Exhibit 10.3
REDEMPTION AGREEMENT
This REDEMPTION AGREEMENT (this
“ Agreement ”) is made and entered into as of
June 13, 2008, by and between Cash Systems, Inc., a Delaware
corporation (the “ Company ”) and Highline
Capital Partners QP, LP (the “ Investor ”), with
reference to the following facts:
RECITALS
A. The Company, the Investor and
certain other investors (the “ Other Investors
”, and collectively with the Investor, the “
Investors ”) are parties to that certain Securities
Purchase Agreement, dated as of October 6, 2006 (the “
Securities Purchase Agreement ”), pursuant to which,
among other things, the Investor purchased from the Company
(i) a Senior Secured Convertible Note (the “ Original
Note ”), which was convertible into shares of the
Company’s common stock, par value $0.001 per share (the
“ Common Stock ”) and (ii) a Warrant to
Purchase Common Stock to purchase shares of Common Stock (the
“ Original Warrant ”).
B. The Company and the Investor
are parties to that certain Amendment and Exchange Agreement, dated
as of August 20, 2007 (the “ First Amendment and
Exchange Agreement ”), pursuant to which, among other
things, the Investor exchanged (i) the Original Note for an
Amended and Restated Senior Secured Convertible Note (the “
First Amended and Restated Note ”), which was
convertible into shares of Common Stock and (ii) the Original
Warrant for an Amended and Restated Warrant to Purchase Common
Stock to purchase shares of Common Stock (the “ First
Amended and Restated Warrant ”).
C. The Company and the Investor
are parties to that certain Second Amendment and Exchange
Agreement, dated as of March 14, 2008 (the “ Second
Amendment and Exchange Agreement ”), pursuant to which,
among other things, the Investor exchanged (i) the First
Amended and Restated Note for a Second Amended and Restated Senior
Secured Convertible Note (the “ Second Amended and
Restated Note ”), which is convertible into shares of
Common Stock and (ii) the First Amended and Restated Warrant
for a Second Amended and Restated Warrant to Purchase Common Stock
to purchase shares of Common Stock (the “ Second Amended
and Restated Warrant ”).
D. In connection with the
execution and delivery of the Securities Purchase Agreement, the
Company entered into that certain Registration Rights Agreement,
dated as of October 6, 2006 (the “ Registration
Rights Agreement ”), by and among the Company and the
Investors, which was subsequently amended pursuant to the First
Amendment and Exchange Agreement and the Second Amendment and
Exchange Agreement.
E. In connection with the
execution and delivery of the Securities Purchase Agreement, the
Company also entered into that certain Security Agreement, dated as
of October 10, 2006 (the “ Security Agreement
”), in favor of Portside Growth and Opportunity Fund, in its
capacity as collateral agent for the Investors.
F. On or after the date hereof,
the Company has or will have entered into an Agreement and Plan of
Merger in the form attached hereto as Exhibit A (the “
Merger Agreement ” and the date of execution of the
Merger Agreement, the “ Redemption Agreement
Effective Date ”) with Global Cash Access, Inc., a
Delaware corporation (“ GCA ”) and Card
Acquisition Subsidiary, Inc., a Delaware corporation and
wholly-owned subsidiary of GCA (“ Card Acquisition
”), pursuant to which, among other things, the Company will
merge with and into Card Acquisition (the “ Merger
”).
G. It is a condition precedent
to the closing of the Merger that the Company redeem the Second
Amended and Restated Note and Second Amended and Restated Warrant
from the Investor in accordance with the terms of this Agreement.
Accordingly, the Company has proposed to redeem the Second Amended
and Restated Note and Second Amended and Restated Warrant from
Investor on the Closing Date (as such term is defined in the Merger
Agreement), and Investor has agreed to permit the Company to redeem
the Second Amended and Restated Note and Second Amended and
Restated Warrant, on the terms and subject to the conditions set
forth below.
H. Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings
ascribed to them in the Securities Purchase Agreement, as amended
pursuant to the First Amendment and Exchange Agreement and Second
Amendment and Exchange Agreement.
NOW, THEREFORE , in
consideration of the covenants, promises and representations set
forth herein, the parties agree as follows:
ARTICLE 1
REDEMPTION
1.1 Redemption . On the terms
and subject to the conditions set forth in this Agreement, the
Company shall redeem the Second Amended and Restated Note and
Second Amended and Restated Warrant from the Investor (the “
Redemption ”) for the aggregate Redemption
Consideration (as such term is defined in Section 1.2 below)
on the Closing Date (the “ Redemption Date ”).
The Company shall give the Investor written notice of the
Redemption Date not less than three days prior to such date.
1.2 Deliveries . On the
Redemption Date, (a) the Investor shall deliver to the Company
or its designee its original executed Second Amended and Restated
Note and Second Amended and Restated Warrant, each of which shall
be duly executed in blank for transfer, and (b) the Company
shall pay to the Investor an aggregate amount in cash equal to
$1,403,461, plus all accrued but unpaid interest on the Second
Amended and Restated Note through the date immediately preceding
the Redemption Date, plus 7% of the amount of Excess Working
Capital (as such term is defined in the Merger Agreement), if any,
over the amount of Excess Working Capital used to pay Transaction
Fees (as such term is defined in the Merger Agreement) (the “
Redemption Consideration ”), by wire transfer of
immediately available funds to the account designated by the
Investor prior to the Redemption Date. The parties agree and
acknowledge that (a) no more than $250,000 of Excess Working
Capital, if any, shall be used to pay Transaction Fees, and
(b) Excess Working Capital shall be determined in accordance
with the Merger Agreement by the Company in its sole and absolute
discretion.
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1.3 Effect of Redemption .
Upon consummation of the Redemption, the Second Amended and
Restated Note and Second Amended and Restated Warrant shall be
cancelled by the Company on its books and the Investor shall have
no further rights, powers, entitlements or claims of any kind under
the Second Amended and Restated Note, the Second Amended and
Restated Warrant or any of the other Transaction Documents,
including, without limitation, the Securities Purchase Agreement,
the Registration Rights Agreement and the Security Agreement, all
of which shall be fully and effectively terminated, cancelled,
released, acquitted, and forever discharged without any further
action on the part of the Investor. For the avoidance of doubt, the
payment of the Redemption Consideration shall discharge in full the
Company’s obligation to repay any principal outstanding under
the Second Amended and Restated Note immediately prior to the
Redemption.
1.4 Forbearance . Effective as
of the Redemption Agreement Effective Date until the earlier of
(a) the Redemption Date and (b) the termination of this
Agreement pursuant to Article IV hereof, the Investor hereby
agrees that it will forbear from exercising any rights or remedies
it may possess under the Transaction Documents.
1.5 Waiver of Rights .
Effective as of the Redemption Agreement Effective Date until the
earlier of (a) the Redemption Date and (b) the
termination of this Agreement pursuant to Article IV hereof,
the Investor hereby waives any right it may have under the Second
Amended and Restated Note and Second Amended and Restated Warrant
that may arise in connection with any of the transactions
contemplated by the Merger Agreement, including, without
limitation, under Section 5 of the Second Amended and Restated
Note and Section 4 of the Second Amended and Restated
Warrant.
1.6 Conversion and Exercise;
Restrictions on Transfer . The Investor hereby agrees that,
unless and until this Agreement is terminated pursuant to
Article IV hereof, it will not convert or exercise all or any
portion of the Second Amended and Restated Note or Second Amended
and Restated Warrant into Common Stock or sell, transfer or
otherwise convey all or any portion of the Second Amended and
Restated Note or Second Amended and Restated Warrant from and after
the date hereof and through the Redemption Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Company Representations and
Warranties . The Company represents and warrants to the
Investor as set forth below:
(a) The
Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction under which it was organized.
The Company has all corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement has been
duly and validly authorized by the board of directors of the
Company and no other corporate proceedings on the part of the
Company are necessary to authorize or consummate this Agreement.
This Agreement has been duly and validly executed and delivered by
the Company, and (assuming the due authorization, execution and
delivery hereof by the Investor) constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with its
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terms,
except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors
generally and of general principles of equity.
(b) The
execution, delivery and performance by the Company of this
Agreement does not and will not contravene, conflict with,
constitute a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default under, any of the terms,
conditions or provisions of (i) the organizational documents of the
Company, (ii) any laws binding upon or applicable to the
Company or by which any of its assets or properties is bound or
(iii) any material contract to which the Company is a party or
by which any of its assets or properties is bound.
(c) No
consent, waiver,
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