10 October, 2001
AGENCY AGREEMENT
Equity Securities Investments, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Cash Systems, Inc., a Minnesota corporation (the "Company"), proposes to
issue and sell on a "best efforts" basis between $3,000,000 and $7,000,000
(the "Offerings") under the terms and conditions outlined in the term sheets
attached hereto as Exhibits A, B, and C, pursuant to exemptions from
registration under the Securities Act of 1933, as amended (the "1933 Act")
provided by Regulation D, Rule 506 and exemptions under the securities law of
the State of Minnesota for sales to "accredited investors". The Company
hereby confirms its agreement with you to act as its exclusive agent (the
"Agent") to offer and sell the Offerings on behalf of the Company on a "best
efforts" basis upon the terms and conditions set forth herein and in the
Memorandum described below.
1. Representations and Warranties of the Company. The Company
represents and warrants to you as follows:
(a) On the date hereof and at the time of delivery of the
Offerings to you, the financial statements will not contain any untrue
statement of a material fact and will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(b) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Minnesota, with
corporate power and authority to own its assets and conduct its business and
is duly qualified as a foreign corporation in good standing in each
jurisdiction in which the failure to so qualify would have a materially
adverse effect on the business or property of the Company taken as whole.
(c) The 1999 and 2000 audited financial statements of the
Company fairly present the financial condition and results of operations of
the Company as of the dates, for the periods, and in the manner indicated;
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
concerned, and the independent public accountants whose reports are included
therein are independent public accountants within the meaning of the 1933 Act.
(d) The consummation of the transactions contemplated hereby and
the fulfillment of the terms hereof will not conflict with, or result in any
breach of any of the terms and provisions of, or constitute a default under,
the Articles of Incorporation or the Bylaws of the Company or any indenture,
agreement, or other instrument to which the Company is a party or by which it
is bound, or violate any law or any order, rule, or regulation applicable to
the Company of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Company or any of its properties.
(e) The 1999 and 2000 audited financial statements correctly set
forth the authorized, issued, and outstanding capital stock and indebtedness
for borrowed money of the Company as of the date set forth therein. All
outstanding shares of stock that would need to be issued in the case of
conversion or in connection with the exercise of warrants related to the
Offerings have been duly authorized and validly issued and are fully paid and
non assessable. The Company has the power and authority to issue and sell the
Offerings upon the terms and conditions set forth in this Agreement; all
corporate action required to be taken by the Company for the due and proper
authorization, issuance, and sale of the Offerings has been duly and
sufficiently taken. No preemptive rights of security holders of the Company
exist or are related to the issuance and sale of the Offerings by the Company.
(f) There is no litigation or governmental proceeding pending
or, to the best of the Company's knowledge and belief, threatened against, or
involving the properties or business of, the Company, that would, if decided
adversely to the Company, have a material adverse effect on the Company,
except as disclosed pursuant to the Plan of Reorganization and Stock Exchange
Agreement, dated as of October 10, 2001, by and among the Company and its
stockholders and Unistone, Inc., and others (the "Reorganization Agreement").
(g) No material default exists, and no event has occurred which
with notice or lapse of time, or both, would constitute a material default, in
the due performance and observance of any term, covenant, or condition of any
indenture, mortgage, deed of trust, note, bank loan or credit agreement, or
any other material agreement, understanding, or instrument to which the
Company is a party or by which it or its property may be bound or affected.
(h) The Company has full power and authority to enter into this
Agreement and to carry out all of the terms and conditions hereof to be
carried out by it. This Agreement has been duly authorized, executed, and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as the obligations of the
Company under the indemnification provisions of this Agreement may be limited
by application of the federal securities laws, and except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws and by general principles of
equity.
(i) The Company has obtained all approvals, authorizations,
consents, orders, or other actions of any person, corporation, or other
organization, or of any governmental body, quasi-governmental body, or
official, required in connection with the valid and proper authorization,
issuance, and sale of the Offerings pursuant to this Agreement.
2. Representations, Warranties and Agreements of the Agent. The
Agent represents and warrants to the Company that:
(a) It is a member in good standing of the National Association
of Securities Dealers, Inc. ("NASD") and that it is or will be licensed as a
broker/dealer in any state in which it offers or sells any Offerings.
(b) It will offer and sell the Offerings only in Minnesota and
those states in which the Chief Executive Officer or the President of the
Company has advised it in writing that sales may be made.
(c) It will comply with all applicable provisions of the Rules
of Fair Practice of the NASD, including specifically Sections 8, 24, and 36 of
Article III of such Rules, in connection with this offering.
(d) It will, to the extent it makes any statements concerning
the Offerings during the course of the Offerings, not make any untrue
statement of a material fact or omit to state any material fact necessary to
make such statement not misleading;
(e) It will not offer, offer for sale, or sell the Offerings by
means of any form of general solicitation or general advertising described in
Rule 502(c).
(f) It will limit its offering of the Offerings to persons whom
it has reasonable grounds to believe, and in fact believes, the investment is
suitable.
(g) It will limit its offer and sale of the Offerings to person
whom it has reasonable grounds to believe, and in fact believes, the
investment is suitable.
(h) It will only offer shares pursuant to a private placement
memorandum ("PPM") prepared by the Company and it will cooperate with the
Company so that the Company can timely file all notices or other documents
necessary to evidence compliance with federal and state securities laws.
3. Offer and Sale of the Offerings: Fees.
(a) You, on the basis of the representations and warranties of
the Company contained in this Agreement, agree to act as Agent to offer and
sell the Offerings on behalf of the Company upon the terms and conditions set
forth herein, as the same may be amended or supplemented from time to time.
It is expressly intended that the offer and sale of the Offerings shall be on
a "best efforts" basis, without any commitment by you to purchase the
Offerings, and that you shall be required to deliver payment for only such
Offerings as are sold to purchasers.
(b) For your services as Agent, you shall be entitled to receive
from the purchase price for the Offerings offered and sold by you or your
agents or employees to persons who qualify as accredited investors as set
forth in Rule 501 and as described in the PPM (provided the Offering proceeds
have been accepted by the Company), a cash commission equal to ten percent
(10%) of the aggregate purchase price for the Offerings sold by you or your
agents or employees (and accepted by the Company) and an unaccountable expense
allowance equal to three percent (3%) of the aggregate purchase price for the
Offerings sold by you or your agents or employees (and accepted by the
Company).
(c) For your services as Agent you shall receive from the
Company, upon the successful completion of the Offering, a warrant equal to
ten percent (10%) of the number of shares of common stock into which the notes
may be converted pursuant to their terms by the purchasers or 10% of the
shares sold pursuant to the Offering, as the case may be, which warrant shall
be exercisable for a period of five (5) years from the final closing of the
Offerings, and carry an exercise price of one hundred and twenty percent
(120%) of the price at which the relevant securities are sold to purchasers.
4. Payment and Delivery. On the basis of the representations and
warranties and subject to the terms and conditions set forth in this
Agreement, payment of the purchase price for and delivery of the Offerings
sold as contemplated hereunder shall be made as follows:
(a) You shall forward the purchase price for the Offerings
together with executed and completed subscription agreements, when and as
received by you, but in no event later than noon of the second day after
receipt, to the Company. All checks in payment of the purchase price shall be
made payable to ACash Systems, Inc." All sums will be held in escrow by a
bank until the Offering has been completed or terminated as provided in the
PPM.
(b) The Company will notify you as soon as practicable of the
acceptance of such subscriptions and shall forward to you within ten (10)
business days of the completion of the Offerings, the notes and or share
certificates, as the case may be, of the Company. At the completion of the
Offerings, or earlier by Agent, the Company shall pay the commissions set
forth in Subparagraph 3.(b) above.
5. Convenants of the Company. The Company covenants and agrees with
you that:
(a) The Company will promptly notify you in the event of (i) the
issuance by the Securities and Exchange Commission of any state securities
division of any stop order suspending the offer and sale of Offerings or (ii)
the institution or notice of intended institution of any action or proceeding
for that purpose. The Company will make a reasonable effort to prevent the
issuance of such a stop order and, if such and order shall at any time be
issued, to obtain the withdrawal thereof at the earliest possible moment.
(b) The Company shall be obligated to furnish information and
otherwise cooperate in maintaining an exemption for sale of the Offerings to
accredited investors only under the securities laws of the State of Minnesota
and in whatever other states as Agent and the Company shall agree and the
Agent will not conduct the Offerings in any other state without the Company's
prior approval.
(c) The Company will deliver to you such number of copies of the
financial statements as you may reasonably request.
(d) The Company will pay or cause to be paid all expenses of the
Company in connection with this offering and the transactions herein
contemplated, including, but not limited to, the costs of preparing the notes
and/or shares representing the Offerings; all expenses and taxes, if any,
incident to the issuance and delivery of the Offerings; the fees and expenses
of counsel and independent accountants for the Company relating to legal
review, opinions of counsel, audits, review of unaudited financial statements
or otherwise; the costs and expenses in connection with the any filings
required to maintain the exemption for sale of the Offerings under federal and
Minnesota securities laws; provided, however, that the Company shall not be
obligated to pay any of your expenses made in connection with the Offerings,
other than those expenses expressly provided for herein.
6. Indemnification.
(a) The Company will indemnify and hold harmless you and each
person, if any, who controls you within the meaning of Section 15 of the 1933
Act and their respective successors (hereinafter in Paragraphs 6(a) and (b)
separately and collectively called the "defendants" ) from and against any and
all losses, claims, damages, or liabilities, joint or several, to which the
defendants may become subject under the 1933 Act, at common law, or otherwise
(including any legal or other expenses reasonably incurred in connection
therewith), insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statements or alleged untrue statement of a material fact contained in the PPM
or arise out of or are based upon the omission or alleged omission to state
therein a material fact that is required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, unless such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by you expressly for use therein, provided,
that this indemnity agreement is subject to the condition that notice be given
as provided in Subparagraph (c) below.
(b) You will indemnify and hold harmless the Company and each
person, if any, who controls you within the meaning of Section 15 of the 1933
Act and their respective successors (hereinafter in Paragraphs 6(a), (b) and
(c) separately and collectively called the "defendants") from and against any
and all losses, claims, damages, or liabilities, joint or several, to which
the defendants may become subject under the 1933 Act, at common law, or
otherwise (including any legal or other expenses reasonably incurred in
connection therewith), insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statements or alleged untrue statement of a material fact contained in the PPM
or arise out of or are based upon the omission or alleged omission to state
therein a material fact that is required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, unless such statement or omission was made in
reliance upon and in conformity with information furnished in writing to you
in connection therewith by the Company expressly for use therein, provided,
that this indemnity agreement is subject to the condition that notice be given
as provided in Subparagraph (c) below.
(c) Upon the presentation in writing of any claims or the
commencement of any suit against any defendant in respect of which indemnity
may be sought from the Company or you on account of their agreements contained
in Subparagraph (a) or (b) above, such defendant shall promptly give notice in
writing of such claim or suit to the indemnifying party, but failure so to
give such notice shall not relieve the indemnifying party from any liability
that it may otherwise have to the defendant otherwise than on account of said
indemnity agreement. The indemnifying party shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense,
of any such claim or suit, but if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
reasonably satisfactory to the defendants who are parties to such suit or
against whom such claim is presented. If the indemnifying party elects to
assume the defense and retain such counsel, such defendants shall bear the
fees and expenses subsequently incurred of any additional counsel retained by
them. The Company and you agree to notify each other promptly, as soon as it
has knowledge thereof, of the commencement of any litigation or proceedings
against the Company or you, or any of their respective directors or officers,
in connection with the issue or sale of the Offerings.
7. Effective Date and Termination Date.
(a) This Agency Agreement shall become effective on the date of
execution of this Agency Agreement by the Company and the Agent.
(b) This Agency Agreement shall terminate on the 90th day
following the latter of the date of this Agency Agreement or the completion of
the PPM.
8. Representations to Survive. The representations and warranties
set forth in, or made pursuant to, this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any party
to this Agreement or any of its directors or officers or any controlling
personal and shall survive delivery of and payment for the Offerings. The fee
arrangement contained in Subparagraph 3.(b), the indemnification agreements
contained in Paragraph 6 and the covenants of the Company contained in
Subparagraph 5.(d) shall survive any termination of this Agreement.
9. Notices. Except as otherwise expressly provided in this
Agreement, all notices and other communications hereunder shall be in writing,
and if given to you, the Agent, shall be mailed, delivered, or telegraphed to
you at the address set forth above or, if given to the Company, shall be
mailed, delivered, or telegraphed to the Company at 0000 Xxxx Xxxxxx Xxxx 00,
Xxxxx 000 Xxxxxxxxxx, Xxxxxxxxx 00000.
10. Miscellaneous. This Agreement shall inure to the benefit of, and
be binding upon, the successors of you and of the Company. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their successors, and
the controlling persons and directors and officers referred to in Paragraph 6,
any legal or equitable right, remedy, or claim under or in respect of this
Agreement or any provision. The term "successors" shall not include any
purchaser of the Offerings merely by reason of such purchase. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Minnesota.
11. Reorganization. This Agreement will be effective upon the
consummation of the Reorganization as defined in the Reorganization Agreement
and the Company may assign all of its rights, duties and obligations hereunder
to Unistone, Inc., following the consummation of the Reorganization.
If the foregoing expresses our agreement with you, kindly confirm by
signing the acceptance on the enclosed counterpart hereof and return the same
to us, whereupon this letter and you acceptance shall become and constitute a
binding agreement between the Company and you, in accordance with its terms.
Very truly yours,
CASH SYSTEMS, INC.
Date: October 1, 2001 By
Its
The foregoing Agency Agreement is hereby confirmed and accepted as of
the date first written.
EQUITY SECURITIES INVESTMENTS, INC.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxx 00000
Date: October 1, 2001 By
Its
CASH SYSTEMS, INC.-EQUITY SECURITIES INVESTMENTS, INC.
TERM SHEET
This term sheet summarizes the principal terms of an anticipated financing by
Equity Securities Investments, Inc. (the "Agent") on behalf of Cash Systems,
Inc. (the "Company"). This term sheet is intended solely as a basis for
further discussion and is not intended to be and does not constitute a legally
binding obligation. No other legally binding obligations will be created,
implied, or inferred until documents in final form related to the offering are
executed and delivered by all parties. Without limiting the generality of the
foregoing, it is the parties intent that, until that event, no agreement shall
exist among them and there shall be no obligations whatsoever based on such
things as parol evidence, extended negotiations, "handshakes," oral
understandings, or courses of conduct (including reliance and changes of
position).
The Company and the Agent are discussing a placement on the following terms:
Company/Issuer: Cash Systems, Inc.
Security: 400,000 units. Each unit shall be priced at $1.25 per unit
and each unit shall consist of one share of common stock and
one-quarter of one warrant to purchase one additional share
of common stock at a price of $1.50 per share.
Anticipated
Closing Date: October 15, 2001.
Registration
Rights: The common stock will be registered for resale via an
S-3 or other applicable registration statement that will be
filed as soon as possible after the closing of an
anticipated private placement by the Company in the amount
of at least $3,000,000 (the "Private Placement Closing").
Investor and the Issuer will enter into a Registration
Rights Agreement providing, among other things, that the
registration statement will be filed within 45 days from the
Private Placement Closing. The Issuer will use its best
efforts to cause the registration statement to become
effective within 180 days from the Private Placement
Closing. If the registration statement has not been
declared effective within 180 days from the Private
Placement Closing, then the Issuer will be liable for
liquidated damages enforceable by the Investor. The
liquidated damages will be in the amount of 1.00% for every
30 day period until the registration statement has been
filed and/or declared effective. The liquidated damages
will be payable in cash upon demand.
Conditions to
Closing: 1/. Completion of merger between Company and public entity
2/. Commitment (and related escrow) to use funds solely for
acquisition of Cash-Data, Inc. d/b/a "BankPlus."
3/. Contractual extension of at least two years on contracts
acquired from Cash-Data, Inc. d/b/a "BankPlus."
Agent: Equity Securities Investments, Inc.
Agent
Compensation: At closing, Issuer shall pay Agent a cash commission equal
to 10.00% of the total proceeds received by Issuer in the
transaction and a 3.00% unaccountable expense allowance.
Additionally, at closing, Issuer shall grant to Agent 50,000
common stock purchase warrants with an exercise price of
$1.50 per share.
EQUITY SECURITIES INVESTMENTS, INC.
By:______________________
Its:_______________________
CASH SYSTEMS, INC.
By:______________________
Its:_______________________
CASH SYSTEMS, INC.-EQUITY SECURITIES INVESTMENTS, INC.
TERM SHEET
This term sheet summarizes the principal terms of an anticipated financing by
Equity Securities Investments, Inc. (the "Agent") on behalf of Cash Systems,
Inc. (the "Company"). This term sheet is intended solely as a basis for
further discussion and is not intended to be and does not constitute a legally
binding obligation. No other legally binding obligations will be created,
implied, or inferred until documents in final form related to the offering are
executed and delivered by all parties. Without limiting the generality of the
foregoing, it is the parties intent that, until that event, no agreement shall
exist among them and there shall be no obligations whatsoever based on such
things as parol evidence, extended negotiations, "handshakes," oral
understandings, or courses of conduct (including reliance and changes of
position).
The Company and the Agent are discussing a placement on the following terms:
Company/Issuer: Cash Systems, Inc.
Security: 1,500,000 B 3,500,000 shares. Subject to the Milestone
Adjustments set forth below, each share shall be priced at
$2.00 per share unit and each unit shall consist of one
share of common stock and one warrant to purchase one
additional share of common stock at a mutually to-be-agreed
upon price.
Milestone
Adjustments: An adjustment downward of $0.10 per unit (from the
anticipated $2.00/unit price) will be made for each of the
following milestones that is not achieved by the Company
prior to Closing:
1/. Calendar 2001 revenues of at least $7,000,000 and net
income of at least $500,000;
2/. Completion of acquisition of Cash-Data, Inc. d/b/a
"BankPlus" and Contractual extension of at least two years
on contracts acquired from party;
3/. Execution of the Hollywood Casino contract or (a)
similar contract(s) which generate comparable revenues and
earnings;
4/. Further development of the Equifax relationship,
including development of the Equifax PC product; and
5/. Progress toward completion of the 3 in 1 ATM terminal.
Anticipated
Closing Date: February 28, 2002.
Registration
Rights: The common stock will be registered for resale via an
S-3 or other applicable registration statement that will be
filed as soon as possible after the Closing. Investor and
the Issuer will enter into a Registration Rights Agreement
providing, among other things, that the registration
statement will be filed within 45 days after the Closing.
The Issuer will use its best efforts to cause the
registration statement to become effective within 180 days
from the Closing. If the registration statement has not
been declared effective within 180 days from the Closing,
then the Issuer will be liable for liquidated damages
enforceable by the Investor. The liquidated damages will be
in the amount of 1.00% for every 30 day period until the
registration statement has been filed and/or declared
effective. The liquidated damages will be payable in cash
upon demand.
Agent: Equity Securities Investments, Inc.
Agent
Compensation: At closing, Issuer shall pay Agent a cash commission equal
to 10.00% of the total proceeds received by Issuer in the
transaction and a 3.00% unaccountable expense allowance.
Additionally, at closing, Issuer shall grant to Agent
150,000 common stock purchase warrants with an exercise
price of $2.40 (subject to the above Milestone Adjustment)
per share.
EQUITY SECURITIES INVESTMENTS, INC.
By:______________________
Its:_______________________
CASH SYSTEMS, INC.
By:______________________
Its:_______________________
