Cash Systems Inc - Current report filing (8-K)
March 18 2008 - 9:00AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2008
CASH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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87-0398535
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(State or other jurisdiction of
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(I.R.S. employer
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incorporation or organization)
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identification number)
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Commission file number: 1-31955
7350 Dean Martin Drive, Suite 309
Las Vegas, Nevada 89139
(Address of principal executive offices and zip code)
Registrants telephone number, including area code: (702) 987-7169
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligations of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed in the Current Report on Form 8-K filed by Cash Systems, Inc. (the
Company) with the Securities and Exchange Commission (SEC) on October 10, 2006, the Company
issued and sold to certain institutional accredited investors an aggregate of $20.0 million in
principal amount of senior secured convertible notes (the Initial Notes) and five-year warrants
(immediately exercisable) to purchase an aggregate of 312,500 shares of the Companys common stock
at $8.00 per share (the Initial Warrants). In addition, as previously disclosed in the Companys
Current Report on Form 8-K filed with the SEC on August 21, 2007 (the August 2007 Form 8-K), the
Company entered into an Amendment and Exchange Agreement with each of its note holders pursuant to
which the Company and each of the note holders agreed to, among other things, amend and restate the
Initial Notes in the form attached as Exhibit 10.6 to the August 2007 Form 8-K (the First Amended
and Restated Notes), amend and restate the Initial Warrants in the form attached as Exhibit 10.7
to the August 2007 Form 8-K (the First Amended and Restated Warrants), and amend certain
provisions of the other Transaction Documents.
The First Amended and Restated Notes differed from the Initial Notes in certain material
respects, including, without limitation, (i) the aggregate principal amount was increased from
$20.0 million to $22.0 million, (ii) the interest rate was increased from 6.5% per annum to 7.5%
per annum, (iii) the note holders were given an additional right of optional redemption pursuant to
which, on October 10, 2008, the note holders may require the
Company to redeem an aggregate principal amount
not to exceed $8 million at a price equal to the principal amount being redeemed, and (iv) the Company was
given the right of mandatory redemption, pursuant to which, on October, 10, 2008, the Company may,
if certain conditions set forth in the Amended and Restated Notes are satisfied or waived, redeem
an aggregate principal amount not to exceed $8 million at a price equal to the product of (x) 130% and (y)
the principal amount being redeemed. The First Amended and Restated Warrants differed from the Initial
Warrants in certain material respects, including, without limitation, (i) the aggregate number of
shares of common stock underlying such warrants was increased from 312,500 shares to 487,500
shares, and (ii) the exercise price was reduced from $8.00 per share to $7.38 per share.
On March 14, 2008, the Company entered into a Second Amendment and Exchange Agreement with
each of its note holders (each, a Second Amendment and Exchange Agreement and collectively, the
Second Amendment and Exchange Agreements) pursuant to which the Company and each of the note
holders agreed to, among other things, amend and restate the First Amended and Restated Notes in
the form attached hereto as Exhibit 10.6 (the Second Amended and Restated Notes), amend and
restate the First Amended and Restated Warrants in the form attached hereto as Exhibit 10.7 (the
Second Amended and Restated Warrants), and amend certain provisions of the other Transaction
Documents.
The Second Amended and Restated Notes differ from the First Amended and Restated Notes in
certain material respects, including, without limitation, (i) the aggregate principal amount was
increased from $22.0 million to $24.2 million, (ii) the conversion price was reduced from $8.00 per
share to $2.51 per share, (iii) the conversion price may be further reduced by the note holders at
any time on or before April 22, 2008 to 120% of the arithmetic average of the Weighted Average
Price (as defined in the Second Amended and Restated Notes) of the Companys common stock for each
day during the period commencing on March 18, 2008 and ending on April 15, 2008, (iv) the aggregate
principal amount that the note holders may require the Company to
redeem, and the aggregate principal amount that the
Company may elect to redeem, on October 10, 2008 was increased from $8 million to $12.1 million,
(v) the financial covenants based on Consolidated Total Debt to EBITDA (as defined in the First
Amended and Restated Notes) were eliminated and the financial covenants based on Consolidated
Revenue and Consolidated EBITDA (as defined in the Second Amended and Restated Notes) were
modified, and (vi) the
interest rate will be increased by 1.5% per annum from and after the occurrence of any
Dilutive Issuance Event (as defined in the Second Amended and Restated Notes).
The Second Amended and Restated Warrants differ from the First Amended and Restated Warrants
in certain material respects, including, without limitation, (i) the exercise price was reduced
from $7.38 per share to $2.49 per share, and (ii) the exercise price may be further reduced by the
note holders at any time on or before April 22, 2008 to 120% of the arithmetic average of the
Weighted Average Price (as defined in the Second Amended and Restated Notes) of the Companys
common stock for each day during the period commencing on March 18, 2008 and ending on April 15,
2008.
The foregoing description of the Second Amendment and Exchange Agreements, the Second Amended
and Restated Notes and the Second Amended and Restated Warrants is not comprehensive and is
qualified in its entirety by reference to the full text of the attached exhibits. Copies of the
Second Amendment and Exchange Agreements, the form of Second Amended and Restated Note and the form
of Second Amended and Restated Warrant are attached to this Current Report on Form 8-K as Exhibit
10.1, Exhibit 10.2, Exhibit 10.3, Exhibit 10.4, Exhibit 10.5, Exhibit 10.6 and Exhibit 10.7,
respectively, and are incorporated herein by reference.
Item 2.02. Results of Operations and Financial Condition.
On March 17, 2008, the Company issued a press release announcing fourth quarter and full year
2007 unaudited financial results. A copy of the press release is furnished as Exhibit 99.1 to this
Current Report on Form 8-K. The information furnished pursuant to Item 2.02 and Exhibit 99.1 of
this Current Report on Form 8-K shall not be deemed to be filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the
liability of that section, nor shall it be deemed incorporated by reference into any registration
statement or other document pursuant to the Securities Act of 1933, as amended (the Securities
Act) or the Exchange Act, except as expressly stated by specific reference in such filing.
Item 2.03. Creation of Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant.
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated in
this Item 2.03 by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated in
this Item 3.02 by reference. The Second Amended and Restated Notes and the Second Amended and
Restated Warrants have not been registered under the Securities Act or any state securities laws.
The exchange was made in reliance on the exemption from the registration requirements of the
Securities Act by virtue of Section 3(a)(9) thereof.
Item 7.01. Regulation FD Disclosure.
On March 17, 2008, the Company issued a press release announcing (i) fourth quarter and full
year 2007 unaudited financial results, (ii) that it had entered into the Second Amendment and
Exchange Agreements with the note holders and exchanged the First Amended and Restated Notes and
First Amended and Restated Warrants for the Second Amended and Restated Notes and the Second
Amended and Restated Warrants, respectively, (iii) that its board of directors has decided to
explore strategic alternatives to maximize shareholder value and that Deutsche Bank will serve as
its financial advisor in this process, (iv) that its independent registered public accountants will
likely indicate in their audit opinion rendered in connection with the preparation and filing of
the Companys annual report on Form 10-K for the year ended December 31, 2007 (the Form 10-K)
substantial doubt about the Companys ability to continue as a
going concern primarily due to concerns as to the Companys
ability to generate or obtain liquidity to satisfy the right of the
note holders to require the Company to redeem up to
$12.1 million in principal amount of the Second Amended and
Restated Notes on October 10, 2008, and (v) that it
expects to file a Form 12b-25 to report its inability to file the Form 10-K by the initial filing
deadline.
A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished pursuant to Item 7.01 and Exhibit 99.1 of this Current Report on Form 8-K
shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise
subject to the liability of that
section, nor shall it be deemed incorporated by reference into any registration statement or
other document pursuant to the Securities Act or the Exchange Act, except as expressly stated by
specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit
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Number
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Description
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10.1
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Portside Growth and Opportunity Fund
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10.2
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highline Capital Partners, LP
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10.3
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highline Capital Partners QP, LP
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10.4
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highline Capital International, Ltd.
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10.5
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highbridge International LLC
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10.6
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Form of Second Amended and Restated Senior Secured Convertible Note
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10.7
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Form of Second Amended and Restated Warrant to Purchase Common Stock
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99.1
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Press Release dated March 17, 2008
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Cash Systems, Inc.
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(Registrant)
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Dated: March 18, 2008
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By:
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/s/
Andrew Cashin
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Name:
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Andrew Cashin
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Title:
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Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
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Number
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Description
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10.1
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Portside Growth and Opportunity Fund
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10.2
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highline Capital Partners, LP
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10.3
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highline Capital Partners QP, LP
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10.4
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highline Capital International, Ltd.
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10.5
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Second Amendment and Exchange Agreement dated March 14, 2008
between Cash Systems, Inc. and Highbridge International LLC
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10.6
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Form of Second Amended and Restated Senior Secured Convertible Note
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10.7
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Form of Second Amended and Restated Warrant to Purchase Common Stock
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99.1
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Press Release dated March 17, 2008
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