EXHIBIT 10.2
FORM OF
NONQUALIFIED STOCK OPTION AGREEMENT
CASH SYSTEMS, INC.
2005 EQUITY INCENTIVE PLAN
     THIS AGREEMENT, made effective as of this day of ___, 20___, by and between
Cash Systems, Inc., a Delaware corporation (the “Company”), and ___
(“Participant”).
W I T N E S S E T H:
     WHEREAS, Participant on the date hereof is a consultant or advisor to, or a
key employee, officer or director of the Company or one of its Subsidiaries; and
     WHEREAS, the Company wishes to grant a nonqualified stock option to
Participant to purchase shares of the Company’s Common Stock pursuant to the
Company’s 2005 Equity Incentive Plan (the “Plan”); and
     WHEREAS, the Administrator has authorized the grant of a nonqualified stock
option to Participant and has determined that, as of the effective date of this
Agreement, the fair market value of the Company’s Common Stock is
$           per share;
     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
     1. Grant of Option. The Company hereby grants to Participant on the date
set forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of ___(___) shares of Common Stock at a
per share price of $___on the terms and conditions set forth herein, and subject
to adjustment pursuant to Section 13 of the Plan. This Option is a nonqualified
stock option and will not be treated as an incentive stock option, as defined
under Section 422, or any successor provision, of the Internal Revenue Code of
1986, as amended (the “Code”), and the regulations thereunder.
     2. Duration and Exercisability.
          a. General. The term during which this Option may be exercised shall
terminate on the close of business on                ,        , except as
otherwise provided in Paragraphs 2(b) through 2(d) below. This Option shall
become exercisable according to the following schedule:

              Vesting Date   Number/Percentage of Shares          

 

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Once the Option becomes fully exercisable to the extent of one hundred percent
(100%) of the aggregate number of shares specified in Paragraph 1, Participant
may continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If Participant
does not purchase upon an exercise of this Option the full number of shares
which Participant is then entitled to purchase, Participant may purchase upon
any subsequent exercise prior to this Option’s termination such previously
unpurchased shares in addition to those Participant is otherwise entitled to
purchase.
          b. Termination of Relationship (other than Disability or Death). If
Participant’s employment or other relationship with the Company or any
Subsidiary is terminated for any reason other than disability or death, this
Option shall completely terminate on the earlier of (i) the close of business on
the three-month anniversary date of the termination of such employment or other
relationship, and (ii) the expiration date of this Option stated in Paragraph
2(a) above. In such period following the termination such employment or other
relationship, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding the date on which all of
such Participant’s employment or other relationship with the Company or
Subsidiary has terminated, but had not previously been exercised. To the extent
this Option was not exercisable upon the termination of such employment or other
relationship, or if Participant does not exercise the Option within the time
specified in this Paragraph 2(b), all rights of Participant under this Option
shall be forfeited.
          c. Disability. If Participant’s employment or other relationship with
the Company or any Subsidiary terminates because of disability (as defined in
Code Section 22(e), or any successor provision), this Option shall completely
terminate on the earlier of (i) the close of business on the twelve-month
anniversary date of the termination of such employment or other relationship,
and (ii) the expiration date of this Option stated in Paragraph 2(a) above. In
such period following the termination of such employment or other relationship,
this Option shall be exercisable only to the extent the Option was exercisable
on the vesting date immediately preceding the date on which Participant’s
employment or other relationship with the Company or Subsidiary have terminated,
but had not previously been exercised. To the extent this Option was not
exercisable upon the termination of such employment or other relationship, or if
Participant does not exercise the Option within the time specified in this
Paragraph 2(c), all rights of Participant under this Option shall be forfeited.
          d. Death. In the event of Participant’s death, this Option shall
terminate on the earlier of (i) the close of business on the twelve-month
anniversary date of the date of Participant’s death, and (ii) the expiration
date of this Option stated in Paragraph 2(a) above. In such period following
Participant’s death, this Option may be exercised by the person or persons to
whom Participant’s rights under this Option shall have passed by Participant’s
will or by the

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laws of descent and distribution only to the extent the Option was exercisable
on the vesting date immediately preceding the date of Participant’s death. To
the extent this Option was not exercisable upon the date of Participant’s death,
or if such person or persons fail to exercise this Option within the time
specified in this Paragraph 2(d), all rights under this Option shall be
forfeited.
     3. Manner of Exercise.
          a. General. The Option may be exercised only by Participant (or other
proper party in the event of death or incapacity), subject to the conditions of
the Plan and subject to such other administrative rules as the Board may deem
advisable, by delivering within the option period written notice of exercise to
the Company at its principal office. The notice shall state the number of shares
as to which the Option is being exercised and shall be accompanied by payment in
full of the option price for all shares designated in the notice. The exercise
of the Option shall be deemed effective upon receipt of such notice by the
Company and upon payment that complies with the terms of the Plan and this
Agreement. The Option may be exercised with respect to any number or all of the
shares as to which it can then be exercised and, if partially exercised, may be
exercised as to the unexercised shares any number of times during the option
period as provided herein.
          b. Form of Payment. Subject to the approval of the Administrator,
payment of the option price by Participant shall be in the form of cash,
personal check, certified check or previously acquired shares of Common Stock of
the Company, or any combination thereof. Any stock so tendered as part of such
payment shall be valued at its Fair Market Value as provided in the Plan. For
purposes of this Agreement, “previously acquired shares of Common Stock” shall
include shares of Common Stock that are already owned by Participant for at
least six (6) months prior to the exercise of the stock option, or for such
other period of time as may be required by generally accepted accounting
principles.
          c. Stock Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.
     4. Miscellaneous.
          a. Rights as Shareholder. This Agreement shall not confer on
Participant any right with respect to the continuance of any relationship with
the Company or any of its Subsidiaries, nor will it interfere in any way with
the right of the Company or any of its Subsidiaries to terminate any such
relationship. Participant shall have no rights as a shareholder with respect to
shares subject to this Option until such shares have been issued to Participant
upon exercise of this Option. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 13 of the Plan.

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          b. Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
Participant may be required by the Company, as a condition of the effectiveness
of any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Participant’s own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.
          c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject
to Section 13 of the Plan, certain changes in the number or character of the
Common Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e., Participant shall
have such “anti-dilution” rights under the Option with respect to such events,
but shall not have “preemptive” rights).
          d. Shares Reserved. The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
          e. Withholding Taxes. In order to permit the Company to comply with
all applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, income or other taxes are withheld from any
amounts payable by the Company to Participant. If the Company is unable to
withhold such federal and state taxes, for whatever reason, Participant hereby
agrees to pay to the Company an amount equal to the amount the Company would
otherwise be required to withhold under federal or state law. Participant may,
subject to the approval and discretion of the Board or such administrative rules
it may deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company’s Common Stock or by
electing to have the Company withhold shares of Common Stock otherwise issuable
to Participant. Such shares shall have a Fair Market Value equal to the minimum
required tax withholding, based on the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are applicable to
the supplemental income resulting from the exercise of this Option. In no event
may the Company withhold shares having a Fair Market Value in excess of such
statutory minimum required tax withholding.
          f. Nontransferability. During the lifetime of Participant, the accrued
Option shall be exercisable only by Participant or by the Participant’s guardian
or other legal representative, and shall not be assignable or transferable by
Participant, in whole or in part, other than by will or by the laws of descent
and distribution.

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          g. 2005 Equity Incentive Plan. The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan.
All defined terms of the Plan shall have the same meaning when used in this
Agreement. The Plan governs this Option and, in the event of any questions as to
the construction of this Agreement or in the event of a conflict between the
Plan and this Agreement, the Plan shall govern, except as the Plan otherwise
provides.
          h. Lockup Period Limitation. Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of its
Common Stock in compliance with the Securities Act of 1933, as amended, and that
the underwriter(s) seek to impose restrictions under which certain shareholders
may not sell or contract to sell or grant any option to buy or otherwise dispose
of part or all of their stock purchase rights of the underlying Common Stock,
Participant hereby agrees that for a period not to exceed 180 days from the
prospectus, Participant will not sell or contract to sell or grant an option to
buy or otherwise dispose of this option or any of the underlying shares of
Common Stock without the prior written consent of the underwriter(s) or its
representative(s).
          i. Blue Sky Limitation. Notwithstanding anything in this Agreement to
the contrary, in the event the Company makes any public offering of its
securities and determines in its sole discretion that it is necessary to reduce
the number of issued but unexercised stock purchase rights so as to comply with
any state securities or Blue Sky law limitations with respect thereto, the Board
of Directors of the Company shall have the right (i) to accelerate the
exercisability of this Option and the date on which this Option must be
exercised, provided that the Company gives Participant 15 days’ prior written
notice of such acceleration, and (ii) to cancel any portion of this Option or
any other option granted to Participant pursuant to the Plan which is not
exercised prior to or contemporaneously with such public offering. Notice shall
be deemed given when delivered personally or when deposited in the United States
mail, first class postage prepaid and addressed to Participant at the address of
Participant on file with the Company.
          j. Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 13 of
the Plan occurs and Participant is an “affiliate” of the Company or any
Subsidiary (as defined in applicable legal and accounting principles) at the
time of such transaction, Participant will comply with all requirements of Rule
145 of the Securities Act of 1933, as amended, and the requirements of such
other legal or accounting principles, and will execute any documents necessary
to ensure such compliance.
          k. Stock Legend. The Board may require that the certificates for any
shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors) shall bear an appropriate legend to reflect the
restrictions of Paragraph 4(b) and Paragraphs 4(h) through 4(j) of this
Agreement.

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          l. Scope of Agreement. This Agreement shall bind and inure to the
benefit of the Company, its Subsidiaries and its successors and assigns and
Participant and any successor or successors of Participant permitted by
Paragraph 2 or Paragraph 4(f) above.
          m. Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement of any
such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by binding arbitration. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be a retired state or federal judge or an attorney
who has practiced securities or business litigation for at least 10 years. If
the parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Clark County, Nevada, select an
arbitrator. Arbitration will be conducted pursuant to the provisions of this
Agreement, and the commercial arbitration rules of the American Arbitration
Association, unless such rules are inconsistent with the provisions of this
Agreement. Limited civil discovery shall be permitted for the production of
documents and taking of depositions. Unresolved discovery disputes may be
brought to the attention of the arbitrator who may dispose of such dispute. The
arbitrator shall have the authority to award any remedy or relief that a court
of this state could order or grant; provided, however, that punitive or
exemplary damages shall not be awarded. The arbitrator may award to the
prevailing party, if any, as determined by the arbitrator, all of its costs and
fees, including the arbitrator’s fees, administrative fees, travel expenses,
out-of-pocket expenses and reasonable attorneys’ fees. Unless otherwise agreed
by the parties, the place of any arbitration proceedings shall be Clark County,
Nevada.
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

                      CASH SYSTEMS, INC.    
 
                    By:                      
 
      Its:        
 
               
 
               
 
                              Participant    

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