<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-26580
AMERICAN COIN MERCHANDISING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1093721
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5660 CENTRAL AVENUE, BOULDER, COLORADO 80301
(Address of principal executive offices)
(Zip Code)
(303) 444-2559
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS MAY 1, 2000
----- --------------
<S> <C>
Common Stock, $0.01 par value 6,487,669 shares
</TABLE>
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AMERICAN COIN MERCHANDISING, INC.
INDEX
<TABLE>
<CAPTION>
PART 1 FINANCIAL INFORMATION. PAGE
<S> <C> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
March 31, 2000 and December 31, 1999......................................... 3
Consolidated Condensed Statements of Earnings for the
Three Months Ended March 31, 2000 and 1999................................... 4
Consolidated Condensed Statement of Stockholders' Equity for the
Three Months Ended March 31, 2000............................................ 5
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999................................... 6
Notes to Consolidated Condensed Financial Statements........................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................... 8
PART II OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K.................................................... 11
</TABLE>
2
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS
AMERICAN COIN MERCHANDISING, INC.
Consolidated Condensed Balance Sheets
(in thousands, except per share data)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................................ $ 963 $ 579
Trade accounts and other receivables, net................................................ 478 691
Inventories, net......................................................................... 12,090 14,806
Prepaid expenses and other assets........................................................ 2,236 2,260
-------- --------
Total current assets................................................................. 15,767 18,336
-------- --------
Property and equipment, at cost:
Vending machines......................................................................... 55,857 53,079
Vehicles................................................................................. 6,680 6,866
Office equipment, furniture and fixtures................................................. 4,161 4,003
-------- --------
66,698 63,948
Less accumulated depreciation............................................................ (22,366) (20,305)
-------- --------
Property and equipment, net.......................................................... 44,332 43,643
Placement fees, net of accumulated amortization of $1,260 in 2000 and $1,090 in 1999........ 1,355 930
Costs in excess of assets acquired and other intangible assets, net of accumulated
amortization of $4,464 in 2000 and $3,904 in 1999........................................ 37,687 38,247
Other assets, net of accumulated amortization of $569 in 2000 and $460 in 1999.............. 1,835 1,350
Deferred tax assets......................................................................... 1,481 1,628
-------- --------
Total assets......................................................................... $102,457 $104,134
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt........................................................ $ 2,343 $ 2,463
Accounts payable......................................................................... 2,776 4,167
Accrued commissions...................................................................... 1,494 1,595
Other accrued expenses................................................................... 1,222 744
-------- --------
Total current liabilities............................................................ 7,835 8,969
-------- --------
Long-term debt, net of current portion...................................................... 49,364 50,230
Other liabilities........................................................................... 291 239
-------- --------
Total liabilities.................................................................... 57,490 59,438
-------- --------
Company obligated mandatorily redeemable preferred securities of subsidiary trust
holding solely junior subordinated debentures............................................ 15,555 15,542
Stockholders' equity:
Preferred stock, $.10 par value (Authorized 500 shares; none issued)..................... -- --
Common stock, $.01 par value (Authorized 20,000 shares; issued and
outstanding 6,488 shares in 2000 and 6,480 shares in 1999)............................. 65 65
Additional paid-in-capital............................................................... 22,019 22,001
Retained earnings........................................................................ 7,328 7,088
-------- --------
Total stockholders' equity........................................................... 29,412 29,154
-------- --------
Commitments
Total liabilities and stockholders' equity........................................... $102,457 $104,134
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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AMERICAN COIN MERCHANDISING, INC.
Consolidated Condensed Statements Of Earnings
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Revenue:
Vending...................................................................... $30,900 $27,766
Franchise and other.......................................................... 599 1,381
------- -------
Total revenue............................................................ 31,499 29,147
------- -------
Cost of revenue:
Vending, excluding related depreciation and amortization..................... 20,140 18,215
Depreciation and amortization................................................ 2,117 1,943
------- -------
Total cost of vending.................................................... 22,257 20,158
Franchise and other.......................................................... 555 966
------- -------
Total cost of revenue.................................................... 22,812 21,124
------- -------
Gross profit............................................................. 8,687 8,023
General and administrative expenses............................................. 5,554 5,311
Depreciation and amortization................................................... 827 779
------- -------
Operating earnings....................................................... 2,306 1,933
Interest expense, net........................................................... 1,919 1,674
------- -------
Earnings before income taxes............................................. 387 259
Provision for income taxes...................................................... 147 86
------- -------
Net earnings............................................................. $ 240 $ 173
======= =======
Basic earnings per share of common stock................................. $0.04 $0.03
Diluted earnings per share of common stock............................... $0.04 $0.03
Basic weighted average common shares..................................... 6,480 6,475
Diluted weighted average common shares................................... 6,480 6,478
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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AMERICAN COIN MERCHANDISING, INC.
Consolidated Condensed Statement Of Stockholders' Equity
(In thousands)
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL STOCK-
COMMON PAID-IN RETAINED HOLDERS'
STOCK CAPITAL EARNINGS EQUITY
<S> <C> <C> <C> <C>
DECEMBER 31, 1999............................................ $65 $22,001 $7,088 $29,154
Issuance of 7,475 shares of common stock in
employee stock purchase plan............................ -- 18 -- 18
Net earnings.............................................. -- -- 240 240
--- ------- ------ -------
MARCH 31, 2000............................................... $65 $22,019 $7,328 $29,412
=== ======= ====== =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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AMERICAN COIN MERCHANDISING, INC.
Consolidated Condensed Statements Of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Operating activities:
Net earnings...................................................................... $ 240 $ 173
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization................................................. 3,077 2,844
Changes in operating assets and liabilities:
Trade accounts and other receivables...................................... 213 (23)
Inventories............................................................... 2,716 1,208
Prepaid expenses and other assets......................................... (423) (681)
Accounts payable, accrued expenses and other liabilities.................. (962) (667)
------- -------
Net cash provided by operating activities................................... 4,861 2,854
------- -------
Investing activities:
Acquisitions of property and equipment, net....................................... (2,914) (937)
Placement fees.................................................................... (595) (189)
------- -------
Net cash used in investing activities....................................... (3,509) (1,126)
------- -------
Financing activities:
Net payments on credit facility................................................... (368) (860)
Principal payments on long-term debt.............................................. (618) (286)
Employee stock purchase plan...................................................... 18 --
------- -------
Net cash used in financing activities....................................... (968) (1,146)
------- -------
Net increase in cash and cash equivalents................................... 384 582
Cash and cash equivalents at beginning of period..................................... 579 2,247
------- -------
Cash and cash equivalents at end of period........................................... $ 963 $ 2,829
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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AMERICAN COIN MERCHANDISING, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
American Coin Merchandising, Inc., d/b/a Sugarloaf Creations, Inc. and
American Coin Merchandising Trust I (the "Company") and its franchisees own and
operate coin-operated skill-crane machines ("Shoppes") that dispense stuffed
animals, plush toys, watches, jewelry and other items. The Company's Shoppes are
placed in supermarkets, mass merchandisers, bowling centers, truck stops, bingo
halls, bars, restaurants, warehouse clubs and similar locations. The Company
also operates bulk vending equipment, kiddie rides and video equipment that are
located primarily in supermarkets and mass merchandisers. At March 31, 2000, the
Company had 33 field offices with operations in 42 states and there were 12
Company franchisees operating in 16 territories.
The accompanying consolidated condensed financial statements have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Certain amounts for prior periods have been reclassified to conform
to the March 31, 2000 presentation. Although the Company believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these consolidated condensed financial statements be read in
connection with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1999.
In the opinion of the Company, the accompanying consolidated condensed
financial statements include all adjustments (consisting of normal recurring
accruals and adjustments) required to present fairly the Company's financial
position at March 31, 2000 and December 31, 1999, and the results of its
operations and cash flows for each of the three month periods ended March 31,
2000 and 1999.
The operating results for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
2. SUPPLEMENTAL DISCLOURES OF CASH FLOW INFORMATION
A schedule of supplemental cash flow information follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Cash paid during the period:
Interest paid............................................................ $1,299 $1,659
Income taxes paid........................................................ 51 47
</TABLE>
3. EARNINGS PER SHARE
Basic and diluted earnings per share are computed by dividing earnings
available to common stockholders by the weighted average number of common shares
outstanding during the period and by all dilutive potential common shares
outstanding during the period, respectively. The weighted average number of
shares used in the computation of basic and dilutive earnings per share were
6,480,276 and 6,480,429, respectively, for the three months ended March 31, 2000
and 6,475,069 and 6,477,851, respectively for the three months ended March 31,
1999.
4. INCOME TAXES
Quarterly income taxes are computed using the anticipated effective tax
rate for the year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this section and the Company's Form 10-K for the
year ended December 31, 1999.
GENERAL
Substantially all of the Company's revenue and gross profit is derived from
Company-owned Shoppes. The Company's revenue and gross profit in a particular
period is directly related to the number of Shoppes in operation during the
period. Management believes that the Company's business is somewhat seasonal,
with average revenue per machine per week greater during the Easter and
Christmas periods. Vending revenue represents cash receipts from customers using
vending machines and is recognized when collected. The cost of vending revenue
is comprised of the cost of vended product, location commissions, depreciation,
and direct service cost.
Franchise and other revenue represents the Company's percentage of gross
vending revenue generated by Shoppes owned and operated by franchisees, as well
as product sold to franchisees and non-franchisee customers. Product sold to
franchisees and non-franchisees consists of goods to vend in the Shoppes.
REVENUE
Total revenue for the first three months of 2000 increased 8.1% to $31.5
million from $29.1 million for the same period in 1999.
Vending revenue increased $3.1 million or 11.3% for the first three months
of 2000 to $30.9 million from $27.8 million for the comparable period in 1999,
primarily as a result of a 5.7% increase in the average number of Shoppes in
place during the first three months of 2000 compared to the average number in
place during the same period in 1999.
The Company has recently experienced substantial growth, however, there can
be no assurance that the Company will continue to grow at historical rates or at
all. The Company's ability to generate increased revenue and achieve higher
levels of profitability will depend upon its ability and the ability of its
franchisees to place additional Shoppes as well as to maintain or increase the
average financial performance of the Shoppes. The Company's ability to place
additional Shoppes depends on a number of factors beyond the Company's control,
including general business and economic conditions. Installation of additional
Shoppes will also depend, in part, upon the Company's ability to secure
additional national and regional supermarket, mass merchandiser and restaurant
chain accounts and to obtain approval to place additional Shoppes in individual
locations of such accounts. The Company, its franchisees and their suppliers
also may be unable to place and adequately service additional Shoppes.
A primary key to the financial success of the Company is the weekly revenue
generated per Shoppe, which has a history of fluctuating. The Company has
attributed some of this fluctuation to the effectiveness of its product mix and
has taken steps to address this problem; however, there can be no assurance that
such efforts will continue to have a positive impact on the performance of the
Shoppes.
Franchise and other revenue decreased $782,000 or 56.6% to $599,000 for the
first three months of 2000 as compared to the same period in 1999, due to lower
product sales to franchisees and non-franchisees that results from the
acquisition of franchisees and the closure of Plush 4 Play during the third
quarter of 1999. The Company anticipates franchise and other revenue to remain
at this level in the future.
COST OF REVENUE AND GROSS PROFIT
The cost of vending operations for the first three months of 2000 increased
$2.1 million or 10.4% to $22.3 million from $20.2 million for the comparable
period in 1999. The vending operations' contribution to gross profit for the
first three months of 2000 increased to $8.6 million, which represents a 13.6%
increase over gross profit from vending operations realized in the same period
in 1999. The vending gross profit achieved during the first quarter of 2000 was
28.0% of vending revenue, which represents a .6 percentage point increase from
the gross profit percentage achieved during the first quarter of 1999. The
increase in vending margin resulted primarily from lower average cost of product
and direct labor partially offset by higher location commissions and vehicle
expense compared to the same period in 1999.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED).
The cash vending gross profit (vending revenue minus cost of vended
product, location commissions and direct service cost) achieved during the first
quarter of 2000 was 34.8% of vending revenue, which is .4 percentage points
higher than the cash vending gross profit achieved during the first quarter of
1999. The cash vending gross profit for the current quarter is also .4
percentage points higher than the cash vending gross profit achieved during the
fourth quarter of 1999. The Company attributes this increase primarily to lower
average product costs and lower direct labor costs.
Substantially all the Company's plush toys and other products dispensed
from the Shoppes are produced by foreign manufacturers. A majority is purchased
directly by the Company from manufacturers in the People's Republic of China
("China"). The Company purchases its other products indirectly from vendors who
obtain a significant percentage of such products from foreign manufacturers. As
a result, the Company is subject to changes in governmental policies, the
imposition of tariffs, import and export controls, transportation delays and
interruptions, political and economic disruptions and labor strikes, which could
disrupt the supply of products from such manufacturers. Among other things, the
loss of China's "most favored nation" status under U.S. tariff laws could result
in a substantial increase in the import duty of certain products manufactured in
China, which could result in substantially increased costs for certain products
purchased by the Company which could have a material adverse effect on the
Company's business, financial condition and results of operation.
For the first quarter of 2000, gross profit on franchise and other revenue
decreased to $44,000 or 7.4% of franchise and other revenue, as compared to
$415,000 or 30.1% of franchise and other revenue for the first quarter of 1999.
The decrease in gross margin as a percentage of franchise and other revenue
resulted primarily from lower product sales to franchisees and non-franchisees.
OPERATING EXPENSE
General and administrative expenses and depreciation and amortization
increased $291,000 or 4.8% to $6.4 million for the first three months of 2000,
but decreased as a percentage of revenue to 20.3% as compared to 20.9% for the
comparable period in 1999, primarily as a result of higher revenues.
OPERATING EARNINGS
Operating earnings for the first three months of 2000 increased 19.3% to
$2.3 million, or 7.3% of total revenue, as compared to $1.9 million, or 6.6% of
total revenue for the comparable period in 1999. The increase in operating
earnings as a percentage of revenue results primarily from the higher gross
margin achieved from vending operations.
INTEREST EXPENSE, NET
Interest expense for the first three months of 2000 increased $245,000 to
$1.9 million as compared to the same period in 1999. The Company's interest
expense is directly related to its level of borrowings and changes in the
underlying interest rates.
NET EARNINGS AND NET EARNINGS PER SHARE
Net earnings for the first three months of 2000 increased 38.7% to
$240,000, as compared to net earnings of $173,000 for the comparable period in
1999. Diluted earnings per share for the first three months of 2000 increased to
$0.04, as compared to $0.03 for the first three months of 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources
historically have been cash flows from operations, borrowings under the
Company's bank credit facility and issuance of its equity securities. These
sources of cash flows have been offset by cash used for acquisitions, investment
in skill-crane machines and other amusement vending devices and payment of
long-term borrowings.
Net cash provided by operating activities was $4.9 million and $2.9 million
for the three months ended March 31, 2000 and 1999, respectively. The Company
anticipates that cash will continue to be provided by operations as additional
skill-crane machines and other amusement devices are placed in service. Cash
required in the future is expected to be funded by existing cash and cash
provided by operations and borrowings under the Company's credit facility.
Net cash used in investing activities was $3.5 million and $1.1 million for
the three months ended March 31, 2000 and 1999, respectively. Capital
expenditures for the three months ended March 31, 2000 and 1999 amounted to
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED).
$2.9 million and $937,000, respectively, of which $2.8 million and $774,000 was
for the acquisition of skill-crane and other machines.
Net cash used in financing activities was $968,000 and $1.1 million for the
three months ended March 31, 2000 and 1999, respectively. Financing activities
consist primarily of advances and repayments on the Company's credit facility
and other debt obligations.
Under its current credit facility, the Company may borrow up to $52.0
million at a rate based on the bank's prime interest rate or, at the Company's
option, an interest rate based on the current LIBOR rate. The effective rate at
March 31, 2000 was 9.94%. The credit facility is available through July 13, 2001
and at March 31, 2000 there was a principal amount of approximately $48.6
million outstanding and $2.9 million available under the facility. The credit
facility provides that certain financial ratios be met and places restrictions
on, among other things, the occurrence of additional debt financing and the
payment of dividends. The Company was in compliance with such financial ratios
and restrictions at March 31, 2000.
The Company may use a portion of its capital resources to effect
acquisitions of franchisees. Because the Company cannot predict the timing or
nature of acquisition opportunities, or the availability of acquisition
financing, the Company cannot determine the extent to which capital resources
may be used. Company management believes that funds generated from operations,
borrowings available under its credit facility, and the Company's ability to
negotiate additional and enhanced credit agreements will be sufficient to meet
the Company's foreseeable operating and capital expenditure requirements.
10
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PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
10.47 Premier Amusement Vendor Agreement, dated
January 28, 2000, between the Registrant and Best
Vendor Co.
10.48 Addendum to Premier Amusement Vendor Agreement,
dated January 28, 2000, between the Registrant and Best
Vendor Co.
10.49 Addendum # 2 to Premier Amusement Vendor Agreement,
dated February 14, 2000, between the Registrant and Best
Vendor Co.
11.1 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
11
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AMERICAN COIN MERCHANDISING, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN COIN MERCHANDISING, INC.
May 12, 2000 By: /s/ W. John Cash
------------------------ ----------------------------------
Date W. John Cash
Senior Vice President,
Chief Financial Officer
12
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
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<S> <C> <C>
10.47 Premier Amusement Vendor Agreement, dated
January 28, 2000, between the Registrant and Best
Vendor Co. 14
10.48 Addendum to Premier Amusement Vendor Agreement,
dated January 28, 2000, between the Registrant and Best
Vendor Co. 23
10.49 Addendum # 2 to Premier Amusement Vendor Agreement,
dated February 14, 2000, between the Registrant and Best
Vendor Co. 27
11.1 Statement re: Computation of Per Share Earnings 28
27 Financial Data Schedule 29
</TABLE>
<PAGE> 1
Exhibit 10.47
PREMIER AMUSEMENT VENDOR AGREEMENT
- --------------------------------------------------------------------------------
PAVA Contract #: Sugarloaf 0200
EFFECTIVE DATE: February 1, 2000
PARTIES:
<TABLE>
<S> <C>
"Best Vendors" "Premier Amusement Vendor"
BEST VENDORS CO., AMERICAN COIN MERCHANDISING, INC.
a Minnesota corporation d/b/a Sugarloaf Creations, Inc.
2626 West Lake Street a Colorado Corporation
Minneapolis, MN 55416 5660 Central Avenue
Bolder, CO 80301
</TABLE>
RECITALS:
A. Best Vendors desires to establish a network of "premier amusement
vendors" experienced in the amusement vending machine industry and who will
commit to provide excellent service to Best Vendors' accounts within a
designated territory. Best Vendors will commit to provide "premier amusement
vendors" in each designated territory with a specified percentage of its
amusement vending business in a product category in order to concentrate Best
Vendors' amusement vending business with "premier amusement vendors."
B. Premier Amusement Vendor desires to become one of Best Vendors' chosen
"premier amusement vendors" pursuant to the terms and conditions of this
Agreement.
AGREEMENT:
In consideration of the terms and conditions contained in this Agreement,
Best Vendors ("we" or "us" or "our") and Premier Amusement Vendor ("you" or
"your") agree to the terms in this Agreement. All capitalized terms in this
Agreement not otherwise defined have the meanings given to them in the schedules
attached to this Agreement.
1. PREMIER AMUSEMENT VENDOR PROGRAM. We hereby appoint you as one of our
"premier amusement vendors" for amusement vending services. We will appoint you
to service certain of our amusement services accounts in the Territory for the
Product Category, all as set forth on the Schedule(s). We will assign such
accounts to you in a manner that we, in our sole discretion, deem appropriate to
consolidate routes and optimize service to our accounts. You agree to cooperate
with us in connection with our termination of existing vendors that you will
replace and each of us shall bear a mutually agreeable portion of the costs
(including those which may arise in any resulting litigation) relating to the
replacement of such existing vendors.
2. TERM. The term of this Agreement shall commence on the Effective Date of
this Agreement stated above and will extend for twenty (20) calendar year
quarters (excluding any initial stub period), unless terminated earlier pursuant
to the terms of this Agreement. Your appointment with respect to the Machines at
the Facility for the Account all as set forth on each schedule now or
subsequently attached to this Agreement by mutual agreement (the "Schedule" or
"Schedules") will commence on the Effective Date stated on such Schedule and
will extend for the stated duration of the Schedule, until the termination or
expiration of this Agreement, or until terminated as otherwise provided in this
Agreement, whichever is earlier. Upon termination or expiration of this
Agreement, you acknowledge that you have no claim against us for your investment
in Machines or otherwise.
3. APPOINTMENT. We appoint you as our "premier amusement vendor" with the
non-transferable right to install and operate the Machines at the Facility for
the Account identified on each of the Schedules. Upon the agreement of us and
you to the Schedule(s) attached to this Agreement, you agree to install on the
Installation Date at each respective Facility the Machines indicated upon each
Schedule. This appointment does not include
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any right, and you agree not, to distribute goods or services bearing or
utilizing any trademark, service mark, trade name, advertising or other
commercial symbol of ours, any Account or their affiliates. Installation or
operation of Machines within any Facility subsequent to the receipt of this
Agreement constitutes acceptance by you of this Agreement as to all of the
Facilities described in the Schedules. You reserve the right to refuse to add
additional Machines or Facilities to the Schedules; however, you agree to not
unreasonably withhold consent to add additional Machines at Facilities already
serviced by you on terms similar to those applicable to existing Machines at
such Facilities subject to changes based on the economic costs of servicing such
additional Machines.
4. DEPOSIT, COMMISSION AND FEES. You agree to pay us the deposit,
commission and fees in the amounts and at the times described on the Schedules.
We agree to pay you the Marketing Fee pursuant to the terms set forth on the
attached Fee and Commission Schedule.
5. OPERATIONS MANUAL. You must comply with all rules, procedures, and
policies in the Weisman Enterprises, Inc. Premier Vendor Amusement Operations
Manual (the "Operations Manual"), a copy of which you will have on loan from us.
By accepting this Agreement, you acknowledge that you have received and had the
opportunity to review the Operations Manual. You further agree that you are able
to and will comply with all of its provisions. The Operations Manual is
incorporated into and is part of this Agreement. We reserve the right to make
reasonable modifications to the Operations Manual from time to time as we may
deem appropriate and to maintain uniformity as to the rules, procedures and
policies applicable to all premier amusement vendors. Without limiting the types
of modifications that may be made, modifications may require you to incur
expenses to acquire hardware and software in order for you to make certain
electronic data transfers to us. You must treat the Operations Manual as
confidential. The terms of this Agreement shall control in the event of any
inconsistency or conflict between the terms in this Agreement and the terms in
the Operations Manual. Pursuant to the terms in the Operations Manual, you and
us, respectively, agree to hold quarterly discussions in order to review
performance and additional opportunities.
6. LAWS, REGULATIONS AND RULES. You must comply with all laws, ordinances,
rules and regulations, whether federal, state or local, applicable to the
operation of your business and the Machines. You agree to procure and maintain,
at your sole expense, all necessary permits and licenses for the lawful
operation of your business and the Machines. Further, (i) you agree to comply
with reasonable directives issued by us from time to time with respect to the
servicing of Machines, and (ii) you agree to comply with directives issued by an
Account from time to time with respect to the servicing of Machines for such
Account. You must at all times conduct your business in a manner consistent with
the highest ethical standards and recognized standards in the trade.
7. INDEMNIFICATION. You agree to indemnify, defend and save us and each
Account and our and their respective directors, officers, employees,
subsidiaries, affiliates, landlords, agents and contractors (collectively,
"Indemnified Parties") harmless from and against any and all claims, demands, or
causes of action, losses, damages, costs and expenses (including reasonable
attorneys' fees), or other liability relating to bodily injury or property
damage arising from, or alleged to have arisen from, (a) the operation of your
business or the Machines, (b) any actual or alleged negligence or dishonesty of,
or any actual or alleged actions or omissions by, you or any of your employees,
agents or subcontractors, (c) any breach by you of your obligations under this
Agreement, (d) any alleged patent, copyright or trademark infringement or
unauthorized use of trade secrets or other proprietary rights by you or any of
your employees, agents or subcontractors, or (e) any taxes, assessments, fees,
and charges levied on us arising as a result of this Agreement on your and our
performance of this Agreement (including, without limitation, the sale of
product, licensing requirements, payment and receipt of commissions), but
excluding only our income taxes computed on overall income not merely one type
of income (e.g., commissions). We may, at our election, retain counsel and
defend such action, suit or proceeding at your expense. You may not settle any
such action, suit or proceeding without our prior written consent.
8. INSURANCE. During the term of this Agreement, you will, at your sole
cost and expense, maintain worker's compensation insurance, commercial general
liability insurance (including coverage for products liability and contractual
liability) on an occurrence basis in an amount equal to the greater of five
million dollars ($5,000,000) or such larger amount as may be required by an
Account, and automobile liability insurance on an occurrence basis in an
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amount not less than one million dollars ($1,000,000) providing for the
investigation, defense and satisfaction (by settlement or otherwise), at no cost
to us or the other Indemnified Parties, of any liability, claim, loss, cost,
expense or fee asserted against or incurred by you, us or the other Indemnified
Parties. WITHIN FIVE (5) DAYS AFTER EXECUTION OF THIS AGREEMENT, AND FROM TIME
TO TIME THEREAFTER, UPON REQUEST BY US, YOU WILL CAUSE THE INSURER ISSUING SUCH
POLICIES TO ISSUE A CERTIFICATE TO US CONFIRMING THAT SUCH POLICIES HAVE BEEN
ISSUED AND ARE IN FULL FORCE AND EFFECT AND PROVIDE COVERAGE OF THOSE
INDEMNIFIED PARTIES IDENTIFIED BY US AS ADDITIONAL NAMED INSUREDS, AND ALSO
CONFIRMING THAT BEFORE ANY CANCELLATION, MODIFICATION OR REDUCTION IN COVERAGE
OF SUCH POLICIES, THE INSURANCE COMPANY WILL GIVE US THIRTY (30) DAYS PRIOR
WRITTEN NOTICE OF SUCH PROPOSED CANCELLATION, MODIFICATION OR REDUCTION. Subject
to the terms of this Agreement, you waive for yourself and your insurers all
rights of recovery against us and the other Indemnified Parties for damages
covered by such policies. Such policies must include provisions denying to the
insurer subrogation rights against us and all other Indemnified Parties for any
damages covered by such policies. All such policies must be provided by an
insurer rated A+ or better by Bests and licensed to do business in each state in
which a Facility is located.
9. TAXES. You must: (a) pay all taxes, assessments, fees, charges and
permit or license fees imposed or levied on us or you arising as a result of
this Agreement or your and our performance of this Agreement, however
characterized or described, now or hereinafter imposed by any governmental
authority upon your or our activities under this Agreement or your business
generally (including, without limitation, the sale of product, licensing
requirements, payment and receipt of commissions), but excluding only our income
taxes computed on overall income not merely one type of income (e.g.,
commissions); (b) pay all sales, use or other taxes or surtaxes, however
characterized or described (excluding only our income taxes), which may now or
hereafter be imposed by any governmental authority upon products, product sales,
Machines, Machine receipts, Fees, Commissions or any of the rights or privileges
granted to you under this Agreement; and (c) in your own name remit to and file
with the proper governmental authorities all of the foregoing taxes,
assessments, fees and necessary returns and comply with all regulations and
rules promulgated by such governmental authorities. You may not permit any lien
to be placed upon any of our property or that of any Account. Upon request, you
agree to provide us proof of payment of all taxes.
10. SETTLEMENTS. Unless otherwise directed by us, all settlements with
customers pertaining to misvends and unsatisfactory products will be made by
Account personnel at each Facility and you agree to reimburse each Account
concurrent with Machine receipt collections for all settlements paid. You agree
to maintain adequate return records to account for settlements.
11. INSTALLATION. Machines will be installed at Facilities by you at your
sole expense and any damage caused by the movement of the Machines will be your
sole responsibility. Machines must be new unless otherwise stated on the related
Schedule. You agree to make no electrical, plumbing or structural changes or
alterations in or to any Facility without our prior written consent.
12. RECORDS. For the purpose of permitting us to verify payment of all
amounts due or required to be paid under this Agreement, during the time you
have Machines at any Facility, and for at least three (3) years thereafter, you
agree to keep and preserve at your office identified below, balance sheets,
statements of earnings, general ledger, receipts and disbursement journals and
such sales records and other supporting documentation which must disclose in
detail all information required to permit us to verify payment of all amounts
due or required to be paid under this Agreement and which records shall conform
to generally accepted accounting principles. Such records must also permit
verification of gross sales and refunds by Facility and Machine. At any time
after five (5) days advance notice to you, we or our agents and accountants will
have the right during business hours to inspect, copy and audit such financial
statements and books and records. You agree to promptly pay us such amount
reasonably determined by us to be owed by you plus the late charges specified by
this Agreement. In addition, you agree to promptly pay us an amount equal to the
cost of the audit if the amount owed to us (excluding audit costs) is
understated by at least one percent (1%) or if your records are insufficient to
determine amounts payable by you to us under the Agreement.
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13. PURCHASES AND PRODUCTS. No goods or services may be purchased, nor will
any liabilities or obligations be incurred, by you or any person employed by or
conducting business with you in our name or upon our credit or that of any
Account. Each of you and us, respectively, will be entitled to retain any
promotional monies made available by product licensors, franchisors,
manufacturers, distributors and the like. We reserve the right to select and
change products and product brands without obligation to you. We reserve the
right to have any products removed from the Machines which we, in our sole
discretion, deem unsuitable for any reason.
14. RELATIONSHIP. You are an independent contractor acting on your own
behalf, and nothing contained in this Agreement is to be construed to make you
our partner, employee, agent, joint venturer, dealer or franchisee. You
represent and acknowledge that: (a) you are knowledgeable and experienced in the
amusement vending industry; (b) your appointment is being granted "AS IS," and
without any express or implied representation or warranty except as expressly
set forth in this Agreement; (c) neither we nor any Account has made any
warranty or representation whatsoever with respect to the economic or financial
performance of the business to be conducted pursuant your appointment; (d) other
than as set forth in this Agreement, no fee or other remuneration has been paid
to us by you in consideration of your appointment; (e) your appointment does not
include any right, and you agree not, to use any name, trademark, service mark,
trade name, advertising or other commercial symbols of ours, any Account or its
affiliates; and (f) you are under no obligation to purchase any product or
service from us or any Account.
15. THEFT OR DAMAGE. Neither us nor any Account will be responsible for,
and you assume all risk of, any theft, damage or destruction of any Machines,
goods, merchandise, fixtures, equipment or other property belonging to you or
any person employed by or conducting business with you, or kept, stored or
located at any Facility.
16. ACCOUNT RELATIONSHIP AND CONFIDENTIALITY. (a) You acknowledge that the
rights granted pursuant to this Agreement are by virtue of a master vending
license or agreement (the "Master Vending Agreement") between us and each
Account. In the event a Master Vending Agreement is terminated or amended for
any reason whatsoever by an Account, your appointment with respect to the
Facilities of such Account shall automatically terminate or be amended as of the
termination or amendment date of the Master Vending Agreement of such Account.
Further, your appointment with respect to a Facility may be terminated if you
fail to respond in an appropriate manner to a service deficiency with respect to
the Facility within three (3) days after written notification to you by us or
the Account of the deficiency. In addition, your appointment with respect to a
Facility or Account may be terminated if the representatives of the Account
request a new servicing vendor; provided, however, we shall use reasonable
efforts to maintain the relationship between you and the Account with respect to
other Facilities of such Account if a request for a new servicing vendor is not
based upon problems with your service. If your appointment to a Facility or
Account is terminated for reasons other than problems with your service, we will
use reasonable efforts to replace the terminated Facility or Account with that
of a like-kind.
(b) You acknowledge that we have expended substantial time, effort and
expense in acquiring each Master Vending Agreement, which Master Vending
Agreement represents a significant asset of ours. You further acknowledge that
in order for us to maintain our relationship with each Account strict
performance by you of the terms and provisions of this Agreement is essential
including, but not limited to, full and prompt payment of the Fees and
Commission, maintenance of records, and compliance with the requirements of this
Agreement. You agree not to disclose to any person or entity, whether or not
engaged in the amusement vending business and including, but not limited to, any
Account, its officers, directors, employees, agents or licensees, any details of
any kind or nature concerning this Agreement or related to the conduct of
business under this Agreement. Any disclosure which relates to this Agreement
that is required by law must be limited to the minimum permissible disclosure.
Further, you must notify us prior to any disclosure and cooperate with us in
order to permit us to obtain a protective order or similar device to protect the
confidentiality of the terms relating to our relationship. Moreover, all press
releases and other disclosures regarding any aspect of our relationship must be
approved by us in writing prior to issuance.
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17. LATE CHARGES. To reimburse us for administrative and reporting costs
incurred as a result of late payments of any Commission, in the event a
Commission payment is not received by us on or before its due date, you agree to
pay us one and one-half percent (1.5%) interest per month or the maximum rate
permissible by law, whichever is less, plus all reasonable collection costs on
all amounts due under this Agreement which are not paid when due.
18. YOUR DEFAULT. The following constitute Events of Default of this
Agreement by you: (i) you (A) make an assignment for the benefit of creditors or
authorize, initiate or consent to the initiation against you of any proceeding
for a moratorium or for relief under the United States Bankruptcy Code or any
similar state law or you are otherwise the subject of a stay of enforcement of
creditors' remedies generally; or (B) terminate your business or otherwise cease
to function as a going concern; (ii) you default in the making of any payment
due under this Agreement, and said failure remains uncured for a period of six
(6) business days after written demand for payment by us; (iii) you fail to
comply with or perform any term, condition, covenant or provision contained in
this Agreement or in the Operations Manual to be performed by you (including
failure to maintain required insurance coverage), and said failure remains
uncured for a period of thirty (30) days after written demand for performance by
us; (iv) you fail five (5) times within any six (6) month period to comply with
or perform any term, covenant, condition or provision in this Agreement or in
the Operations Manual to be performed by you regardless of whether you timely
addressed the prior failures or deficiencies; (v) you, your agents or
representatives (A) are convicted of or enter a plea of guilty or nolo
contendere to any felony criminal charge, (B) act in a manner which impairs the
reputation or goodwill of you, us or our Accounts, or (C) engage in gross
misconduct or dishonest conduct; or (vi) the occurrence of an Event of Default
by you in any other agreement by and between you and us.
19. OUR DEFAULT. The following constitute Events of Default of this
Agreement by us: (i) we (A) make an assignment for the benefit of creditors or
authorize, initiate or consent to the initiation against us of any proceeding
for a moratorium or for relief under the United States Bankruptcy Code or any
similar state law or we are otherwise the subject of a stay of enforcement of
creditors' remedies generally; or (B) terminate our business or otherwise cease
to function as a going concern; (ii) we fail to comply with or perform any term,
condition, covenant or provision contained in this Agreement or in the
Operations Manual to be performed by us, and said failure remains uncured for a
period of thirty (30) days after written demand for performance by you; (iii) we
fail five (5) times within any six (6) month period to comply with or perform
any term, covenant, condition or provision in this Agreement or in the
Operations Manual to be performed by us regardless of whether we timely
addressed the prior failures or deficiencies; (iv) we, our agents or
representatives (A) are convicted of or enter a plea of guilty or nolo
contendere to any felony criminal charge, (B) act in a manner which impairs our
or your reputation or goodwill, or (C) engage in gross misconduct or dishonest
conduct; or (v) the occurrence of an Event of Default by us in any other
agreement by and between you and us.
20. TERMINATION. (a) Upon the happening of an Event of Default, the
non-defaulting party, in addition to all other remedies available in law or in
equity subject to the limitations in this Agreement, may terminate this entire
Agreement and your status as a "premier amusement vendor" or your rights with
respect to any one or more particular territories, Facilities or Machines by
delivery of written notice to the defaulting party. The Premier Amusement Vendor
Deposit will be returned to you within three (3) months after the termination of
this Agreement, subject to our right to offset any amounts owed by you to us.
(b)(i) Upon termination of this Agreement by us upon the happening of
an Event of Default, we may require you to immediately remove the Machines from
each Facility from which you are terminated or we may require you to continue to
abide by the terms of this Agreement during a transition period of up to six (6)
months during which you will remove your Machines in the manner designated by us
permitting an orderly transition and continuity of service. (ii) Upon the
expiration of this Agreement, either party may require the other to continue to
abide by the terms of this Agreement during a transition period of up to six (6)
months during which period you will remove your Machines in the manner
designated by us permitting an orderly transition and continuity of service. For
a period of one (1) year after the later of (i) the termination or expiration of
this Agreement, or (ii) your removal of the vending machines from the Facility,
you may not directly or indirectly: (A) solicit or engage in the installation,
operation, management or licensing of vending or amusement machines in any
affected
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Facility; (B) act as a manager, consultant, or contractor with respect to
vending or amusement machines in any affected Facility; or (C) communicate,
orally or in writing, with an Account of any affected Facility, their officers,
directors, employees, agents, managers, contractors, consultants or licensees
with respect to vending or amusement machines in such Facility. If you fail to
so remove any Machine from an affected Facility, we or our designee has the
right to remove and store such Machines at your sole expense, without liability
for any damage to the Machines arising out of or related to such removal or
storage, and you will be liable to us for fifty dollars ($50) per day/per
Machine that you have failed to remove or retrieve from a Facility or from
storage (which amount you agree is a reasonable charge). Your failure to perform
any obligation or duty which you have agreed to perform in Subsections 16(b),
20(b) and 21 of this Agreement will cause irreparable harm to us, for which
there is no adequate remedy at law. You further agree that an order of specific
performance or injunctive relief against you in the event of your default under
Subsections 16(b) or 20(b) or Section 21 would be equitable and reasonable.
Accordingly, in the event of a default by you pursuant to Subsections 16(b) or
20(b) or Section 21, in addition to whatever other remedies are or might be
available at law or in equity, we have the right either to compel specific
performance by, or to obtain injunctive relief against, you to enforce the
provisions of Subsections 16(b) or 20(b) or Section 21.
(c) The right of termination as provided in this Agreement is absolute
and the parties have considered the possibility of termination, the expenditures
necessary for performance of the terms of this Agreement and the possible losses
and damages incident to them in the event of termination. You acknowledge that
any funds expended or expenses incurred for labor, promotion, vehicles, Machines
or other items with regard to your performance under this Agreement are expended
or incurred with the understanding that this Agreement may be terminated or
amended in accordance with the terms of this Agreement. IT IS UNDERSTOOD AND
AGREED THAT NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR DAMAGES (INCLUDING
PUNITIVE, EXEMPLARY, CONSEQUENTIAL AND INCIDENTAL DAMAGES) IN ANY FORM BY REASON
OF ANY TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS RELATING TO YOUR
EXPENDITURES FOR MACHINES, LOST PROFITS AND OPPORTUNITIES. All measures of
damages shall be limited to the recovery of actual damages sustained.
Notwithstanding any termination of this Agreement, each of the parties is
required to carry out any provision which contemplates performance subsequent to
such termination; and such termination does not affect any liability or other
obligation which has accrued prior to such termination including, but not
limited to, any liability for loss or damage on account of a prior default.
21. NONSOLICITATION/NONCOMPETITION. You agree not to, directly or
indirectly, engage in discussions with, encourage or solicit the vending or
amusement machine business from, an Account held by us and to discontinue any
communication with such prospect upon acquiring knowledge that the Account is
served by us. You, on behalf of yourself and your affiliates, agree not to
directly or indirectly have any ownership interest in any vending or amusement
machine management enterprise or any entity performing similar functions which
is competitive with our operations. On the date of this Agreement and at each
quarterly discussion as provided for in Section 5 above, you shall deliver to us
a written notice certifying the amount of business which you engage in with a
vending or amusement management machine enterprise and entities performing
similar functions. You also agree to notify us in writing within ten (10) days
after you are awarded business from one of our competitors. During the term of
this Agreement and for a period of one (1) year thereafter, you agree not to
solicit the business of or provide vending services to Accounts that were
assigned to you under this Agreement.
22. SCHEDULES. Amendments to and additional Schedules may be presented by
us to you at any time. Installation or operation of Machines within any Facility
affected by an additional or amended Schedule following receipt by you of such
Schedule constitutes acceptance by you of the amended or additional Schedule.
All terms contained in a Schedule are effective as of the Effective Date stated
on such Schedule.
23. GENERAL. (a) Except as otherwise provided in this Agreement, any notice
required or permitted to be given under this Agreement shall be deemed to have
been duly delivered: (i) when received if personally delivered; (ii) the same
day if delivery by facsimile sent no later than 4:00 p.m. (receiver's time) on a
business day provided transmission is evidenced by a written confirmation from
sender's facsimile machine; (iii) one (1) business day after placement with a
reputable overnight carrier for next morning delivery provided recipient must
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sign for receipt; or (iv) four (4) business days after depositing if placed in
the U.S. mails for delivery by registered or certified mail, return receipt
requested, postage prepaid and addressed to the appropriate party at the address
set forth on the first page of this Agreement or to such other address as such
party may hereafter designate by written notice to the other party.
(b) This Agreement is binding upon and inures to the benefit of you and
us and each of our respective successors and permitted assigns. We reserve the
right to assign our rights under this Agreement. You may not directly or
indirectly assign, transfer, delegate, subcontract or sublicense your rights
under this Agreement, in whole or in part, without our prior written consent,
which consent shall not be unreasonably withheld. Any attempt by you to assign
your rights under this Agreement without our consent is void. Our consent to a
transfer will be subject to our then current premier amusement vendor standards,
including, without limitation, the assignee not being a competitor of ours, the
chief executive officer and chief operating officer of the assignee each having
at least ten (10) years of experience in the vending industry, the assignee's
net worth being equivalent to your net worth, and you being in full compliance
with this Agreement. In the event you are a partnership, corporation, limited
liability company or other entity, the transfer in one transaction or a series
of transactions of fifty percent (50%) or more of your aggregate equity or
voting control constitutes an assignment of this Agreement subject to this
subsection. If we consent to an assignment or transfer, we may, among other
things, require you to pay us a transfer fee equal to [ ] of your Net Receipts
(as defined in the Schedules) from most recent prior twelve calendar months on
all of your business from us, whether or not covered by this Agreement, that is
being assigned and that the assignee of this Agreement sign a new Premier
Amusement Vendor Agreement.
(c) Any dispute arising out of or relating to this Agreement or the
alleged breach of it, or the making of this Agreement, including claims of fraud
in the inducement, shall be settled by binding arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association,
without actual submission of the dispute to such association unless the parties
fail to agree to alternative rules within fifteen (15) days after initiation of
the arbitration by delivery of written notice to the other parties specifying
the same. Judgment upon an award may be entered in any court having jurisdiction
of the controversy. The arbitrator shall be a retired state or federal judge
selected by the mutual agreement of the parties. If they cannot so agree within
twenty (20) days, any party may request that the chief judge of the District
Court for Hennepin County, Minnesota, select a retired judge or, if one is not
available, an attorney with at least ten (10) years of business or commercial
litigation experience. The place of any arbitration proceedings shall be
Hennepin County, Minnesota. The costs of the proceedings shall be shared equally
by the disputing parties unless the arbitrator, in the arbitrator's discretion,
determines to award costs to the prevailing party. Notwithstanding the
foregoing, either party may apply to any court having jurisdiction seeking
injunctive relief or specific performance prior to resolution of a dispute by
arbitration. Any action by either you or us against the other party must be
brought within two (2) years of the date the cause of action first arose.
(d) THIS AGREEMENT, AND THE RESPECTIVE RIGHTS OF THE PARTIES UNDER THIS
AGREEMENT, SHALL BE GOVERNED AND CONSTRUED BY THE LAWS OF THE STATE OF
MINNESOTA, WITHOUT APPLICATION OF ANY CHOICE OF LAW CONSIDERATIONS. ANY CLAIM,
CAUSE OF ACTION, SUIT OR DEMAND ALLEGEDLY ARISING OUT OF OR RELATED TO THIS
AGREEMENT, OR THE RELATIONSHIP OF THE PARTIES WHICH IS PERMITTED PURSUANT TO
SECTION 23(c) TO BE BROUGHT IN COURT SHALL BE BROUGHT EXCLUSIVELY IN THE STATE
OR FEDERAL COURTS LOCATED IN HENNEPIN COUNTY, MINNESOTA. YOU CONSENT AND SUBMIT
TO THE JURISDICTION OF SAID COURTS AND AGREE THAT SERVICE OF PROCESS MAY BE MADE
BY PUBLICATION, BY REGISTERED OR CERTIFIED MAIL, OR IN ANY MANNER PROVIDED UNDER
MINNESOTA OR APPLICABLE FEDERAL LAW.
(e) This Agreement (including Schedules) is intended by the parties as
the final and binding expression of our agreement with you and contains the
complete and exclusive terms thereof. It supersedes all prior negotiations,
representations and agreements. No modification of this Agreement is effective
unless in writing signed by both parties. If any provision in this Agreement is
deemed or declared unenforceable, invalid or void,
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the same does not impair any of the other provisions contained in this Agreement
which are to be enforced in accordance with their respective terms.
The undersigned represent that they are authorized to sign this
Agreement on behalf of their respective entities.
<TABLE>
<S> <C>
BEST VENDORS CO. AMERICAN COIN MERCHANDISING, INC.
d/b/a Sugarloaf Creations, Inc.
By: /s/ Mark L. Wilson By: /s/ Randall Fagundo
------------------------------------------- ---------------------------------
Print Name: Mark L. Wilson Title: President Print Name: Randall Fagundo
-------------- --------- ---------------
Title: President & CEO
Date: 1/28/2000 Date: 1/28/00
-------------------- ---------------------
</TABLE>
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FEE AND COMMISSION SCHEDULE
TO PREMIER AMUSEMENT VENDOR AGREEMENT
BY AND BETWEEN
BEST VENDORS CO. AND AMERICAN COIN MERCHANDISING, INC. D/B/A SUGARLOAF
CREATIONS, INC.
- --------------------------------------------------------------------------------
PREMIER AMUSEMENT VENDOR DEPOSIT: Upon your execution and delivery of each
Facility Schedule to us, you agree to pay us a deposit equal to an estimated
average two (2) months of Commission to be generated from the Facility during
the next twelve (12) months. Prior to each anniversary date of this Agreement,
you agree to deposit with us such amount necessary in order for you to have on
deposit with us an amount equal to an estimated average two (2) months of
Commission for each Facility for the then upcoming contract year.
COMMISSION: You agree to pay us an amount equal to the amount of "Net Receipts"
from the Machines at the Facilities multiplied by the applicable Commission Rate
stated on the Schedule. "Net Receipts" means the gross collections less actual
sales/use taxes (without deduction of any costs incurred by you). Commission
payments for each month are due on the tenth (10th) day after the end of such
month. The Commission Rate is subject to change upon prior notice by us to you
when our Account has renegotiated its rates with us, upon a significant change
in business conditions, or on an annual basis. You may terminate this Agreement
with respect to a Facility if a Commission Rate change is unacceptable provided
you give us at least sixty (60) days prior written notice and continue to
perform under this Agreement during such period of time. The Commission Rate
change shall not be effective during such termination notice period. In any
case, you agree to provide us a Commission Rate (measured in isolation of other
fees herein) at least as favorable as that you provide to any vending management
company performing a similar function from which you derive comparable or lower
net receipts (except using gross receipts for K-Mart bulk sales).
PERFORMANCE GUARANTY AMOUNT: Within ninety (90) days after the end of each
anniversary date of this Agreement or earlier termination of your service to a
Facility, you agree to pay us an amount equal to the Performance Guaranty Amount
for such Facility less actual Commission payments made for such period.
[ ]
[ ]
MARKETING FEE: We agree to pay you a Marketing Fee equal to [ ] of our Net
Receipts received during the first four (4) calendar quarters from any new
Accounts which retain us to provide amusement vending machines solely or
primarily as a result of your efforts. We will pay you the Marketing Fee within
thirty (30) days after the end of each of the first four (4) calendar quarters
with a final reconciliation of the Marketing Fee within ninety (90) days after
the end of the first four (4) calendar quarters of service to the new Account.
DATE: 1/28/2000
-----------------------
INITIALS:
Best Vendors Co.: /s/ MLW
------------
Premier Vendor: /s/ RF
--------------
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Exhibit 10.48
ADDENDUM
TO
PREMIER AMUSEMENT VENDOR AGREEMENT
This Addendum ("Addendum") amends the Premier Amusement Vendor Agreement
(the "Agreement") by and between Best Vendors Co. ("Best Vendors") and American
Coin Merchandising, Inc. (d/b/a Sugarloaf Creations, Inc.), a Delaware
corporation ("Premier Vendor").
AGREEMENT:
In consideration of the terms and conditions contained in the Agreement and
this Addendum to the Agreement, Best Vendors ("we" or "us" or "our") and Premier
Vendor ("you" or "your") agree to the terms in this Addendum. All capitalized
terms in this Addendum not otherwise defined have the meanings given to them in
the Agreement.
1. Controlling Provisions. To the extent that the terms in this Addendum
are different from or contrary to any terms in the Agreement (including any
attachment, schedule, exhibit or document specifically incorporated into the
Agreement), the terms in this Addendum shall prevail. References to the
"Agreement" refer to the Agreement as modified by this Addendum.
2. Section 1. The word "sole" in the third sentence of Section 1 is hereby
deleted and replaced with the word "reasonable."
3. Section 1. The last sentence of Section 1 is hereby deleted and replaced
with the following: "You agree to cooperate with us in connection with our
termination of our existing vendors that you will replace. [ ]
4. Section 2. At the end of Section 2, the words "or otherwise" are hereby
deleted and replaced with the following: "or other expenditures or commitments
to meet your obligations under this Agreement."
5. Section 3. After the words "nontransferable right" in Section 3, the
following is hereby inserted: "(except as permitted in Section 23 below)."
6. Section 3. The following is added at the end of Section 3: "The addition
of any Facilities to the Schedules shall be subject to the mutual consent of the
parties."
7. Section 5. The words "as may be deem appropriate" are hereby deleted
from the fourth sentence in Section 5.
8. Section 7. The last two sentences of Section 7 are hereby deleted and
replaced with the following: "You will retain counsel reasonably acceptable to
us and defend such action, suit or proceeding at your expense. We shall be
entitled to participate in settlement or defense through your counsel. No
settlement shall be agreed to by either you or us unless the other party
consents, which consent shall not be unreasonably withheld. If we refuse to
consent to a proposed settlement that includes
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a complete release of us and does not include any non-monetary terms which are
materially adverse to us, you shall not have any indemnification responsibility
to us for damages in excess of such proposed settlement amount or for expenses
incurred subsequent to such refusal."
9. Section 8. The following sentence is hereby added after the existing
first sentence of Section 8: "The insurance required by this provision may
include such coverage as provided by excess or umbrella insurance written on an
occurrence coverage form."
10. Section 8. Only 10 days prior written notice is required by your
insurance company of a proposed cancellation, modification or reduction of your
insurance based on the nonpayment of premiums. No notice of a proposed
modification or reduction of your insurance is required based on claims against
the policies provided that you are required to immediately notify us if claims
reduce the then available insurance coverage below 80% of that required by
Section 8 of the Agreement. Further, we may require you to acquire additional
insurance in order that you are maintaining the insurance amounts required by
Section 8 of the Agreement.
11. Section 11. The words "or like new" are hereby inserted in the second
sentence of Section 11 after the word "new."
12. Section 11. The word "our" in the third sentence of Section 11 is
hereby replaced with "the customer's."
13. Section 12. The reference to "five (5) days" in Section 12 is hereby
changed to "ten (10) business days."
14. Section 12. In the last sentence of Section 12, "one percent (1%)" is
hereby changed to "[ ]."
15. Section 16(b). The following is hereby inserted after the word
"disclosures" in the last sentence of Section 16(b): "that are not required by
law." You agree to provide us with samples of your proposed disclosures relating
to the Agreement and agree to request confidential treatment of such portions as
we may request.
16. Section 20(b). In the third sentence of Section 20(b), the word "will"
is hereby changed to "may."
17. Section 21. The following is added prior to the first and second
sentence of Section 21: "During the term of this Agreement,". In addition, the
word "knowingly" is hereby inserted prior immediately prior to the word "engage"
in the first sentence in Section 21.
18. Section 23(b). The following is hereby inserted after the word
"withheld" in Section 23(b): "; provided, however, that our consent shall not be
required in connection with a merger by you or a sale of substantially all of
your assets if the other party thereto (i) agrees to be bound by the terms of
the Agreement, (ii) the successor to this Agreement is not a competitor of ours,
and (iii) the post-transaction successor is reasonably believed by us to be
capable and willing to satisfy your obligations under the Agreement."
19. Section 23(b). We consent to your assignment of your rights under the
Agreement to your existing franchisees identified by name and location to us in
writing on the date of this Agreement, provided that you remain liable for the
franchisees' performance under the Agreement.
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20. Section 23. The reference to "[ ]" in Section 23(b) is hereby changed
to "[ ]."
21. Section 23(c). The third and fourth sentences of Section 23(c)
beginning "The arbitrator . . . ." and "If they cannot . . . ." are hereby
deleted in their entirety.
22. [ ]
23. Commission (Fee and Commission Schedule). The reference to "tenth
(10th)" in the Commission section is hereby changed to "fifteenth (15th)."
24. Commission (Fee and Commission Schedule). The words "or an annual
basis" are hereby deleted from the Commission section and the word "or" is
hereby added prior to the word "upon" in the same sentence.
25. Performance Guaranty Amount (Fee and Commission Schedule). The
Performance Guaranty Amount shall be computed on an Account-by-Account basis
rather than a Facility-by-Facility basis. You and we agree that the "Prior
Annualized Gross Sales" amounts identified on each Facility Schedule are correct
to the best of the knowledge of you and us (but no knowledge is implied). The
appropriate corrections to the Performance Guaranty Amount computation and prior
Performance Guaranty Amount payments shall be made if it is determined that the
"Prior Annualized Gross Sales" stated on the Schedules is incorrect.
26. [ ]
27. [ ]
28. Facility Schedules - Effective Date. You and we agree to develop
transition schedules which indicate the sequence of events planned to transition
new Facilities to you. We will update the transition schedules from time to time
in order to provide you the latest information as to when Facilities are
expected to be available for installation of your Machines. You agree to be
prepared to install Machines in accordance with the transition schedules and
will use your best efforts to install Machines on an accelerated basis if
Facilities are available earlier than contemplated by the transition schedules.
You understand that certain existing vendors may move their Machines early or
refuse to remove their Machines. We agree to use reasonable commercial efforts
(excluding initiating an immediate lawsuit) to make Facilities available in
accordance with the transition schedule but shall not be liable if existing
vendors or Accounts cause delays. The Facility Schedules are subject to
correction of typographical and clerical errors.
29. Reference to and Effect on the Agreement. Except as specifically
amended herein, the Agreement remains in full force and effect and is hereby
ratified and confirmed.
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<PAGE> 4
This Addendum shall be effective as of February 1, 2000.
AMERICAN COIN MERCHANDISING, INC. BEST VENDORS CO.
(d/b/a Sugarloaf Creations, Inc.)
By /s/ Randall Fagundo By /s/ Mark L. Wilson
----------------------- -----------------------
Its President & CEO Its President
----------------------- -----------------------
Date: 1/28/2000 Date: 1/28/2000
--------------------- ---------------------
4
<PAGE> 1
Exhibit 10.49
ADDENDUM #2
TO
PREMIER AMUSEMENT VENDOR AGREEMENT
This Addendum ("Addendum") amends the Premier Amusement Vendor Agreement
dated February 1, 2000, as previously amended (the "Agreement") by and between
Best Vendors Co. ("Best Vendors") and American Coin Merchandising, Inc. (d/b/a
Sugarloaf Creations, Inc.), a Delaware corporation ("Premier Vendor").
AGREEMENT:
In consideration of the terms and conditions contained in the Agreement and
this Addendum to the Agreement, Best Vendors ("we" or "us" or "our") and Premier
Vendor ("you" or "your") agree to the terms in this Addendum. All capitalized
terms in this Addendum not otherwise defined have the meanings given to them in
the Agreement.
1. To the extent that the terms in this Addendum are different from or
contrary to any terms in the Agreement (including any attachment, schedule,
exhibit or document specifically incorporated into the Agreement), the terms in
this Addendum shall prevail. References to the "Agreement" refer to the
Agreement as modified by this Addendum.
2. [ ]
3. Best Vendors and Premier Vendor hereby agree that Facility Schedules
A4.1, A6.1 and A8.1 and the Lost Location Schedule, each in the form attached
hereto are made part of the Agreement.
4. Except as specifically amended herein, the Agreement remains in full
force and effect and is hereby ratified and confirmed.
This Addendum shall be effective as of February 1, 2000.
AMERICAN COIN MERCHANDISING, INC. BEST VENDORS CO.
(d/b/a Sugarloaf Creations, Inc.)
By /s/ Randall Fagundo By /s/ Mark L. Wilson
----------------------- -----------------------
Its President & CEO Its President
----------------------- -----------------------
Date: 2/14/2000 Date: 2/15/2000
--------------------- ---------------------
1
<PAGE> 1
EXHIBIT 11.1
AMERICAN COIN MERCHANDISING, INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---- ----
<S> <C> <C>
Net earnings............................................. $ 240,000 $ 173,000
========== ==========
Common shares outstanding at beginning of period......... 6,480,194 6,475,069
Effect of shares issued during the period............ 82 --
---------- ----------
Basic weighted average common shares..................... 6,480,276 6,475,069
Incremental shares from assumed conversions:
Stock options........................................ 153 2,782
---------- ----------
Diluted weighted average common shares................... 6,480,429 6,477,851
========== ==========
Basic earnings per share............................. $ 0.04 $ 0.03
Diluted earnings per share........................... $ 0.04 $ 0.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 963
<SECURITIES> 0
<RECEIVABLES> 713
<ALLOWANCES> 235
<INVENTORY> 12,090
<CURRENT-ASSETS> 15,767
<PP&E> 66,698
<DEPRECIATION> 22,366
<TOTAL-ASSETS> 102,457
<CURRENT-LIABILITIES> 7,835
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> 29,347
<TOTAL-LIABILITY-AND-EQUITY> 102,457
<SALES> 29,265
<TOTAL-REVENUES> 31,499
<CGS> 5,752
<TOTAL-COSTS> 22,812
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,919
<INCOME-PRETAX> 387
<INCOME-TAX> 147
<INCOME-CONTINUING> 240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 240
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
