REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of the 8th day of November, 2001, by and between Cash Systems,
Inc., a Delaware corporation (the "Company") and XxxxxxxXxxx.xxx, Inc., a
Minnesota corporation ("VirtualFund").
VirtualFund proposes to make a loan to the Company and in connection
therewith the Company will issue to VirtualFund a Common Stock Purchase
Warrant (the "Warrant") for up to 125,000 shares (the "Shares") of the
Company's common stock. As used in this Agreement, the term "Shares" shall
include any other securities issued as a dividend or other distribution with
respect to the Shares, or into which the Shares are converted or for which
they are exchanged, and any other or additional securities issuable upon
exercise of the Warrant in accordance with its terms. As an inducement to
VirtualFund to make the loan to the Company, the Company agrees with
VirtualFund, for the benefit of VirtualFund and any other persons who from
time to time are holders of the Warrant or the Shares (collectively the
"Holders"), as follows:
1. Registration Rights.
(a) Initial Registration. The Company shall promptly (but in no
event later than the earlier of (a) 90 days after the closing date of a
private placement of the Company's common stock in the amount of at least
$3,000,000, or (b) 150 days from the date of this Agreement, the earlier of
such 90th day or such 150th day being a "Filing Deadline") file with the
Securities and Exchange Commission (the "Commission") and thereafter use its
reasonable best efforts to cause to be declared effective no later than 90
days after the Filing Deadline (such 90th day being an "Effectiveness
Deadline") a registration statement ("Registration Statement") on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the offer and sale of the Transfer Restricted Shares (as
defined in Section 1(f) hereof) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in the Registration
Statement and Rule 415 under the Securities Act (hereinafter, a
"Registration"); provided, however, that no Holder (other than VirtualFund)
shall be entitled to have the Shares held by it covered by such Registration
Statement unless such Holder agrees in writing to be bound by all the
provisions of this Agreement applicable to such Holder.
(b) Demand Registrations. In addition to the initial Registration
described in Section 1(a), at any time after such initial Registration
Statement ceases to be effective the Company shall, upon the written request
of Holders of at least 25% of the Transfer Restricted Shares, promptly
file with the Commission a Registration Statement (a "Demand Registration") on
an appropriate form under the Securities Act relating to the offer and sale of
the Transfer Restricted Shares and thereafter use its reasonable best efforts
to cause such Registration Statement to be declared effective no later than
120 days after the date of the request from the Holders (such 120th day being
the Effectiveness Deadline with respect to such Demand Registration), provided
that the Company shall not be obligated to effect more than one (1) Demand
Registration for the Holders pursuant to this Section 1(b) in any twelve month
period nor more than a total of four (4) Demand Registrations for the Holders
pursuant to this Section 1(b).
(i) If at the time of any request to register Transfer
Restricted Shares pursuant to this Section 1(b), the Company is engaged
in, or has fixed plans to engage in within thirty (30) days of the time
of such request, a registered public offering or is engaged in any other
activity which, in the good faith determination of the Board of Directors
of the Company, would be adversely affected by the Demand Registration
to the material detriment of the Company, then the Company may at its
option direct that such Demand Registration be delayed for a reasonable
period not in excess of three (3) months from the effective date
of such other offering or the date of completion of such other material
activity, as the case may be; provided, however, that such right to delay
a request may be exercised by the Company not more than once in any
period of twelve (12) consecutive months. In addition, the Company shall
not be required to effect any registration within ninety (90) days after
the effective date of any other Registration Statement of the Company.
In any such case, the Effectiveness Deadline for the Demand Registration
shall be extended by a period equal to the period of the permitted delay.
(ii) Each request for a Demand Registration by the Holders
shall state the number of Transfer Restricted Shares proposed to be sold
and the intended method of disposition thereof. Upon receiving a request
for a Demand Registration, the Company shall promptly take such steps as
are necessary or appropriate to prepare for the registration of the
Transfer Restricted Shares that are the subject of such request.
(iii) A Registration shall not constitute a Demand
Registration until it has become effective and remains continuously
effective for the Registration Period described in Section 1(d) hereof.
In addition, a Registration shall not constitute a Demand Registration if
(x) after such Demand Registration has become effective, such
registration or the related offer, sale or distribution of Transfer
Restricted Shares thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the
Holders and such interference is not thereafter eliminated or (y) the
conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such Demand Registration are not
satisfied or waived, other than by reason of a failure by the Holders.
(c) Incidental Registrations. At any time after the date of this
Agreement, if the Company proposes to file a Registration Statement
under the Securities Act with respect to an offering by the Company for
its own account (other than a registration statement on Form S-4 or S-8
or any successor thereto), then the Company shall give written notice of
such proposed filing to each of the Holders of Transfer Restricted Shares
at least thirty (30) days before the anticipated filing date. Such notice
shall describe the proposed Registration and distribution and offer such
Holders the opportunity to register all or a portion of the Transfer
Restricted Shares then owned by such Holder (an "Incidental
Registration"). The Company shall, and shall use its best efforts
(within ten (10) days of the notice provided for in the preceding
sentence) to cause the managing underwriter or underwriters of a proposed
underwritten offering (the "Managing Underwriter") to permit each of
the Holders who have requested in writing to participate in the
Incidental Registration to include such Holder's Transfer Restricted
Shares in such offering on the same terms and conditions as the
securities of the Company included therein. In connection with any
Incidental Registration under this Section 1(c) involving an
underwriting, the Company shall not be required to include any Transfer
Restricted Shares in such underwriting unless the Holders thereof accept
the terms of the underwriting as agreed upon between the Company and the
Managing Underwriter, and then only in such quantity as shall not, in the
opinion of the Managing Underwriter, jeopardize the success of the
offering by the Company. If in the written opinion of the Managing
Underwriter the registration of all or part of the Transfer Restricted
Shares which the Holders have requested to be included would materially
adversely affect such offering, then the Company shall include in such
Incidental Registration, to the extent of the number of shares that the
Managing Underwriter believes may be sold, if any, without causing such
adverse effect, first, all of the securities to be offered for the
account of the Company; second the Transfer Restricted Shares to be
offered for the account of the Holders pursuant to this Section 1(c),
pro rata based on the amount recommended by the Managing Underwriter;
and third, any other securities requested to be included in such
underwriting.
(d) The Company shall use its reasonable best efforts to keep any
Registration Statement filed pursuant to this Agreement continuously effective
in order to permit the prospectus included therein to be lawfully delivered by
the Holders of the relevant Shares, for a period of two years from the date of
its effectiveness (in the case of the initial Registration described in
Section 1(a)), a period of nine months from the date of its effectiveness (in
the case of the Demand Registration described in Section 1(b)), or such
shorter period that shall terminate when all the Shares covered by the
Registration Statement (i) have been sold pursuant thereto or (ii) are no
longer restricted securities (as defined in Rule 144 under the Securities Act)
(in any such case, such period being called the "Registration Period"). The
Company shall be deemed not to have used its best efforts to keep the
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Shares covered thereby not
being able to offer and sell such Shares during that period, unless such
action is required by applicable law.
(e) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Registration Statement and the related
prospectus and any amendment or supplement thereto, as of the effective date
of the Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and
the rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(f) "Transfer Restricted Shares" means each Share until (i) the
date on which such Share has been effectively registered under the Securities
Act and disposed of in accordance with a Registration Statement or (ii) the
date on which such Share is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
2. Registration Procedures. In connection with the any Registration
contemplated by Section 1 hereof the following provisions shall apply:
(a) The Company shall (i) furnish to VirtualFund, prior to the
filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that VirtualFund is participating in the
Registration Statement, the Company shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as VirtualFund reasonably may propose; and (ii) subject to paragraph
(j) of this Section 2, include the names of the Holders who propose to sell
Shares pursuant to the Registration Statement as selling securityholders.
(b) The Company shall give written notice to VirtualFund and the
Holders of the Shares (which notice pursuant to clauses (ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the prospectus until
the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto
has been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Registration Statement or the prospectus in order
that the Registration Statement or the prospectus do not contain an
untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances
under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Shares included
within the coverage of the Registration, without charge, at least one copy of
the Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (including those, if any, incorporated by reference).
(e) The Company shall, during the Registration Period, deliver to
each Holder of Shares included within the coverage of the Registration,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in the Registration Statement and any amendment or
supplement thereto as such person may reasonably request. The Company
consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling
Holders of the Shares in connection with the offering and sale of the Shares
covered by the prospectus, or any amendment or supplement thereto, included in
the Registration Statement.
(f) Prior to any public offering of the Shares pursuant to any
Registration Statement the Company shall register or qualify or cooperate with
the Holders of the Shares included therein and their respective counsel in
connection with the registration or qualification of the Shares for offer and
sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Shares reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Shares covered by such Registration
Statement; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Shares to
facilitate the timely preparation and delivery of certificates representing
the Shares to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Shares pursuant to such Registration Statement.
(h) Upon the occurrence of any event contemplated by clauses (ii)
through (v) of Section 2(b) above during the Registration Period, the Company
shall promptly prepare and file a post-effective amendment to the Registration
Statement or a supplement to the related prospectus and any other required
document so that, as thereafter delivered to Holders of the Shares or
purchasers of Shares, the prospectus shall not contain an untrue statement of
a material fact or omit to state any material fact 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.
(i) The Company shall comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the
Registration and shall make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act)
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of a 12-month period (or
90 days, if such period is a fiscal year) beginning with the first month of
the Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statement shall cover such 12-month period.
(j) The Company may require each Holder of Shares to be sold
pursuant to the Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Shares as the
Company may from time to time reasonably require for inclusion in the
Registration Statement, and the Company may exclude from such registration the
Shares of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(k) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and
take all such other action, if any, as any Holder of the Shares shall
reasonably request in order to facilitate the disposition of the Shares
pursuant to any Registration.
(l) The Company shall (i) make reasonably available for inspection
by the Holders of the Shares, any underwriter participating in any disposition
pursuant to the Registration Statement and any attorney, accountant or other
agent retained by the Holders of the Shares or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's officers, directors,
employees, accountants and auditors to supply all relevant information
reasonably requested by the Holders of the Shares or any such underwriter,
attorney, accountant or agent in connection with the Registration Statement,
in each case, as shall be reasonably necessary to enable such persons, to
conduct a reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that the foregoing inspection and
information gathering shall be coordinated on behalf of the other Holders, by
one counsel designated by and on behalf of such other Holders as described in
Section 3 hereof.
(m) The Company, if requested by any Holder of Shares covered by
the Registration Statement, shall cause (i) its counsel to deliver an opinion
and updates thereof relating to the Shares in customary form addressed to such
Holders and the managing underwriters, if any, thereof and dated, in the case
of the initial opinion, the effective date of such Registration Statement
(it being agreed that the matters to be covered by such opinion shall include,
without limitation, the due incorporation and good standing of the Company and
its subsidiaries; the qualification of the Company and its subsidiaries to
transact business as foreign corporations; the due authorization, execution
and delivery of the relevant agreement of the type referred to in Section 2(k)
hereof; the due authorization, execution, authentication and issuance, and the
validity and enforceability, of the applicable Shares; the absence of material
legal or governmental proceedings involving the Company and its subsidiaries;
the absence of governmental approvals required to be obtained in connection
with the Registration Statement, the offering and sale of the applicable
Shares, or any agreement of the type referred to in Section 2(k) hereof; the
compliance as to form of such Registration Statement and any documents
incorporated by reference therein with the requirements of the Securities Act;
and, as of the date of the opinion and as of the effective date of the
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from such Registration Statement and the prospectus
included therein, as then amended or supplemented, and from any documents
incorporated by reference therein of an untrue statement of a material fact or
the omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of any
such documents, in the light of the circumstances existing at the time that
such documents were filed with the Commission under the Exchange Act); (ii)
its officers to execute and deliver all customary documents and certificates
and updates thereof requested by any underwriters of the applicable Shares and
(iii) its independent public accountants and the independent public
accountants with respect to any other entity for which financial information
is provided in the Registration Statement to provide to the selling Holders of
the applicable Shares and any underwriter therefor a comfort letter in
customary form and covering matters of the type customarily covered in
comfort letters in connection with primary underwritten offerings, subject to
receipt of appropriate documentation as contemplated, and only if permitted,
by Statement of Auditing Standards No. 72.
(n) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Shares or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder
of such Shares or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of such Rules, including,
without limitation, by (i) if such Rules, including Rule 2720, shall so
require, engaging a "qualified independent underwriter" (as defined in Rule
2720) to participate in the preparation of the Registration Statement relating
to such Shares, to exercise usual standards of due diligence in respect
thereto and, if any portion of the offering contemplated by such Registration
Statement is an underwritten offering or is made through a placement or sales
agent, to recommend the price of such Shares, (ii) indemnifying any such
qualified independent underwriter to the extent of the indemnification of
underwriters provided in Section 4 hereof and (iii) providing such information
to such broker-dealer as may be required in order for such broker-dealer to
comply with the requirements of the Rules.
(o) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Shares covered by the Registration
Statement contemplated hereby.
3. Registration Expenses.
(a) All expenses incident to the Company's performance of and
compliance with this Agreement shall be borne by the Company, regardless of
whether a Registration Statement is ever filed or becomes effective, including
without limitation;
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal
securities and state "blue sky" or securities laws;
(iii) all expenses of printing, messenger and delivery
services and telephone;
(iv) all fees and disbursements of counsel for the Company;
(v) all application and filing fees in connection with listing
the Shares on a national securities exchange, quotation service or
over-the-counter market; and
(vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance).
The Company shall bear its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.
(b) The Holders participating in any underwritten offering shall be
responsible for any expenses customarily borne by selling securityholders,
including underwriting discounts and commissions and fees and expenses of
counsel to the selling securityholders to the extent not required to be paid
by the Company pursuant to Section 3 hereof.
(c) In connection with any Registration Statement required by this
Agreement, the Company shall reimburse VirtualFund and the Holders of Transfer
Restricted Shares who are selling or reselling Shares pursuant to the "Plan of
Distribution" contained in the Registration Statement for the reasonable fees
and disbursements, up to a maximum of $7,500 per year, of not more than one
counsel, who shall be Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P. unless another
firm shall be chosen by the Holders of a majority of the Transfer Restricted
Shares for whose benefit such Registration Statement is being prepared.
4. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder
of the Shares and each person, if any, who controls such Holder within the
meaning of the Securities Act or the Exchange Act (each Holder and such
controlling persons are referred to collectively as the "Indemnified Parties")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Shares) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration, or arise
out of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse, as incurred, the
Indemnified Parties for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action in respect thereof; provided, however, that (i)
the Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration in reliance upon
and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus
relating to a Registration Statement, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Holder from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Shares concerned, to the extent that a prospectus relating to such Shares was
required to be delivered by such Holder under the Securities Act in connection
with such purchase and any such loss, claim, damage or liability of such
Holder results from the fact that there was not sent or given to such person,
at or prior to the written confirmation of the sale of such Shares to such
person, a copy of the final prospectus if the Company had previously furnished
copies thereof to such Holder; provided further, however, that this indemnity
agreement shall be in addition to any liability that the Company may otherwise
have to such Indemnified Party. The Company shall also indemnify underwriters,
their officers and directors and each person who controls such underwriters
within the meaning of the Securities Act or the Exchange Act to the same
extent as provided above with respect to the indemnification of the Holders of
the Shares if requested by such Holders.
(b) Each Holder of the Shares, severally and not jointly, shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in
respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Registration, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein; and, subject to the limitation set forth
immediately preceding this clause, shall reimburse, as incurred, the Company
for any legal or other expenses reasonably incurred by the Company or any such
controlling person in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity
agreement shall be in addition to any liability that such Holder may otherwise
have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action or proceeding (including
a governmental investigation), such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 4, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not, in any event, relieve
the indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b) above. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof the indemnifying party shall not be liable to such indemnified party
under this Section 4 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action, and does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from
the sale of the Shares, pursuant to the Registration, or (ii) if allocation
provided by the foregoing clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or such Holder or such other indemnified party, as
the case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding any other provision of this Section 4(d), the Holders of the
Shares shall not be required to contribute any amount in excess of the amount
by which the net proceeds received by such Holders from the sale of the Shares
pursuant to a Registration Statement exceeds the amount of damages which such
Holders have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the
meaning of the Securities Act or the Exchange Act shall have the same rights
to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the
sale of the Shares pursuant to the Registration Statement and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. Delinquency Fee Under Certain Circumstances.
(a) The Company shall pay the Holders a delinquency fee (the
"Delinquency Fee") with respect to the Shares if any of the following events
occur (each such event in clauses (i) through (iii) below being herein called
a "Registration Default"):
(i) If the initial Registration Statement required by this
Agreement is not filed with the Commission on or prior to the Filing
Deadline;
(ii) If any Registration Statement required by this Agreement
has not been declared effective by the Commission by the applicable
Effectiveness Deadline; or
(iii) If the Registration Statement has been declared
effective by the Commission but (A) such Registration Statement
thereafter ceases to be effective or (B) such Registration Statement
or the related prospectus ceases to be usable in connection with
resales of Transfer Restricted Shares during the periods specified
herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Registration Statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Each of the foregoing shall constitute a Registration Default whatever the
reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a
result of any action or inaction by the Commission .
A Delinquency Fee shall accrue on the Shares at the rate of 1.0% of
the aggregate Warrant Price of the Shares covered by such Registration
Statement for each 30-day period or portion thereof from and after the date on
which any such Registration Default shall occur until the date on which all
such Registration Defaults have been cured. Any Delinquency Fee due pursuant
to this Section 5(a) shall be payable in cash within three (3) business days
after written demand for payment is made by the Holders of a majority of the
Shares covered by such Registration Statement.
(b) A Registration Default referred to in Section 5(a)(iii) hereof
shall be deemed not to have occurred and be continuing in relation to a
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with
respect to the Company that would need to be described in the Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement the
Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for
a continuous period in excess of 15 days, a Delinquency Fee shall be payable
in accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.
6. Rule 144. The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time the Company is not required to file such
reports, it shall, upon the request of any Holder of Shares, make publicly
available other information so long as necessary to permit sales of their
Shares pursuant to Rule 144. The Company covenants that it shall take such
further action as any Holder of Shares may reasonably request, to the extent
required from time to time to enable such Holder to sell Shares without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144. The Company shall provide a copy of this Agreement to
prospective purchasers of Shares identified to the Company by VirtualFund upon
request. Upon the request of any Holder of Shares, the Company shall deliver
to such Holder a written statement as to whether it has complied with such
requirements.
7. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure
by the Company to comply with its obligations under Section 1 hereof may
result in material irreparable injury to VirtualFund or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such
failure, VirtualFund or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 1 hereof. The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority of the Shares affected by
such amendment, modification, supplement, waiver or consents.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
(i) if to VirtualFund:
XxxxxxxXxxx.xxx, Inc.
0000 Xxxx Xxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxxxx, XX 00000
Fax No.: (952) ___-____
Attention: Chief Executive Officer
(ii) if to the Company:
Cash Systems, Inc.
0000 Xxxx Xxxxxx Xxxx 00, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Fax No.: (952( 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
receipt is acknowledged by recipient's facsimile machine operator, if sent by
facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and
VirtualFund, and shall have the right to enforce such agreements directly to
the extent they may deem such enforcement necessary or advisable to protect
their rights or the rights of Holders hereunder.
(f) Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Minnesota without
regard to principles of conflicts of laws.
(j) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first set forth above.
CASH SYSTEMS, INC.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: President
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XXXXXXXXXXX.XXX, INC.
By: /s/
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Name:
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Title:
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