments required with
respect thereto. All Rental Payments will be sent to Lessor's above-referenced
address, or to such other address as specified by Lessor in writing. Lessee
shall also pay Lessor Advance Rent (as specified in the applicable Schedule) for
the Equipment when it signs the applicable Schedule, and such Advance Rent shall
be refunded without interest to Lessee only if Lessor declines to sign the
applicable Schedule. Advance Rent shall be credited to Lessee's first Rental
Payment under the applicable Schedule, and any excess Advance Rent shall be
credited to Lessee's final Rental Payment(s). Lessee agrees to pay Lessor a late
charge of 5% of any Rental Payment (or other amount due hereunder) that is not
paid within 10 days of its due date, plus interest at the rate of 1-1/2% per
month on any such amounts (or such lesser rate as is the maximum rate allowable
under applicable law). Also, in the event that more than one Schedule is entered
into hereunder, the parties will use their best efforts to implement a common
billing date for all Schedules.
7. ADJUSTMENTS. The Total Purchase Price (as specified in the applicable
Schedule) and Rental Payment set forth in each Schedule are estimates, and if
the final invoice from Seller specifies a Total Purchase Price (including taxes,
delivery, installation and other charges) that is greater or less than such
estimated Total Purchase Price, Lessee hereby authorizes Lessor to adjust the
Total Purchase Price and Rental Payment on the applicable Schedule to reflect
the final invoice amount (Final Invoice Amount). If Option B in the Schedule has
been selected, Lessee also authorizes Lessor to adjust such purchase and renewal
options to reflect the Final Invoice Amount. However, if the Final Invoice
Amount exceeds the estimated total Purchase Price by more than 10%, Lessor will
notify Lessee and obtain Lessee's prior written approval of the aforementioned
adjustments; provided, however that such written approval shall not be required
when such adjustments are caused by Equipment changes or system reconfigurations
requested or caused by Lessee. Additionally, if Lessor financed any
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down payment for the Equipment pursuant to an interim financing agreement
(Financing Agreement) with Lessee, Lessor may also adjust the Total Purchase
Price and Rental Payment with respect to such Equipment and to reflect any
accrued interest that Lessee elects to finance. All references in this Agreement
and in any Schedule to Total Purchase Price and Rental Payment shall mean the
estimates thereof specified in the applicable Schedule, as adjusted pursuant to
this Section 7.
8. INSURANCE. At its own expense, Lessee shall provide and maintain the
following insurance: (a) insurance against the loss or theft of or damage to the
Equipment for the greater of the Stipulated Loss Value (computed as described in
the applicable Schedule) or full replacement value thereof, naming Lessor as a
loss payee; and (b) public liability and third party property damage insurance,
naming Lessor as an additional insured. Such insurance shall be in a form,
amount and with companies reasonably satisfactory to Lessor, shall contain the
insurer's agreement to give Lessor 30 days' prior written notice before
cancellation or material change thereof, and shall be payable to Lessor
regardless of any act, omission or breach by Lessee. Lessee shall deliver to
Lessor the insurance policies or copies thereof or certificates of such
insurance on or before the Commencement Date of the applicable Schedule, and at
such other times as Lessor may reasonably request. If no Event of Default
exists, and no event has occurred and is continuing that with notice or the
lapse of time or both would constitute an Event of Default, the proceeds of any
insurance required under clause (a) hereof that have been paid to Lessor shall
be applied against Lessee's obligations to Lessor under Section 13 hereof.
9. TAXES. Lessee shall reimburse Lessor for (or pay directly, but only if
instructed by Lessor) all taxes, fees, and assessments that may be imposed by
any taxing authority on the Equipment or on its purchase, ownership, delivery,
possession, operation, rental, return to Lessor or purchase by Lessee
(collectively, Taxes); provided, however, that Lessee shall not be liable for
any such Taxes (whether imposed by the United States or by any other domestic or
foreign taxing authority) imposed on or measured by Lessor's net income or tax
preference items. Lessee's obligation includes, but is not limited to, the
obligation to pay all license and registration fees and all sales, use, personal
property and other taxes and governmental charges, together with any penalties,
fines and interest thereon, that may be imposed during the Term of the
applicable Schedule. Lessee is liable for these Taxes whether they are imposed
upon Lessor, Lessee, the Equipment, this Agreement, the applicable Schedule or
any Financing Agreement. If Lessee is required by law or administrative practice
to make any report or return with respect to such Taxes, Lessee shall promptly
advise Lessor thereof in writing and shall cooperate with Lessor to ensure that
such reports are properly filed and accurately reflect Lessor's interest in the
Equipment. Lessor has no obligation to contest any such Taxes, however, Lessee
may do so provided that: (a) Lessee does so in its own name and at its own
expense; (b) the contest does not and will not result in any lien attaching to
any Equipment or otherwise jeopardize Lessor's right to any Equipment; and (c)
Lessee indemnifies Lessor for all expenses (including legal fees and costs),
liabilities and losses that Lessor incurs as a result of any such contest.
10. REPAIRS; USE; LOCATION; LABELS. Lessee shall: (a) at its own expense,
keep the Equipment in good repair, condition and working order and maintained in
accordance with the manufacturer's recommended engineering and maintenance
standards; (b) use the Equipment lawfully and exclusively in connection with its
business operations and for the purpose for which the Equipment was designed and
intended; and (c) without Lessor's prior
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written consent, not move the Equipment from the Equipment Location. If Lessor
supplies Lessee with labels stating that the Equipment is owned by Lessor,
Lessee shall affix such labels to the Equipment pursuant to Lessor's
instructions.
11. MAINTENANCE; INSPECTION; ALTERATIONS. At its own expense, Lessee shall:
(a) enter into and maintain a maintenance agreement for the Equipment with the
manufacturer or other party acceptable to Lessor; (b) maintain the Equipment in
the same condition as when delivered, subject only to ordinary wear and tear,
and in good operating order and appearance; (c) make all alterations or
additions to the Equipment that may be required or supplied by the Seller or
legally necessary; and (d) make no other alterations or additions to the
Equipment (except for alterations or additions that will not impair the value or
performance of the Equipment and that are readily removable without damage to
the Equipment). Any modifications, alterations or additions that Lessee makes to
the Equipment (except as permitted by Section 11(d) above) shall become Lessor's
property and shall also be deemed to be Equipment. Upon request, Lessor, or any
party designated by Lessor, shall have the right to inspect the Equipment and
Lessee's applicable maintenance agreement and records at any reasonable time.
12. PERSONAL PROPERTY; LIENS AND ENCUMBRANCES; TITLE. The Equipment shall
at all times remain personal property, notwithstanding that the Equipment, or
any part thereof, may be (or becomes) affixed or attached to real property or
any improvements thereon. Except for the interest of Lessor, Lessee shall keep
the Equipment free and clear of all levies, liens and encumbrances of any nature
whatsoever. Except as expressly set forth in this Agreement, the Equipment shall
at all times remain the property of Lessor and Lessee shall have no right, title
or interest therein.
13. RISK OF LOSS. As between Lessor and Lessee, Lessee shall bear the
entire risk of loss, theft, destruction or damage to the Equipment from any
cause whatsoever or requisition of the Equipment by any governmental entity or
the taking of title to the Equipment by eminent domain or otherwise
(collectively, Loss). Lessee shall advise Lessor in writing within 10 days of
any such Loss. Except as provided below, no such Loss shall relieve Lessee of
the obligation to pay Lessor Rental Payments and all other amounts owed
hereunder. In the event of any such Loss, Lessor, at its option, may: (a) if the
Loss has not materially impaired the Equipment (in Lessor's reasonable
judgment), require Lessee, upon Lessor's demand, to place the Equipment in good
condition and repair reasonably satisfactory to Lessor; or (b) if the Loss has
materially impaired the Equipment (in Lessor's reasonable judgment), require
Lessee, upon Lessor's demand, to pay Lessor its anticipated return (Lessor's
Return), which shall consist of the following amounts: (i) the Rental Payments
(and other amounts) then due and owing under the applicable Schedule; plus (ii)
the Stipulated Loss Value (computed as described in the applicable Schedule) of
the Equipment; plus (iii) all other amounts that become due and owing under the
applicable Schedule, but only to the extent such amounts are not included in the
moneys paid to Lessor pursuant to clauses (i) and (ii) above. Upon Lessor's full
receipt of such Lessor's Return: (y) the applicable Schedule shall terminate,
and except as provided in section 25, Lessee shall be relieved of all
obligations under the applicable Schedule; and (z) Lessor shall transfer all of
its interest in the Equipment to Lessee "AS IS, WHERE IS," and without any
warranty, express or implied from Lessor, other than the absence of any liens or
claims by, through, or under Lessor.
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14. NON-CANCELLABLE NET LEASE. ALL LEASES HEREUNDER SHALL BE
NON-CANCELLABLE NET LEASES, AND LESSEE AGREES THAT IT HAS AN UNCONDITIONAL
OBLIGATION TO PAY ALL RENTAL PAYMENTS AND OTHER AMOUNTS WHEN DUE. LESSEE IS NOT
ENTITLED TO ABATE OR REDUCE RENTAL PAYMENTS OR ANY OTHER AMOUNTS DUE, OR TO SET
OFF ANY CHARGES AGAINST THOSE AMOUNTS. LESSEE IS NOT ENTITLED TO RECOUPMENTS,
CROSS-CLAIMS, COUNTERCLAIMS OR ANY OTHER DEFENSES TO ANY RENTAL PAYMENTS OR
OTHER AMOUNTS DUE HEREUNDER, WHETHER THOSE DEFENSES ARISE OUT OF CLAIMS BY
LESSEE AGAINST LESSOR, SELLER, THIS AGREEMENT, ANY SCHEDULE OR OTHERWISE.
NEITHER DEFECTS IN EQUIPMENT, DAMAGE TO IT, NOR ITS LOSS, DESTRUCTION OR LATE
DELIVERY SHALL TERMINATE THIS AGREEMENT OR ANY SCHEDULE, OR AFFECT LESSEE'S
OBLIGATIONS HEREUNDER. UNLESS LESSEE'S OBLIGATION TO PAY RENTAL PAYMENTS AND
OTHER AMOUNTS HAS BEEN TERMINATED PURSUANT TO THAT EXPRESS TERMS OF THIS
AGREEMENT, ALL RENTAL PAYMENTS AND OTHER AMOUNTS SHALL CONTINUE TO BE DUE AND
PAYABLE HEREUNDER.
15. LESSOR DISCLAIMERS; LIMITATION OF REMEDIES. IT IS SPECIFICALLY
UNDERSTOOD AND AGREED THAT: (A) LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR PROMISE MADE BY SELLER, NEITHER SELLER NOR LESSOR
SHALL ACT AS, OR BE DEEMED TO BE, AN AGENT OF THE OTHER, AND LESSOR SHALL NOT BE
BOUND BY, OR LIABLE FOR, ANY REPRESENTATION OR PROMISE MADE BY SELLER (EVEN IF
LESSOR IS AFFILIATED WITH SELLER); (B) LESSOR SHALL NOT BE LIABLE FOR ANY
FAILURE OF ANY EQUIPMENT OR ANY DELAY IN ITS DELIVERY OR INSTALLATION; (C)
LESSOR SHALL NOT BE LIABLE FOR ANY BREACH OF ANY WARRANTY THAT SELLER MAY HAVE
MADE; (D) LESSEE HAS SELECTED ALL EQUIPMENT WITHOUT LESSOR'S ASSISTANCE; (E)
LESSOR IS NOT A MANUFACTURER OF ANY EQUIPMENT; AND (F) LESSOR HAS NOT MADE AND
DOES NOT NOW MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE DESIGN, COMPLIANCE WITH SPECIFICATIONS, OPERATION, OR CONDITION
OF ANY EQUIPMENT (OR ANY PART THEREOF), THE MERCHANTABILITY OR FITNESS OF
EQUIPMENT FOR A PARTICULAR PURPOSE, OR ISSUES REGARDING PATENT INFRINGEMENT,
TITLE AND THE LIKE. IT IS FURTHER AGREED THAT LESSOR SHALL HAVE NO LIABILITY TO
LESSEE, LESSEE'S CUSTOMERS, OR ANY THIRD PARTIES FOR ANY DIRECT, INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR ANY SCHEDULE
OR CONCERNING ANY EQUIPMENT, OR FOR ANY DAMAGES BASED ON STRICT OR ABSOLUTE TORT
LIABILITY OR LESSOR'S NEGLIGENCE; PROVIDED, HOWEVER, THAT NOTHING IN THIS
AGREEMENT SHALL DEPRIVE LESSEE OF ANY RIGHTS IT MAY HAVE AGAINST ANY PERSON
OTHER THAN LESSOR. LESSEE SHALL LOOK SOLELY TO SELLER FOR ANY AND ALL CLAIMS AND
WARRANTIES RELATING TO THE EQUIPMENT. Lessor hereby assigns to Lessee for the
Term of the applicable Schedule the right to enforce, provided no Event of
Default then exists under this Agreement and such enforcement is pursued in
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Lessee's name, any representations, warranties and agreements made by Seller
pursuant to the Purchase Documents, and Lessee may retain any recovery resulting
from any such enforcement efforts. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
LESSEE WAIVES ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON A LESSEE BY ARTICLE
2A OF THE UCC AND ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE
THAT MAY LIMIT OR MODIFY LESSOR'S RIGHTS AS DESCRIBED IN THIS SECTION OR OTHER
SECTIONS OF THIS AGREEMENT.
16. LESSEE WARRANTIES. Lessee represents, warrants and covenants to Lessor
that: (a) unless it is an individual, Lessee is duly organized, validly existing
and in good standing under applicable law; (b) Lessee has the power and
authority to enter into this Agreement, all Schedules and all other related
instruments or documents hereunder (collectively, Fundamental Agreements); (c)
such Fundamental Agreements are enforceable against Lessee in accordance with
their terms and do not violate or create a default under any instrument or
agreement binding on Lessee; (d) there are no pending or threatened actions or
proceedings before any court or administrative agency that could have a material
adverse effect on Lessee or any Fundamental Agreement, unless such actions are
disclosed to Lessor and consented to in writing by Lessor; (e) Lessee shall
comply in all material respects with all Federal, state and municipal laws and
regulations the violation of which could have a material adverse effect upon the
Equipment or Lessee's performance of its obligations under any Fundamental
Agreement; (f) Lessee shall obtain all governmental approvals necessary for it
to enter into and perform each Fundamental Agreement; (g) each Fundamental
Agreement shall be effective against all creditors of Lessee under applicable
law, including fraudulent conveyance and bulk transfer laws, and shall raise no
presumption of fraud; (h) financial statements and other related information
furnished by Lessee shall be prepared in accordance with generally accepted
accounting principles and shall present Lessee's financial position as of the
dates given on such statements; (i) Lessee shall furnish Lessor with its
certified financial statements, opinions of counsel, resolutions, and such other
information and documents as Lessor may reasonably request; (j) ALL EQUIPMENT IS
LEASED FOR BUSINESS PURPOSES ONLY, AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD
PURPOSES; and (k) all Equipment is tangible personal property and shall not
become a fixture or real property under Lessee's use thereof. Lessee shall be
deemed to have reaffirmed the foregoing warranties each time it executes any
Fundamental Agreement.
17. GENERAL INDEMNITY. Lessee shall indemnify, hold harmless, and, if so
requested by Lessor, defend Lessor against all claims (Claims) directly or
indirectly arising out of or connected with the Equipment or any Fundamental
Agreement. Claims refers to all losses, liabilities, damages, penalties,
expenses (including legal fees and costs), claims, actions, and suits, whether
based on a theory of strict liability of Lessor or otherwise, and includes, but
is not limited to, matters regarding: (a) the selection, manufacture, purchase,
acceptance, rejection, ownership, delivery, lease, possession, maintenance, use,
condition, return or operation of the Equipment; (b) any latent defects or other
defects in any Equipment, whether or not discoverable by Lessor or by Lessee;
(c) any patent, trademark or copyright infringement; and (d) the condition of
any Equipment arising or existing during Lessee's use.
18. SURRENDER; EXTENSION OF TERM. Unless Lessee purchases the Equipment or
renews the Term pursuant to the applicable Schedule, or acquires the Equipment
pursuant to Section 13 hereof, Lessee shall, at its expense, deinstall, inspect,
test and properly
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pack the Equipment at the expiration of the Term, free of all liens and rights
of others, by delivering it on board such common carrier as Lessor may specify
with freight prepaid to any destination within the United States of America
specified by Lessor. If Lessor so requests, Lessor and its agents shall have the
right to enter upon any premises where Equipment may be located to perform any
of Lessee's tasks noted above in this Section 18, and Lessee shall reimburse
Lessor for all costs and expenses Lessor incurs in fulfilling such tasks. Lessee
agrees that the Equipment, when returned to Lessor, shall be in the same
condition as when delivered to Lessee, reasonable wear and tear excepted, and
certified as being eligible for Seller's or the manufacturer's generally
available maintenance contract at then prevailing rates, without Lessor
incurring any expense to repair, rehabilitate or certify such Equipment (Lessee
shall be liable for all costs and expenses Lessor incurs to place the Equipment
in such condition). If requested by Lessor, Lessee, at its expense, shall store
the Equipment on its premises for a reasonable period, during which period the
Equipment shall be subject to all of the terms and conditions hereof, except for
the obligation to make Rental Payments. In all instances where Lessee is
returning Equipment to Lessor, Lessee shall give Lessor written notice thereof
in accordance with the terms of the applicable Schedule. If Lessee fails to
provide the aforementioned notice or return the Equipment to Lessor in the time
and manner provided above, the Term shall be extended in accordance with the
terms of the applicable Schedule. If any Schedule is extended pursuant to the
preceding sentence, Lessee shall continue to pay the higher of the periodic
Rental Payments in effect prior to the expiration of the then existing term of
the applicable Schedule (whether it be the Initial Term or any Renewal Term
(Applicable Term)) or such other periodic rental payment amount as is specified
for such extension period in the Schedule, and all other provisions of this
Agreement shall continue to apply.
19. EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default under this Agreement and all Schedules: (a) Lessee fails to pay any
Rental Payment or any other amount payable to Lessor hereunder within 10 days
after its due date; or (b) Lessee fails to perform or observe any other
representation, warranty, covenant, condition or agreement to be performed or
observed by Lessee hereunder or in any other agreement with Lessor, or in any
agreement with any other person that in Lessor's sole opinion is a material
agreement, and Lessee fails to cure any such breach within 10 days after notice
thereof; or (c) any representation or warranty made by Lessee hereunder, or in
any other instrument provided to Lessor by Lessee, proves to be incorrect in any
material respect when made; or (d) Lessee makes an assignment for the benefit of
creditors, whether voluntary or involuntary; or (e) a proceeding under any
bankruptcy, reorganization, arrangement of debts, insolvency or receivership law
is filed by or against Lessee or Lessee takes any action to authorize any of the
foregoing matters; or (f) Lessee becomes insolvent or fails generally to pay its
debts as they become due, the Equipment is levied against, seized or attached,
or Lessee seeks to effectuate a bulk of sale of Lessee's inventory or assets; or
(g) Lessee voluntarily or involuntarily dissolves or is dissolved, or terminates
or is terminated; or (h) any guarantor dies or revokes a guaranty provided to
Lessor under this Agreement; or (i) any guarantor under this Agreement is the
subject of an event listed in clauses (b) through (g) above; or (j) any letter
of credit required pursuant to any Schedule is breached, cancelled, terminated
or not renewed during the Term of any such Schedule.
20. REMEDIES. If an Event of Default occurs, Lessor may, in its sole
discretion, exercise one or more of the following remedies: (a) terminate this
Agreement or any or all Schedules; or (b) take possession of, or render
unusable, any Equipment wherever the Equipment
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may be located, without demand or notice, without any court order or other
process of law and without liability to Lessee for any damages occasioned by
such action, and no such action shall constitute a termination of any Schedule;
or (c) require Lessee to deliver the Equipment at a location designated by
Lessor; or (d) declare the Lessor's Return (as defined in Section 13 hereof and
calculated by Lessor as of the date of the Event of Default) for each applicable
Schedule due and payable as liquidated damages for loss of a bargain and not as
a penalty and in lieu of any further Rental Payments under the applicable
Schedule; or (e) proceed by court action to enforce performance by Lessee of any
Schedule and/or to recover all damages and expenses incurred by Lessor by reason
of any Event of Default; or (f) terminate any other agreement that Lessor may
have with Lessee; or (g) exercise any other right or remedy available to Lessor
at law or in equity. Also, Lessee shall pay Lessor all costs and expenses
(including legal fees and costs and fees of collection agencies) incurred by
Lessor in enforcing any of the terms, conditions or provisions of this
Agreement. Upon repossession or surrender of any Equipment, Lessor shall lease,
sell or otherwise dispose of the Equipment in a commercially reasonable manner,
with or without notice and at public or private sale, and apply the net proceeds
thereof (after deducting all expenses (including legal fees and costs) incurred
in connection therewith) to the amounts owed to Lessor hereunder; provided,
however, that Lessee shall remain liable to Lessor for any deficiency that
remains after any sale or lease of such Equipment. Lessee agrees that with
respect to any notice of a sale required by law to be given, 10 days' notice
shall constitute reasonable notice. These remedies are cumulative of every other
right or remedy given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise, and may be enforced concurrently therewith from time
to time.
21. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to
perform any of its obligations hereunder, Lessor may perform any act or make any
payment that Lessor deems reasonably necessary for the maintenance and
preservation of the Equipment and Lessor's interests therein; provided, however,
that the performance of any act or payment by Lessor shall not be deemed a
waiver of, or release Lessee from, the obligation at issue. All sums so paid by
Lessor, together with expenses (including legal fees and costs) incurred by
Lessor in connection therewith, shall be paid to Lessor by Lessee immediately
upon demand.
22. FINANCING OF ADDITIONS. If, under any Schedule, Lessee intends to make
any addition to the Equipment, Lessee shall, in writing, request Lessor to
finance the costs of such addition. Lessee shall provide Lessor with the terms
under which it hopes to obtain the financing, and upon receiving such a request
Lessor shall determine, in its sole discretion, whether to provide such
financing. If Lessor does not, within 20 days after receiving Lessee's request,
offer to finance the addition upon the terms requested by Lessee, Lessee may
obtain offers from third parties for financing the addition, and Lessee shall
notify Lessor of the details of any third party financing offer Lessee would
like to accept (Third Party Offer). If Lessor has not made a financing offer to
Lessee on terms substantially similar to the Third Party Offer within 20 days of
receiving Lessee's notice, Lessee may accept the Third Party Offer unless: (a)
the aggregate cost to Lessee of obtaining financing from the Third Party Offer
is greater than the aggregate cost under Lessor's financing offer; (b) the Third
Party Offer would create a security interest in, or a lien on, the Equipment; or
(c) the addition is not permitted under Section 11(d) hereof.
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23. ASSIGNMENT BY LESSOR. Lessor shall have the unqualified right to
assign, pledge, transfer, mortgage or otherwise convey any of its interests
hereunder or in any Schedule or any Equipment, in whole or in part, without
notice to, or consent of, Lessee. If any Schedule is assigned, Lessee shall: (a)
unless otherwise specified by the Lessor and the assignee (Assignee) specified
by Lessor, pay all amounts due under the applicable Schedule to such Assignee,
notwithstanding any defense, setoff or counterclaim whatsoever that Lessee may
have against Lessor or Assignee; (b) not permit the applicable Schedule to be
amended or the terms thereof waived without the prior written consent of the
Assignee; (c) not require the Assignee to perform any obligations of Lessor,
other than those that are expressly assumed in writing by such Assignee; and (d)
execute such acknowledgments thereto as may be requested by Lessor. It is
further agreed that: (x) each Assignee shall be entitled to all of Lessor's
rights, powers and privileges under the applicable Schedule, to the extent
assigned; (y) any Assignee may reassign its rights and interests under the
applicable Schedule with the same force and effect as the assignment described
herein; and (z) any payments received by the Assignee from Lessee with respect
to the assigned portion of the Schedule shall, to the extent thereof, discharge
the obligations of Lessee to Lessor with respect to the assigned portion of the
Schedule. LESSEE ACKNOWLEDGES THAT ANY ASSIGNMENT OR TRANSFER BY LESSOR OR ANY
ASSIGNEE SHALL NOT MATERIALLY CHANGE LESSEE'S OBLIGATIONS UNDER THE ASSIGNED
SCHEDULE.
24. ASSIGNMENT OR SUBLEASE BY LESSEE. WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT, LESSEE SHALL NOT ASSIGN THIS AGREEMENT OR ANY SCHEDULE OR ASSIGN ITS
RIGHTS IN OR SUBLET THE EQUIPMENT OR ANY INTEREST THEREIN; provided, however,
that Lessee may sublease or assign a Schedule to an affiliate or a wholly-owned
subsidiary of Lessee if: (a) Lessee and such sublessee or assignee execute and
deliver to Lessor a writing (to be provided by Lessor) whereby the sublessee or
assignee agrees to assume joint and several liability with Lessee for the full
and prompt payment, observance and performance when due of all of the
obligations of the Lessee under such Schedule; and (b) Lessor consents to such
sublease or assignment, which consent shall not be unreasonably withhold. In no
event, however, shall any such sublease or assignment discharge or diminish any
of Lessee's obligations to Lessor under such Schedule.
25. SURVIVAL; QUIET ENJOYMENT. All representations, warranties and
covenants made by Lessee hereunder shall survive the termination of this
Agreement and shall remain in full force and effect. All of Lessor's rights,
privileges and indemnities, to the extent they are fairly attributable to events
or conditions occurring or existing on or prior to the termination of this
Agreement, shall survive such termination and be enforceable by Lessor and any
successors and assigns. So long as no Event of Default exists, and no event has
occurred and is continuing that with notice or the lapse of time or both would
constitute an Event of Default, neither Lessor nor any Assignee will interfere
with Lessee's quiet enjoyment of the Equipment.
26. FILING FEES; FURTHER ASSURANCES; NOTICES. Lessee will promptly
reimburse Lessor for any filing or recordation fees or expenses (including lien
search fees, legal fees and costs) incurred by Lessor in perfecting or
protecting its interests in the Equipment and under this Agreement. Lessee shall
promptly execute and deliver to Lessor such documents and take such further
action as Lessor may from time to time reasonably request in order to carry out
the intent and purpose of this Agreement and to protect the rights and remedies
of Lessor created
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or intended to be created hereunder. All notices under this Agreement shall be
sent to the respective party at its address set forth on the front page of this
Agreement or on the applicable Schedule or at such other address as the parties
may provide to each other in writing from time to time. Any such notice mailed
to said address shall be effective when deposited in the United States mail,
duly addressed and with first class postage prepaid.
27. WAIVER OF JURY TRIAL; SUCCESSORS, LESSEE AND LESSOR EACH IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY
OTHER LITIGATION OR PROCEEDING UPON, ARISING OUT OF, OR RELATED TO THIS
AGREEMENT, ANY OTHER FUNDAMENTAL AGREEMENT, OR THE DEALINGS OR RELATIONSHIP
BETWEEN OR AMONG LESSOR, LESSEE, SELLER OR ANY OTHER PERSON. This Agreement and
all Schedules inure to the benefit of and are binding upon the permitted
successors or assigns of Lessor and Lessee.
28. NO WAIVER; LESSOR APPROVAL. Any failure of Lessor to require strict
performance by Lessee, or any written waiver by Lessor of any provision hereof,
shall not constitute consent or waiver of any other breach of the same or any
other provision hereof. Neither this Agreement nor any other Fundamental
Agreement shall be binding upon Lessor unless and until executed by Lessor.
29. CAPTIONS; COUNTERPARTS; LESSOR'S AFFILIATES. The captions contained in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement. Only one counterpart of the Schedule shall be marked
"Original" (Original), and all other counterparts thereof shall be marked as,
and shall be, duplicates. To the extent that any Schedule constitutes chattel
paper (as such term is defined in the Uniform Commercial Code in effect in any
applicable jurisdiction), no security interest in such Schedule may be created
through the transfer or possession of any counterpart other than the Original.
Lessee understands and agrees that AT&T Capital Corporation or any affiliate or
subsidiary thereof may, as lessor, execute Schedules under this Agreement, in
which event the terms and conditions of the applicable Schedule and this
Agreement as it relates to the lessor under such Schedule shall be binding upon
and shall inure to the benefit of such entity executing such Schedule as lessor,
as well as any successor or assigns of such entity.
30. CHOICE OF LAW; INTEGRATION; ENTIRE AGREEMENT. EACH LEASE UNDER THIS
AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF NEW JERSEY (STATE). If any provision of this
Agreement or such Schedule shall be prohibited by or invalid under that law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such Schedule. Lessor and Lessee
consent to the jurisdiction of any local, state or Federal court located within
the State, and waive any objection relating to improper venue or forum non
conveniens to the conduct of any proceeding in any such court. This Agreement
and all other Fundamental Agreements executed by both Lessor and Lessee
constitute the entire agreement between Lessor and Lessee relating to the
leasing of the Equipment, and supersede all prior agreements relating thereto,
whether written or oral, and may not be amended or modified except in a writing
signed by the parties hereto.
10
<PAGE>
UNIVERSAL MONEY CENTERS, INC. AT&T CREDIT CORPORATION
Lessee
By:/s/ Dave Windhorst By:/s/ AT&T Corp.
----------------------------- --------------------------------
Lessee Authorized Signature Lessor Authorized Signature
/s/ Dave Windhorst, President
----------------------------- --------------------------------
Print Name & Title Print Name & Title
11
AT&T MASTER EQUIPMENT
Corporation LEASE AGREEMENT SCHEDULE
- --------------------------------------------------------------------------------
LESSEE: Universal Money Centers, Inc. LESSOR: AT&T Credit Corporation
- --------------------------------------------------------------------------------
Street Address Address
6800 Squibb Road 2 Gatehall Drive, Parsippany, NJ 07054
- ---------------------------------------- ---------------------------------------
City/State/Zip Lease Number Schedule Number
Mission, KS 66201 I200084 00020
- ---------------------------------------- ---------------------------------------
SELLER: Total Price Including
AT&T Global Information Solutions Installation/One-Time Charges
f/k/a NCR Corporation
................................................................................
Description of Items to be Leased (the Equipment)
Equipment subject hereto shall include, but not
be limited to: (29) NCR 5670 ATMs and all other
items of equipment, including all attachments,
alterations, and additions thereto, and any and
all parts thereof, and a right to use license
for any software related thereto and related
documentation, as such are and/or will be more
particularly described in the equipment order(s)
as reflected in the invoices of the seller or supplier.
- --------------------------------------------------------------------------------
Total Purchase Price
Yes No (Sum of total prices
Option A ........... X __ including installation/
one-time charges) $440,365.00
------------------------------------------
Lessee selects a fair market value PAYMENT IN ARREARS .................Yes __
purchase Option and a fair rental
value renewal option. If this payments in arrears option is
selected, Lessee shall pay Lessor the
Yes No first Rental Payment for the Equipment on
Option B ........... __ X the last day of the first Rental Payment
Period, which shall begin at Lessor's
Lessee selects (i) a fixed price option on either the Commencement Date or
purchase option of either $ N/A or the first day of the month following the
N/A % of the Total Purchase Price; month in which the Commencement Date
and (ii) a fixed price renewal occurs, and shall pay Lessor the remaining
option of N/A% of the periodic periodic Rental Payments on or before the
Rental Payment. last day of each subsequent Rental
Payment Period.
THE TERMS AND CONDITIONS OF THE ------------------------------------------
FOREGOING OPTIONS AND OTHER Advance Rent Rental Payment
IMPORTANT PROVISIONS ARE SET FORTH $68,256.58 See attached Exhibit B
ON THE BACK OF THIS SCHEDULE.
- ------------------------------------ ------------------------------------------
Employment Location Rental Payment Latest Commencement Date
Period 12/30/96
See attached Exhibit A. Monthly
------------------------------------------
Length of Initial Term
48 Months
- --------------------------------------------------------------------------------
THIS SCHEDULE SHALL BE GOVERNED BY THE TERMS AND CONDITIONS OF THE MASTER
EQUIPMENT LEASE AGREEMENT REFERENCED BY THE LEASE NUMBER SPECIFIED ABOVE
(AGREEMENT) BY AND BETWEEN LESSEE, AS LESSEE, AND LESSOR OR AT&T CAPITAL
CORPORATION OR ANY AFFILIATE OR SUBSIDIARY THEREOF, AS LESSOR, AND BY THE TERMS
AND CONDITIONS SET FORTH ON THE FRONT AND BACK OF THIS SCHEDULE. PURSUANT TO
SUCH TERMS AND CONDITIONS (WHICH LESSEE ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTANDS). LESSEE AGREES TO LEASE FROM LESSOR (AS SPECIFIED BELOW) AND LESSOR
AGREES TO LEASE TO LESSEE THE ABOVE REFERENCED EQUIPMENT, IT IS UNDERSTOOD AND
AGREED THAT THE TERMS AND CONDITIONS OF THIS SCHEDULE MAY BE DIFFERENT FROM THE
TERMS AND CONDITIONS OF PRIOR SCHEDULES AND THAT ANY ASSIGNMENT OR TRANSFER
PURSUANT TO SECTION 23 OF THE AGREEMENT BY LESSOR OR ANY ASSIGNEE SHALL NOT
MATERIALLY CHANGE LESSEE'S OBLIGATIONS HEREUNDER. LESSEE REPRESENTS AND WARRANTS
THAT IT SHALL LOOK ONLY TO THE SELLER FOR ANY AND ALL CLAIMS AND WARRANTIES
RELATING TO THE EQUIPMENT AND THAT IT EITHER HAS REVIEWED, APPROVED AND RECEIVED
A COPY OF THE APPLICABLE PURCHASE DOCUMENTS OR HAS BEEN INFORMED BY LESSOR THAT
IT MAY HAVE RIGHTS UNDER THE PURCHASE DOCUMENTS AND MAY CONTACT SELLER FOR A
DESCRIPTION OF SUCH RIGHTS TO THE EXTENT PERMITTED BY APPLICABLE LAW. LESSEE
WAIVES ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON LESSEE BY ARTICLE 2A OF
THE UCC AND ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE THAT
MAY LIMIT OR MODIFY THE LESSOR'S RIGHTS AS DESCRIBED IN THE AGREEMENT, THIS
SCHEDULE OR ANY OTHER FUNDAMENTAL AGREEMENT (AS DEFINED IN THE AGREEMENT).
- --------------------------------------------------------------------------------
Universal Money Centers, Inc. AT&T CREDIT CORPORATION
Lessee
X /s/ Dave A. Windhorst By: /s/ Mary Jaggers
- -------------------------------------- -----------------------------------
Lessee Authorized Signature Lessor Authorized Signature
Dave A. Windhorst, President Mary Jaggers,
- -------------------------------------- -----------------------------------
Print Name and Title Print Name and Title
12/12/96 12/12/96
Date Date
Page 1 of 5
<PAGE>
INVOICE
----------------------------------------------
Account # Bill Date Due Date Total Due
----------------------------------------------
----------------------------------------------
I200084 12/11/96 Upon Receipt $68,256.58
----------------------------------------------
PLEASE INDICATE ADDRESS CHANGES BELOW INSURE PROPER CREDIT OF YOUR ACCOUNT:
1) DO NOT INCLUDE WITH ANY OTHER AT&T PAYMENT
UNIVERSAL MONEY CENTERS, INC. 2) MAKE CHECKS PAYABLE TO AT&T CREDIT
6800 SQUIBB ROAD CORPORATION
MISSION, KS 66202 3) INCLUDE ACCOUNT NUMBER ON CHECK
REMIT TO:
ATTN: MR. DAVID WINDHORST AT&T CREDIT CORPORATION
2 GATEHALL DRIVE Room 3C284
PARSIPPANY, NJ 07054
ATTN: MARY JAGGERS
- ----------------------------------------------
Account # Bill Date Due Date Total Due
- ----------------------------------------------
- ----------------------------------------------
I200084 12/11/96 Upon Receipt $68,256.58
- ----------------------------------------------
- --------------------------------------------------------------------------------
Schedule Description Total Due
- --------------------------------------------------------------------------------
00020 Rental Payment $68,256.58
***DUE UPON EXECUTION OF SCHEDULE***
This invoice excludes sales tax.
Sales tax on this invoiced amount
Will be included in a future invoice
As an unpaid amount.
- --------------------------------------------------------------------------------
Please pay this amount $68,256.58
- --------------------------------------------------------------------------------
PAYMENTS RECEIVED AFTER DUE DATE MAY BE SUBJECT
TO LATE CHARGES UNDER TERMS OF THE AGREEMENT
Page 2 of 5
<PAGE>
Exhibit B
Schedule 20
AT&T
Capital Corporation Master Equipment
Lease Agreement
Schedule Worksheet
- --------------------------------------------------------------------------------
Lessee: Universal Money Centers, Inc. Lessor: AT&T Credit Corporation
6800 Squibb Road 2 Gatehall Drive
Mission, KS 66202 Parsippany, NJ 07054
- --------------------------------------------------------------------------------
------------------------------------------------------
Lease Number: I200084
Schedule Number: 00020
------------------------------------------------------
----------------------------------------------------
#Atms Cost Absolute Delivery Total
(ea) 14,200.00 685.00 300.00 15,252.82
----------------------------------------------------
----------------------------------------------------
29 411,800.00 19,865.00 8,700.00 440,365.00
----------------------------------------------------
Payment Lease Payment Nbr Total
Level Rate Amount Pmts Payments
------- ----- ------- ---- --------
1 0.155000 68,256.58 x 1 = 68,256.58
2 0.024650 10,855.00 x 17 = 184,535.00
3 0.017610 7,754.83 x 18 = 139,586.94
4 0.007010 3,086.96 x 12 = 37,043.52
-- ----------
Totals 48 429,422.04
Page 3 of 5
<PAGE>
AT&T CREDIT CORPORATION
NCR Credit Unit
2 Gatehall Drive
Parsippany, NJ 07054
F A X C O V E R S H E E T
DATE: December 10, 1996 TIME: 2:31 PM
TO: Dave Windhorst PHONE: 913-831-2055
Universal Money FAX: 913-831-0248
FROM: Mary Jaggers PHONE: 201-606-4847
FAX: 201-606-4848
Number of pages including cover sheet: 1
Message
Here is the breakdown of the charges on Schedule 00020:
Product Amount Quantity Total Amount
------- ------ -------- ------------
5670 $14,200.00 29 $417,126.14
Delivery/Installation 300.00 29 5,340.54
Absolute Metal 685.00 29 19,865.00
Total $15,252.82 29 $442,331.78
If you need anything else, please call me at the above number.
Thank you.
Mary Jaggers
/s/ Mary Jaggers
Page 4 of 5
<PAGE>
LETTERHEAD OF AT&T
AT&T
Capital Corporation
AT&T Credit Corporation
- -------------------------------------------------------------------------------
Mary Jaggers 2 Gatehall Drive
Account Manager Parsippany, NJ 07054
Phone: 201-606-4847
Fax: 201-606-4848
December 31, 1996
Mr. David Windhorst
Universal Money Centers, Inc.
6800 Squibb Road
Mission, KS 66202
RE: Master Equipment Lease Agreement Number I200084 (the "Agreement"),
Schedule 00020
Dear Mr. Windhorst:
Thank you for selecting AT&T Credit Corporation for your lease financing needs.
First, enclosed are your copies of the executed documents. Final invoices for
the above-referenced Schedule have now been received from NCR Corporation and
Absolute Metal Works. Absolute Metal Works will be added to this schedule as an
additional vendor. (Copies of these invoices have also been included for your
review and records.) These invoices reflect a change to the Total Purchase price
and related Advance Rent/Rental Payment amount(s) originally indicated on the
Schedule.
In accordance with Section 7 (Adjustments) of the Agreement, the Purchase Price
for the equipment shall be amended from $440,365.00 to $435,774.34, which is a
decrease of $4,590.66. Your payments will be as follows:
1 $67,545.02
2-18 $10,741.84
19-36 $ 7,673.99
37-48 $ 3,054.78
To confirm the correct payment procedure, please remit payments to: AT&T Credit,
PO Box 85375, Louisville, KY 40285-5375, as indicated on each invoice. PLEASE DO
NOT MAIL YOUR PAYMENTS TO AT&T CREDIT IN PARSIPPANY, NEW JERSEY:
Finally, please note that under this lease agreement (paragraph 9 of the Master
Equipment Lease Agreement), the equipment will be included on AT&T Credit's
property tax return. In turn, AT&T Credit will invoice you to obtain
reimbursement for the property tax assessment. PLEASE DO NOT PAY PROPERTY TAX
DIRECTLY TO YOUR LOCAL TAX AUTHORITY.
All terms used herein and not defined shall have the meanings set forth in the
Agreement or the Schedule, as applicable. All other terms and conditions of the
Agreement and Schedule remain unchanged and in full force and effect.
Should you have any questions about any of the enclosed documents or any matters
concerning billing and payment, please call Customer Service, at telephone 1
800-622-6660. Again, thank you for choosing AT&T Credit for your financing
needs.
Yours truly,
/s/ Mary Jaggers
Mary Jaggers
Account Manager
Page 5 of 5
AT&T MASTER EQUIPMENT
Corporation LEASE AGREEMENT SCHEDULE
- --------------------------------------------------------------------------------
LESSEE: Universal Money Centers, Inc. LESSOR: AT&T Credit Corporation
- --------------------------------------------------------------------------------
Street Address Address
6800 Squibb Road 2 Gatehall Drive, Parsippany, NJ 07054
- ---------------------------------------- ---------------------------------------
City/State/Zip Lease Number Schedule Number
Mission, KS 66201 I200084 0010
- ---------------------------------------- ---------------------------------------
SELLER: Total Price Including
AT&T Global Information Solutions Installation/One-Time Charges
f/k/a NCR Corporation
................................................................................
Description of Items to be Leased (the Equipment)
Equipment subject hereto shall include, but not
be limited to: (5) NCR 5670 ATMs and all other
items of equipment, including all attachments,
alterations, and additions thereto, and any and
all parts thereof, and a right to use license
for any software related thereto and related
documentation, as such are and/or will be more
particularly described in the equipment order(s)
as reflected in the invoices of the seller or supplier.
- --------------------------------------------------------------------------------
Total Purchase Price
Yes No (Sum of total prices
Option A ........... X __ including installation/
one-time charges) $66,427.37
------------------------------------------
Lessee selects a fair market value PAYMENT IN ARREARS .................Yes __
purchase Option and a fair rental
value renewal option. If this payments in arrears option is
selected, Lessee shall pay Lessor the
Yes No first Rental Payment for the Equipment on
Option B ........... __ X the last day of the first Rental Payment
Period, which shall begin at Lessor's
Lessee selects (i) a fixed price option on either the Commencement Date or
purchase option of either $ N/A or the first day of the month following the
N/A % of the Total Purchase Price; month in which the Commencement Date
and (ii) a fixed price renewal occurs, and shall pay Lessor the remaining
option of N/A% of the periodic periodic Rental Payments on or before the
Rental Payment. last day of each subsequent Rental
Payment Period.
THE TERMS AND CONDITIONS OF THE ------------------------------------------
FOREGOING OPTIONS AND OTHER Advance Rent Rental Payment
IMPORTANT PROVISIONS ARE SET FORTH $10,296.24 See attached Exhibit B
ON THE BACK OF THIS SCHEDULE.
- ------------------------------------ ------------------------------------------
Employment Location Rental Payment Latest Commencement Date
Period 10/30/96
See attached Exhibit A. Monthly
------------------------------------------
Length of Initial Term
48 Months
- --------------------------------------------------------------------------------
THIS SCHEDULE SHALL BE GOVERNED BY THE TERMS AND CONDITIONS OF THE MASTER
EQUIPMENT LEASE AGREEMENT REFERENCED BY THE LEASE NUMBER SPECIFIED ABOVE
(AGREEMENT) BY AND BETWEEN LESSEE, AS LESSEE, AND LESSOR OR AT&T CAPITAL
CORPORATION OR ANY AFFILIATE OR SUBSIDIARY THEREOF, AS LESSOR, AND BY THE TERMS
AND CONDITIONS SET FORTH ON THE FRONT AND BACK OF THIS SCHEDULE. PURSUANT TO
SUCH TERMS AND CONDITIONS (WHICH LESSEE ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTANDS). LESSEE AGREES TO LEASE FROM LESSOR (AS SPECIFIED BELOW) AND LESSOR
AGREES TO LEASE TO LESSEE THE ABOVE REFERENCED EQUIPMENT, IT IS UNDERSTOOD AND
AGREED THAT THE TERMS AND CONDITIONS OF THIS SCHEDULE MAY BE DIFFERENT FROM THE
TERMS AND CONDITIONS OF PRIOR SCHEDULES AND THAT ANY ASSIGNMENT OR TRANSFER
PURSUANT TO SECTION 23 OF THE AGREEMENT BY LESSOR OR ANY ASSIGNEE SHALL NOT
MATERIALLY CHANGE LESSEE'S OBLIGATIONS HEREUNDER. LESSEE REPRESENTS AND WARRANTS
THAT IT SHALL LOOK ONLY TO THE SELLER FOR ANY AND ALL CLAIMS AND WARRANTIES
RELATING TO THE EQUIPMENT AND THAT IT EITHER HAS REVIEWED, APPROVED AND RECEIVED
A COPY OF THE APPLICABLE PURCHASE DOCUMENTS OR HAS BEEN INFORMED BY LESSOR THAT
IT MAY HAVE RIGHTS UNDER THE PURCHASE DOCUMENTS AND MAY CONTACT SELLER FOR A
DESCRIPTION OF SUCH RIGHTS TO THE EXTENT PERMITTED BY APPLICABLE LAW. LESSEE
WAIVES ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON LESSEE BY ARTICLE 2A OF
THE UCC AND ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE THAT
MAY LIMIT OR MODIFY THE LESSOR'S RIGHTS AS DESCRIBED IN THE AGREEMENT, THIS
SCHEDULE OR ANY OTHER FUNDAMENTAL AGREEMENT (AS DEFINED IN THE AGREEMENT).
- --------------------------------------------------------------------------------
Universal Money Centers, Inc. AT&T CREDIT CORPORATION
Lessee
X /s/ Dave A. Windhorst By: /s/ Mary Jaggers
- -------------------------------------- ---------------------------------------
Lessee Authorized Signature Lessor Authorized Signature
Dave A. Windhorst, President Mary Jaggers,
- -------------------------------------- ---------------------------------------
Print Name and Title Print Name and Title
10/18/96 10/18/96
Date Date
Page 1 of 3
<PAGE>
Exhibit A
INVOICE
AT&T
Capital Corporation AT&T Credit -- GLOBAL INFORMATION SOLUTIONS
----------------------------------------------
Account # Bill Date Total Due
----------------------------------------------
----------------------------------------------
1200084 10/17/96 $10,296.24
----------------------------------------------
TO INSURE PROPER CREDIT OF YOUR ACCOUNT:
1) DO NOT INCLUDE WITH ANY OTHER AT&T PAYMENT
2) MAKE CHECKS PAYABLE TO AT&T CREDIT - GIS
3) INCLUDE ACCOUNT NUMBER ON CHECK
PLEASE INDICATE ADDRESS CHANGES BELOW: MAIL PAYMENTS TO:
Universal Money Centers, Inc. AT&T Credit - GIS
6800 Squibb Road 2 Gatehall Drive, Rm 3C284
Mission, KS 66202 Parsippany, NJ 07053
ATTN: Mary Jaggers
Attn: Mr. David Windhorst
- --------------------------------------------------------------------------------
Schedule Description Amount
- --------------------------------------------------------------------------------
00010 (5) NCR 5670 ATMs
EQUIPMENT LOCATION
------------------
Various locations in the state of Texas
Advance Rental Payment $10,296.24
***DUE UPON EXECUTION OF SCHEDULE***
PLEASE PAY THIS AMOUNT $10,296.24
Page 2 of 3
<PAGE>
Exhibit B
Schedule 10
AT&T
Capital Corporation Master Equipment
Lease Agreement
Schedule Worksheet
- --------------------------------------------------------------------------------
Lessee: Universal Money Centers, Inc. Lessor: AT&T Credit Corporation
6800 Squibb Road 2 Gatehall Drive
Mission, KS 66202 Parsippany, NJ 07054
- --------------------------------------------------------------------------------
------------------------------------------------------
Lease Number: I200084
Schedule Number: 00010
------------------------------------------------------
----------------------------------------------------------------
Base Total Down Total
#Atms Cost Delivery Cost Payment Lease
(ea) 15,941.31 184.16 16,125.47 2,840.00 13,285.47
----------------------------------------------------------------
5 79,706.55 920.80 80,627.35 14,200.00 66,427.35
----------------------------------------------------------------
Payment Lease Payment Nbr Total
Level Rate Amount Pmts Payments
------- ----- ------- ---- --------
1 0.155000 10,296.24 x 1 = 10,296.24
2 0.024650 1,637.43 x 17 = 27,836.31
3 0.017610 1,169.79 x 18 = 21,056.22
4 0.007010 465.66 x 12 = 5,587.92
-- ----------
Lease Totals 48 64,776.69
Plus Downpayment 14,200.00
Total Payout 78,976.69
Page 3 of 3
AT&T MASTER EQUIPMENT
Corporation LEASE AGREEMENT SCHEDULE
- --------------------------------------------------------------------------------
LESSEE: Universal Money Centers, Inc. LESSOR: AT&T Credit Corporation
- --------------------------------------------------------------------------------
Street Address Address
6800 Squibb Road 2 Gatehall Drive, Parsippany, NJ 07054
- ---------------------------------------- ---------------------------------------
City/State/Zip Lease Number Schedule Number
Mission, KS 66201 I200084 0040
- ---------------------------------------- ---------------------------------------
SELLER: Total Price Including
AT&T Global Information Solutions Installation/One-Time Charges
f/k/a NCR Corporation
................................................................................
Description of Items to be Leased (the Equipment)
Equipment subject hereto shall include, but not
be limited to: (8) NCR 5670 ATMs and all other
items of equipment, including all attachments,
alterations, and additions thereto, and any and
all parts thereof, and a right to use license
for any software related thereto and related
documentation, as such are and/or will be more
particularly described in the equipment order(s)
as reflected in the invoices of the seller or supplier.
- --------------------------------------------------------------------------------
Total Purchase Price
Yes No (Sum of total prices
Option A ........... X __ including installation/
one-time charges) $116,000.00
------------------------------------------
Lessee selects a fair market value PAYMENT IN ARREARS .................Yes __
purchase Option and a fair rental
value renewal option. If this payments in arrears option is
selected, Lessee shall pay Lessor the
Yes No first Rental Payment for the Equipment on
Option B ........... __ X the last day of the first Rental Payment
Period, which shall begin at Lessor's
Lessee selects (i) a fixed price option on either the Commencement Date or
purchase option of either $ N/A or the first day of the month following the
N/A % of the Total Purchase Price; month in which the Commencement Date
and (ii) a fixed price renewal occurs, and shall pay Lessor the remaining
option of N/A% of the periodic periodic Rental Payments on or before the
Rental Payment. last day of each subsequent Rental
Payment Period.
THE TERMS AND CONDITIONS OF THE ------------------------------------------
FOREGOING OPTIONS AND OTHER Advance Rent Rental Payment
IMPORTANT PROVISIONS ARE SET FORTH $17,980.00 See attached Exhibit A
ON THE BACK OF THIS SCHEDULE.
- ------------------------------------ ------------------------------------------
Employment Location Rental Payment Latest Commencement Date
Period 2/28/97
4748 Osborne Monthly
El Paso, Texas 79922 ------------------------------------------
Length of Initial Term
48 Months
- --------------------------------------------------------------------------------
THIS SCHEDULE SHALL BE GOVERNED BY THE TERMS AND CONDITIONS OF THE MASTER
EQUIPMENT LEASE AGREEMENT REFERENCED BY THE LEASE NUMBER SPECIFIED ABOVE
(AGREEMENT) BY AND BETWEEN LESSEE, AS LESSEE, AND LESSOR OR AT&T CAPITAL
CORPORATION OR ANY AFFILIATE OR SUBSIDIARY THEREOF, AS LESSOR, AND BY THE TERMS
AND CONDITIONS SET FORTH ON THE FRONT AND BACK OF THIS SCHEDULE. PURSUANT TO
SUCH TERMS AND CONDITIONS (WHICH LESSEE ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTANDS). LESSEE AGREES TO LEASE FROM LESSOR (AS SPECIFIED BELOW) AND LESSOR
AGREES TO LEASE TO LESSEE THE ABOVE REFERENCED EQUIPMENT, IT IS UNDERSTOOD AND
AGREED THAT THE TERMS AND CONDITIONS OF THIS SCHEDULE MAY BE DIFFERENT FROM THE
TERMS AND CONDITIONS OF PRIOR SCHEDULES AND THAT ANY ASSIGNMENT OR TRANSFER
PURSUANT TO SECTION 23 OF THE AGREEMENT BY LESSOR OR ANY ASSIGNEE SHALL NOT
MATERIALLY CHANGE LESSEE'S OBLIGATIONS HEREUNDER. LESSEE REPRESENTS AND WARRANTS
THAT IT SHALL LOOK ONLY TO THE SELLER FOR ANY AND ALL CLAIMS AND WARRANTIES
RELATING TO THE EQUIPMENT AND THAT IT EITHER HAS REVIEWED, APPROVED AND RECEIVED
A COPY OF THE APPLICABLE PURCHASE DOCUMENTS OR HAS BEEN INFORMED BY LESSOR THAT
IT MAY HAVE RIGHTS UNDER THE PURCHASE DOCUMENTS AND MAY CONTACT SELLER FOR A
DESCRIPTION OF SUCH RIGHTS TO THE EXTENT PERMITTED BY APPLICABLE LAW. LESSEE
WAIVES ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON LESSEE BY ARTICLE 2A OF
THE UCC AND ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE THAT
MAY LIMIT OR MODIFY THE LESSOR'S RIGHTS AS DESCRIBED IN THE AGREEMENT, THIS
SCHEDULE OR ANY OTHER FUNDAMENTAL AGREEMENT (AS DEFINED IN THE AGREEMENT).
- --------------------------------------------------------------------------------
Universal Money Centers, Inc. AT&T CREDIT CORPORATION
Lessee
X /s/ Dave A. Windhorst By: /s/ Mary Jaggers
- -------------------------------------- ---------------------------------------
Lessee Authorized Signature Lessor Authorized Signature
Dave A. Windhorst, President Mary Jaggers,
- -------------------------------------- ---------------------------------------
Print Name and Title Print Name and Title
3/12/97 3/12/97
Date Date
Page 1 of 3
<PAGE>
EXHIBIT A
Universal Money Centers, Inc.
Lease Number I200084
Schedule Number 00040
Rental Payment Stream
Payment Number Amount
- -------------- ------
1 $17,980.00
2 thru 18 $ 2,859.40
19 thru 36 $ 2,042.76
37 thru 48 $ 813.16
Page 2 of 3
<PAGE>
INVOICE
----------------------------------------------
Account # Bill Date Due Date Total Due
----------------------------------------------
----------------------------------------------
1200084 2/20/97 Upon Receipt $17,980.00
----------------------------------------------
PLEASE INDICATE ADDRESS CHANGES BELOW TO INSURE PROPER CREDIT OF YOUR ACCOUNT:
1) DO NOT INCLUDE WITH ANY OTHER AT&T PAYMENT
UNIVERSAL MONEY CENTERS, INC.
6800 SQUIBB ROAD 2) MAKE CHECKS PAYABLE TO AT&T CREDIT
MISSION, KS 66202 CORPORATION
3) INCLUDE ACCOUNT NUMBER ON CHECK
ATTN: MR. DAVID BONSAL
REMIT TO:
AT&T CREDIT CORPORATION
2 GATEHALL DRIVE Room 3C284
PARSIPPANY, NJ 07054
ATTN: MARY JAGGERS
- -----------------------------------------------
Account # Bill Date Due Date Total Due
- -----------------------------------------------
- -----------------------------------------------
1200084 2/20/97 Upon Receipt $17,980.00
- -----------------------------------------------
- --------------------------------------------------------------------------------
Schedule Description Total Due
- --------------------------------------------------------------------------------
00040 Rental Payment $17,980.00
***DUE UPON EXECUTION OF SCHEDULE***
Please pay this amount $17,980.00
PAYMENTS RECEIVED AFTER DUE DATE MAY BE
SUBJECT TO LATE CHARGES UNDER TERMS OF THE AGREEMENT
Page 3 of 3
- --------------------------------------------------------- -------------------
Name and address of each member of the affiliated group Employer
identification
number
- --------------------------------------------------------- -------------------
Electronic Funds Transfer, Inc.
6800 Squibb Road, Shawnee Mission, KS 66201 48-1001578
- --------------------------------------------------------- -------------------
- --------------------------------------------------------- -------------------
Corporate Payment and Systems, Inc.
6800 Squibb Road, Shawnee Mission, KS 66201 (inactive) 48-0999824
- --------------------------------------------------------- -------------------
Universal Data Services, Inc.
6800 Squibb Road, Shawnee Mission, KS 66201 (inactive) 48-1001577
- --------------------------------------------------------- -------------------
A.M. Corporation
6800 Squibb Road, Shawnee Mission, KS 66201 (inactive) 48-0999670
- --------------------------------------------------------- -------------------
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints David S. Bonsal, Dave A.
Windhorst and Christopher D. Greek, and each of them with full power to act
without the others, with full power of substitution, as the true and lawful
attorneys-in-fact and agents for the undersigned and in the undersigned's name,
place and stead, to sign in the name and on behalf of the undersigned the Annual
Report on Form 10-K of Universal Money Centers, Inc. for its fiscal year ended
January 31, 1998, and any and all amendments thereto, and to file the same, with
all exhibits thereto, and any and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Dated: March 12, 1999
/s/ David S. Bonsal
--------------------------------
David S. Bonsal
Chairman of the Board,
Chief Executive Officer and
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints David S. Bonsal, Dave A.
Windhorst and Christopher D. Greek, and each of them with full power to act
without the others, with full power of substitution, as the true and lawful
attorneys-in-fact and agents for the undersigned and in the undersigned's name,
place and stead, to sign in the name and on behalf of the undersigned the Annual
Report on Form 10-K of Universal Money Centers, Inc. for its fiscal year ended
January 31, 1998, and any and all amendments thereto, and to file the same, with
all exhibits thereto, and any and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Dated: March 12, 1999
/s/ Dave A. Windhorst
---------------------------------
Dave A. Windhorst
President
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints David S. Bonsal, Dave A.
Windhorst and Christopher D. Greek, and each of them with full power to act
without the others, with full power of substitution, as the true and lawful
attorneys-in-fact and agents for the undersigned and in the undersigned's name,
place and stead, to sign in the name and on behalf of the undersigned the Annual
Report on Form 10-K of Universal Money Centers, Inc. for its fiscal year ended
January 31, 1998, and any and all amendments thereto, and to file the same, with
all exhibits thereto, and any and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Dated: March 12, 1999
/s/ Arthur M. Moglowsky
---------------------------------
Arthur M. Moglowsky
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints David S. Bonsal, Dave A.
Windhorst and Christopher D. Greek, and each of them with full power to act
without the others, with full power of substitution, as the true and lawful
attorneys-in-fact and agents for the undersigned and in the undersigned's name,
place and stead, to sign in the name and on behalf of the undersigned the Annual
Report on Form 10-K of Universal Money Centers, Inc. for its fiscal year ended
January 31, 1998, and any and all amendments thereto, and to file the same, with
all exhibits thereto, and any and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Dated: March 12, 1999
/s/ Jeffrey M. Sperry
---------------------------------
Jeffrey M. Sperry
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary
Financial Information Extracted From
the Consolidated Balance Sheets as of
January 31, 1998 and Consolidated
Statements Of Income For The Year Ended
January 31, 1998 and is qualified in
its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> United States
<CIK> 0000702167
<NAME> Universal Money Centers, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-1-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 374,675
<SECURITIES> 0
<RECEIVABLES> 113,035
<ALLOWANCES> 21,380
<INVENTORY> 300
<CURRENT-ASSETS> 475,806
<PP&E> 2,706,160
<DEPRECIATION> 1,475,325
<TOTAL-ASSETS> 2,034,024
<CURRENT-LIABILITIES> 761,542
<BONDS> 392,945
0
0
<COMMON> 398,514
<OTHER-SE> 2,143,331
<TOTAL-LIABILITY-AND-EQUITY> 2,034,024
<SALES> 0
<TOTAL-REVENUES> 3,844,172
<CGS> 0
<TOTAL-COSTS> 1,070,976
<OTHER-EXPENSES> 69,021
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,021
<INCOME-PRETAX> 349,424
<INCOME-TAX> 315,000
<INCOME-CONTINUING> 396,429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 664,424
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
