Item 1.01.
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Entry into a Material Definitive Agreement
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On November 9, 2017, in connection with the consummation of the acquisition of Cantaloupe Systems, Inc., a Delaware corporation (“
Cantaloupe
”), USA Technologies, Inc. (the “
Company
”) entered into a Credit Agreement (“
Credit Agreement
”) among the Company, as the borrower, its subsidiaries, as guarantors, and JPMorgan Chase Bank, N.A., as the lender and administrative agent for the lender (the “
Lende
r”), pursuant to which the Lender (i) made a $25 million term loan to the Company (the “
Term Loan
”) and (ii) provided the Company with a revolving line of credit (the “
Line of Credit
”) under which the Company may borrow revolving credit loans in an aggregate principal amount not to exceed $12.5 million at any time. The proceeds of the Term Loan and borrowings under the Line of Credit, in an aggregate principal amount equal to $35 million, were used by the Company to finance a portion of the purchase price for the acquisition of Cantaloupe ($27.8 million) and repay existing indebtedness to Heritage Bank of Commerce ($7.2 million). Future borrowings under the Line of Credit may be used by the Company for working capital and general corporate purposes of the Company and its subsidiaries. The principal amount of the Term Loan is payable quarterly beginning on December 31, 2017, and the Term Loan, all advances under the Line of Credit, and all other obligations must be paid in full at maturity, on November 9, 2022. Based on the repayment schedule for the Term Loan, on the maturity date, the Company would make a final principal payment under the Term Loan of approximately $7.7 million.
The Company’s obligations under the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) are guaranteed by all of the Company’s subsidiaries. In addition, all of the Company’s and its subsidiaries’ obligations under the Credit Agreement and other Loan Documents are secured by security interests in and to substantially all of the assets, including intellectual property, of the Company and its subsidiaries pursuant to the Pledge and Security Agreement dated as of November 9, 2017, among the Company, the subsidiaries of the Company, and the Lender, and certain other collateral documents.
Loans under the Credit Agreement bear interest, at the Company's option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Company's Total Leverage Ratio (as defined in the Credit Agreement) as of the last day of each fiscal quarter. The initial interest rate on the loans is LIBOR plus 4%. In addition, the Company is also required to pay a commitment fee on the average daily unused portion of the Line of Credit for each fiscal quarter based on the Company's Total Leverage Ratio.
In addition to containing customary representations and warranties and affirmative and negative covenants, the Loan Documents require the Company to maintain a Total Leverage Ratio and Fixed Charge Coverage Ratio (as defined in the Credit Agreement). The Loan Documents also contain customary events of default, including, among other things, payment defaults, breaches of covenants, and bankruptcy and insolvency events, subject to grace periods in certain instances. Upon an event of default, the Lender may declare all of the outstanding obligations of the Company under the Loan Documents to be immediately due and payable, and exercise any other rights provided for under the Loan Documents, including foreclosing on the collateral securing the obligations under the Loan Documents.
Item 1.02.
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Termination of a Material Definitive Agreement
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On November 9, 2017, and in connection with the consummation of the loans with the Lender, the Company paid all amounts due in respect of principal, interest, and fees, and satisfied all of its obligations under the Loan and Security Agreement dated as of March 29, 2016, as amended (the “
Heritage Loan and Security Agreement
”), and ancillary agreements by and between the Company and Heritage Bank of Commerce. Pursuant to such payment, all commitments of Heritage Bank of Commerce were terminated, and the Heritage Loan and Security Agreement was terminated.