Exhibit 10.1


 


LOAN AND MERGER OPTION AGREEMENT


 


THIS LOAN AND MERGER OPTION AGREEMENT (the “Agreement”)
is entered into effective as of November 22, 2005 by and between STEN
Acquisition Corporation, a Minnesota corporation (the “Lender”), Site Equities
International, Inc., a Nevada corporation (the “Borrower”) and Paycenters,
LLC, a Nevada limited liability company (“Paycenters”).


 


RECITALS


 


A.                                   Lender is a wholly owned
subsidiary of STEN Corporation, a Minnesota corporation (“STEN”).


 


B.                                     Borrower is the sole member of
Paycenters, Tower Assets, Inc., a Nevada corporation (“Tower”) and Site
Signal Incorporated,. a Delaware corporation (“SSI”) (Paycenters, Tower and SSI
are referred to herein as the Subsidiaries).


 


For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, it is agreed:


 


ARTICLE I


DEFINITIONS
AND ACCOUNTING TERMS


 


SECTION 1.01.  Defined Terms. 
As used in this Agreement the following terms have the following meanings
(terms defined in the singular to have the same meaning when used in the plural
and vice versa):


 


“Agreement” means this Loan and Merger Option
Agreement, as amended, supplemented, or modified from time to time.


 


“Agreement and Plan of Merger” shall have the
meaning set forth in Section 3.03.


 


“Business Day” means any day other than a
Saturday, Sunday, or other day on which commercial banks in Minneapolis,
Minnesota are authorized or required to close under the laws of the State of
Minnesota.


 


“Collateral” means all property which is
subject or is to be subject to the Lien granted by the Security Agreement or
the Pledge Agreement.


 


“Confirmation Notice” shall have the meaning
set forth in Section 3.02.


 


“Debt” means:  (1) indebtedness or liability for borrowed
money, or for the deferred purchase price of property or services (including
trade obligations); (2) obligations as lessee under capital leases; (3) current
liabilities in respect of unfunded vested benefits under any employee benefit
plan; and (4) all guaranties and other contingent obligations to purchase,
to provide funds for payment, to supply funds to invest in any Person.


 





















 


“Event of Default” means any
of the events specified in Section 7.01.


 


“GAAP” means generally accepted accounting
principles in the United States and the Public Company Accounting Oversight
Board (United States).


 


“Guaranty” shall have the meaning set forth
in Section 4.01.


 


“Intent to Exercise Notice” shall have the
meaning set forth in Section 3.02.


 


“Kiosks” shall have the meaning set forth in Section 2.06.


 


“Initial Interest Payment Date” shall have
the meaning set forth in Section 2.03.


 


“Initial Note” shall have the meaning set
forth in Section 2.04.


 


“Installment” shall have the meaning set
forth in Section 2.01.


 


“Interest Deferral Termination Date” shall
have the meaning set forth in Section 2.03.


 


“Letters of Understanding” shall have the
meaning set forth in Section 4.01.


 


“Lien” means any mortgage, deed of trust,
pledge, security interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, or other
security agreement, or preferential arrangement, charge, or encumbrance of any
kind or nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).


 


“Loan” shall have the meaning set forth in Section 2.01.


 


“Loan Documents” means this Agreement, the
Notes, the Security Agreement, the Voting Agreements, the Pledge Agreement, the
Guaranty, the Letters of Understanding, the Subordination Agreement and the
Agreement and Plan of Merger.


 


“Merger” shall have the meaning set forth in Section 3.01.


 


“Merger Effective Date” shall have the
meaning set forth in Section 2.03.


 


“Merger Option” shall have the meaning set
forth in Section 3.01.


 


“Merger Option Expiration Date” shall have
the meaning set forth in Section 3.02.


 


“Note” and “Notes” shall have the meaning set
forth in Section 2.04.


 


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“Paycenters” shall have the meaning set forth
in the preamble to this Agreement.


 


“Person” means an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority, or other entity of whatever
nature.


 


“Pledge Agreement” shall have the meaning set
forth in Section 4.01.


 


“Replacement Note” shall have the meaning set
forth in Section 2.03.


 


“SEC Documents” shall have the meaning set
forth in Section 3.07.


 


“Security Agreement” shall have the meaning
set forth in Section 4.01.


 


“Shareholder Information” shall have the
meaning set forth in Section 3.07.


 


“SSI” shall have the meaning set forth in the
recitals to this Agreement.


 


“STEN” shall have the meaning set forth in
the recitals to this Agreement.


 


“Subordination Agreement” shall have the
meaning set forth in Section 4.01.


 


“Subsidiaries”  shall have the meaning set forth in the
recitals to this Agreement.


 


“Surviving Entity” shall have the meaning set
forth in Section 3.01.


 


“Tower” shall have the meaning set forth in
the recitals to this Agreement.


 


“Voting Agreement” shall have the meaning set
forth in Section 4.01.


 


SECTION 1.02.  Accounting Terms. 
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP consistent with that applied in the preparation of the
financial statements referred to in Section 5.04, and all financial data
submitted pursuant to this Agreement shall be prepared in accordance with such
principles and, except as otherwise set forth herein, audited by an independent
registered public accounting firm.


 


ARTICLE II


AMOUNT
AND TERMS OF THE LOAN


 


SECTION 2.01.  Loan.  The
Lender agrees, on the terms and conditions hereinafter set forth, to make a
loan (the “Loan”) to the Borrower having a total aggregate principal amount of
Two Million Dollars ($ 2,000,000.00). 
The Loan shall be disbursed to Borrower in the following three separate
installments (each, an “Installment”):


 


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(1)                                  $
800,000.00 of the Loan shall be disbursed by Lender to Borrower following
execution of this Agreement in accordance with Section 2.05 of this
Agreement;


 


(2)                                  $
600,000.00 of the Loan shall be disbursed by Lender to Borrower on or following
January 16, 2006 in accordance with Section 2.05 of this Agreement;
and


 


(3)                                  $
600,000.00 of the Loan shall be disbursed by Lender to Borrower on or following
March 16, 2006 in accordance with Section 2.05 of this Agreement.


 


SECTION 2.02.  Interest. 
Interest shall accrue on the outstanding and unpaid principal amount of
the Loan under this Agreement at a rate equal to eight percent (8.0%) per
annum.  Interest shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed.


 


SECTION 2.03.  Payment.  The
principal and interest under the Loan shall be paid as follows:


 


(1)                                  Except as otherwise set forth in Section 2.03(2),  Section 2.03(3) and Section 2.03(4),
the Borrower shall pay interest only beginning on December 15, 2006 (the “Initial
Interest Payment Date”) and continuing on June 15 and December 15 of
each year thereafter until December 15, 2010, at which time the
outstanding principal and accrued and unpaid interest under the Loan shall
become due and payable.


 


(2)                                  In the event that Lender delivers
to Borrower an Intent to Exercise Notice (defined in Section 3.02),
Borrower will not be required to make any payment of interest (although such
interest will continue to accrue) to Lender under Section 2.03(1) between
the date Lender delivers the Intent to Exercise Notice and the earliest to
occur of the following dates (the “Interest Deferral Termination Date”): (a) the
date the Merger (defined in Section 3.01) becomes effective (the “Merger
Effective Date”), (b) the date that the Lender notifies Borrower in
writing that it will not deliver a Confirmation Notice (defined in Section 3.02),
(c) the date that Lender rescinds its Confirmation Notice in accordance
with Section 3.05, or (d) the Merger Option Expiration Date (defined
in Section 3.02).  On and after the
Interest Default Termination Date, payments of interest and principal under the
Loan shall be made as provided in Sections 2.03(3) and Sections 2.03(4),
as applicable.


 


(3)                                  In the event that the Merger
becomes effective, the Notes (as defined in Section 2.04) shall be
cancelled and all outstanding principal and interest owed under the Loan and
the Notes shall be deemed to have been paid in full as of the Merger Effective
Date.


 


(4)                                  In the event that Lender has
delivered to Borrower an Intent to Exercise Notice and an Interest Deferral Termination
Date occurs (other than the Merger Effective Date): the Borrower shall, within
five (5) Business Days after the Interest Deferral Termination Date
execute and deliver to Lender a promissory note (the “Replacement Note”) in the
form of Exhibit A-2, dated as of the Interest Deferral Termination Date
and having a principal amount equal to


 


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the amount of principal and
accrued and unpaid interest under the Loan as of the Interest Deferral
Termination Date.  Upon acceptance by
Lender of an executed Replacement Note, in form and substance acceptable to
Lender, Lender shall return to Borrower the original Initial Note.


 


(5)                                  All
payments shall be made in lawful money of the United States of America and by
wire transfer to an account designated by Lender to Borrower in writing.  In the event a payment date is not a Business
Day, such payment shall be made on the next succeeding Business Day, and the
extension of time shall in such case be included in the computation of the
payment of interest.


 


SECTION 2.04.  Note.  The
Loan made by the Lender under this Agreement shall, until a Replacement Note is
accepted by Lender, be evidenced by, and repaid with interest in accordance
with, a single promissory note of Borrower, substantially in the form of Exhibit A-1,
duly completed and dated as of the same date of this Agreement (the “Initial
Note”).  After acceptance by Lender of
the Replacement Note, the Loan made by Lender under this Agreement shall be
evidenced by, and repaid with interest in accordance with, the Replacement
Note.  The Initial Note and the
Replacement Note are each referred to herein as the “Note” and collectively as
the “Notes”. The Lender is hereby authorized by the Borrower to endorse on the schedule attached
to the Note the date of each Installment disbursed by Lender to Borrower, which
endorsement shall, in the absence of manifest error, be conclusive as to the
outstanding balance of the Loan made by the Lender; provided, however, that the
failure to make such notation with respect to any Installment shall not limit
or otherwise affect the obligations of the Borrower under this Agreement or the
Notes.


 


SECTION 2.05.  Disbursement of Loan Proceeds.  Lender shall disburse to Borrower the Loan
proceeds under each Installment within ten (10) Business Days after
satisfaction, or waiver by Lender, of the conditions precedent for such
Installment as set forth in Article IV of this Agreement, or at such other
time and place as the Lender and Borrower may agree.


 


SECTION 2.06.  Use of Proceeds. 
The proceeds of the Loan shall be used by the Borrower to (i) fully
satisfy all tax liens of the Borrower and all Subsidiaries, written evidence of
such satisfaction must be provided to Lender within five (5) days after
disbursement by Lender of the first Installment, and (ii) all remaining
proceeds of the Loan shall be used in accordance with the attached Schedule 2.06, unless otherwise agreed to by Lender in
writing.


 


SECTION 2.07. Consent Prior to Placement. The Borrower agrees that during
the term of this Agreement, Borrower shall not execute any contract for the
placement of its kiosk product (used to facilitate bill payment and other
financial transactions in retail locations), without receiving prior written consent
of the Lender.


 


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ARTICLE III


MERGER
OPTION


 


SECTION 3.01.  Grant of Merger Option.  Subject to the terms and conditions of this
Agreement, the Borrower and the Subsidiaries each hereby grant to the Lender,
the right, privilege and option (the “Merger Option”), exercisable in the sole
discretion of Lender, to cause the Borrower and the Subsidiaries to merge with
and into Lender (the “Merger”) so that upon such Merger the separate corporate
existence of Borrower will cease
and the Lender will continue after
the Merger as the surviving entity (the “Surviving Entity”) and Subsidiaries
will exist, immediately after the Merger, as 
wholly owned subsidiaries of Lender. 
The Lender shall be under no obligation whatsoever to exercise the
Merger Option at any time prior to delivery of the Confirmation Notice (defined
below).


 


SECTION 3.02  Exercise of Merger Option.  The Lender may exercise
the Merger Option at any time on or after the date hereof, but no later than
270 calendar days following disbursement of proceeds under the final
Installment of the Loan (the “Merger Option Expiration Date”), by (1) delivering
to the Borrower written notice of its intent to exercise the Merger Option (the
“Intent to Exercise Notice”) and then subsequently (2) delivering a
written confirmation notice of such intent to exercise (the “Confirmation
Notice”) to the Borrower.  For purposes
of clarity, so long as Lender delivers the Intent to Exercise Notice on or
prior to the Merger Option Expiration Date, neither the delivery of the
Confirmation Notice nor the Merger Effective Date need occur prior to the
Merger Option Expiration Date.  The
Lender, the Borrower and Paycenters each agree to take, and to cause the other
Subsidiaries to take, commercially reasonable steps to cause the Merger
Effective Date to occur no later than 120 calendar days after the Confirmation
Notice.


 


SECTION 3.03.  Deliverables upon Initial Exercise.  Within sixty (60) calendar
days after receipt of the Intent to Exercise Notice, the Borrower shall deliver
to the Lender an executed agreement and plan of merger, in form and content
reasonably acceptable to Lender containing the agreed terms set forth on Exhibit B,
together with other customary terms and conditions reasonably acceptable to the
Lender (the “Agreement and Plan of Merger”). 



 


SECTION 3.04.  Due Diligence.  From and after the date
that the Intent to Exercise Notice is delivered to the Borrower until the
earliest of (1) the Merger Effective Date, or (2) the date, if any,
that the Lender rescinds the Confirmation Notice pursuant to Section 3.05,
the Lender and its advisors shall be afforded by the Borrower continual, free
and full access to the facilities, properties, books, records and all other
information of the Borrower during normal business hours.


 


SECTION 3.05.  Confirmation of Exercise.  If, after completing its
due diligence review, the Lender desires to proceed with the Merger, which
decision to proceed or not to proceed with the Merger is determined in the sole
discretion of the Lender and need not be based on any cause, the Lender shall
deliver to the Borrower a Confirmation Notice or notice that it shall not
deliver a Confirmation Notice. 
Notwithstanding any other provision in this Agreement to the contrary,
if after any delivery by the Lender of a Confirmation Notice, the Lender is
notified, or reasonably believes, that one or more of the conditions precedent
to closing set forth in the Agreement and Plan of Merger will not be satisfied
by Borrower prior to the


 


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closing of the Merger, then the Lender may, in
addition to all other rights available to the Lender under this Agreement, at
law and/or in equity, rescind its Confirmation Notice, in which case (1) this
Agreement and the Notes shall remain in full force and effect; (2) the
Borrower will reimburse all of the reasonable costs and expenses incurred by
the Lender from and after the Confirmation Notice Date in preparing for the
Merger, including without limitation reasonable attorneys’ fees, and (3) none
of the parties hereto shall be obligated to proceed with the Merger until such
time, if ever, that the Merger Option is re-exercised in accordance with the
provisions of this Agreement.


 


SECTION 3.06.  Effect of Failure to Exercise Merger
Option.  If the Lender elects, in its sole
discretion not to deliver to Borrower: (1) the Intent to Exercise Notice
prior to the Merger Option Expiration Date, or (2) the Confirmation
Notice, no party shall be obligated to proceed with the Merger and the Merger
will not be consummated.


 


SECTION 3.07.  Preparation of Shareholder Information; SEC
Documents; Shareholders’ Meeting.


 


(1)                                  As promptly as practicable
following the receipt of the Intent to Exercise, Borrower shall prepare and
cause a notice of shareholder meeting to be mailed to its shareholders,
including with such notice any document as may be required by law or reasonably
requested by Lender (the “Shareholder Information”).  Borrower shall, within 60 days following the
delivery of the Intent to Exercise Notice, establish a record date for, duly
call, give notice of, convene and hold a meeting of its shareholders solely for
the purpose of obtaining the approval of its shareholders for the Merger, the Agreement
and Plan of Merger and such other proposals as may be required for the
consummation of the Merger in accordance with this Agreement.  Borrower shall, through its Board of
Directors, recommend to its shareholders approval of the Agreement and Plan of
Merger and to the Merger and shall include such recommendation in the
Shareholder Information.


 


(2)                                  Lender and Borrower shall furnish
each other all information as may be reasonably requested by the other in the
preparation and distribution of the Shareholder Information or any filing to be
made by STEN with the Securities and Exchange Commission (the “Commission”),
including any proxy statement or other report or disclosure to be filed by STEN
under the Securities Exchange Act of 1934 (collectively, the “SEC Documents”).  Borrower acknowledges and agrees that the
existence of and content of this Agreement and the transactions contemplated
hereby are required to be disclosed by STEN in the SEC Documents.


 


(3)                                  Borrower shall not distribute the
Shareholder Information and STEN shall not file or disseminate any SEC Document
relating to the Merger, without providing the other party a reasonable
opportunity to review and comment thereon.


 


(4)                                  If at any time prior to the
Merger Effective Date, either Borrower or STEN discovers that any information
relating to Borrower or STEN, or any of their respective affiliates, directors
or officers, should be amended, corrected or supplemented in the Shareholder
Information or any SEC Document, so that either such document would not include
any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, the party which discovers such information
shall promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly publicly


 


7





















 


disclosed, disseminated to
the shareholders of Borrower and/or filed with the Commission, as the case may
be.


 


SECTION 3.08.  Public Announcements. 
STEN and Borrower shall consult with each other before issuing, and give
each other the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as such party
may reasonably conclude may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system, including without limitation
any SEC Document.


 


ARTICLE IV


CONDITIONS
PRECEDENT


 


SECTION 4.01.  Conditions Precedent to Initial Installment. 
The obligations of the Lender to disburse Loan proceeds under the
initial Installment are subject to the condition precedent that the Lender
shall have received on or before the day of such initial Installment each of
the following, in form and substance satisfactory to the Lender and its
counsel:


 


(1)                                 Note. 
The Initial Note duly executed by the Borrower;


 


(2)                                 Security
Agreement.  A Security Agreement, duly executed by
Paycenters, substantially in the form attached hereto as Exhibit C
(the Security Agreement”);


 


(3)                                 Voting
Agreements.  A voting agreement in the form attached hereto
as Exhibit D, executed by each of Ken Antos, Mark Hill, and Arthur
Petrie (each a “Voting Agreement”);


 


(4)                                 Pledge
Agreement.  A pledge agreement in the form attached hereto
as Exhibit E, executed by the Borrower (the “Pledge Agreement”);


 


(5)                                 Subordination
Agreement. A
subordination in the form attached hereto as Exhibit F, executed by
Arthur Petrie (the “Subordination Agreement”);


 


(6)                                 Guaranty.  A guaranty in the form attached hereto as Exhibit G,
executed by Paycenters (the “Guaranty”);


 


(7)                                 Letters of
Understanding.  Letters of Understanding in the form attached hereto as Exhibit H,
executed by Ken Antos and Mark Hill, respectively;


 


(8)                                 Evidence of all
corporate action.  Copies of all corporate action taken by the
Borrower and Paycenters, including resolutions of its Board of Directors or
Board of Governors, authorizing the execution, delivery, and performance of the
Loan Documents to which it is a party and each other document to be delivered
pursuant to this Agreement that are


 


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certified (dated as of the date of this Agreement) by a duly authorized
officer of the Borrower; and


 


(9)                                 Incumbency and
signature certificate.  A certificate (dated as of the
date of this Agreement) of the Secretary of the Borrower and the Secretary of
Paycenters certifying the names and true signatures of the officers of the
Borrower and Paycenters authorized to sign the Loan Documents to which it is a
party and the other documents to be delivered by the Borrower or Paycenters
under this Agreement.


 


SECTION 4.02.  Conditions Precedent to Second
Installment.  The obligations of Lender to
disburse funds under second Installment are subject to the condition precedent
that the Lender shall have received on or before the day of such second
Installment, written evidence, satisfactory to Lender and its counsel, of a
full release of all tax liens of Borrowers and the Subsidiaries and
satisfaction of all unpaid taxes, interest, penalties and other amounts owed
with in connection with such tax liens. 
Also, a statement as to the actual use of the proceeds from the first
Installment in relation to matters set forth on Schedule 2.06.


 


SECTION 4.03.  Conditions Precedent to Third Installment. The obligations of Lender to
disburse funds under the third Installment are subject to the condition
precedent that the Lender shall have received on or before the day of such
third Installment, full and complete copies of the consolidated balance sheets
of Borrower and the Subsidiaries as of March 31, 2003, March 31,
2004, and March 31, 2005 and the related statements of income and retained
earnings of the Borrower and Subsidiaries for the fiscal years then ended, and
the accompanying footnotes, together with the opinions thereon of independent
certified public accountants, all of which shall be acceptable to Lender. Also,
a statement as to the actual use of the proceeds from the second Installment in
relation to matters set forth on Schedule 2.06.


 


SECTION 4.04.  Conditions Precedent to all Installments. 
The obligations of the Lender to disburse funds under each Installment
under the Loan shall be subject to the following additional conditions
precedent:


 


(1)                                  The following statements shall be
true and the Lender shall have received a certificate signed by a duly
authorized officer of the Borrower dated the date of such Installment, stating
that:


 


(a)                                  The representations and
warranties of Borrower contained in this Agreement, and the Security Agreement,
are correct on and as of the date of such Installment as though made on and as
of such date; and


 


(b)                                 No Event of Default has occurred
and is continuing, or would result from such Installment;


 


(2)                                  The Lender shall have received
such other approvals, opinions, or documents as the Lender may reasonably
request.


 


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(3)                                  The Lender shall be satisfied
that all requirements for disbursement of Loan proceeds under such Installment
shall have been met.


 


ARTICLE V


JOINT
REPRESENTATIONS AND WARRANTIES OF BORROWER AND PAYCENTERS


 


The Borrower and Paycenters jointly represent
and warrant to the Lender that the following representations and warranties
are: (a) true and correct as of the date of this Agreement, (b) will
be true and correct as of the date of each Installment, and (c) will be
true and correct on and as of the date the Confirmation Notice is delivered to
the Borrower:


 


SECTION 5.01.  Incorporation, Good Standing, and Due
Qualification.  Except as otherwise set forth
in this Section 5.01, the Borrower and the Subsidiaries are duly
organized, validly existing and in good standing under the laws of the state of
their organization or incorporation, and each has all requisite power and
authority to own or lease its properties and to carry on their businesses as
they are now being conducted.  The
Borrower and Subsidiaries are legally qualified to transact business as a
foreign limited liability company or corporation, as is relevant, in each of
the jurisdictions in which their businesses or property is such as to require
that it be thus qualified, and it is in good standing in each of the
jurisdictions in which it is so qualified. 
Notwithstanding the foregoing, neither Tower nor SSI are in good
standing in the State of Nevada.


 


SECTION 5.02.  Corporate Power and Authority. 
The execution, delivery and performance of this Agreement and all other
agreements contemplated hereby and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
of the Borrower and Paycenters.  This
Agreement has been duly executed and delivered by the Borrower and is a valid
and binding obligation of the Borrower and Paycenters enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and other similar
laws affecting the enforceability of creditor’s rights generally, general
equitable principles and the discretion of courts in granting equitable remedies.  Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will: (a) contravene
any provision of the Articles of Organization, Operating Agreement, Member
Control Agreement, Articles of Incorporation, Bylaws or other governing
document of the Borrower or the Subsidiaries; (b) violate or conflict with
any federal, state or local law, statute, ordinance, rule, regulation or any
decree, writ, injunction, judgment or order of any court or administrative or
other governmental body or of any arbitration award which is either applicable
to, binding upon or enforceable against the Borrower or the Subsidiaries; or (c) conflict
with, result in any breach of or default (or an event which would, with the passage
of time or the giving of notice or both, constitute a default) under any
material mortgage, contract, agreement, lease, license, indenture, will, trust
or other instrument which is binding upon or enforceable against the Borrower
or Subsidiaries.  The Board of Directors
of the Borrower and the Board of Governors or Board of Directors of the
Subsidiaries have, by action at a duly called held meeting: (i) determined
that this Agreement and the transactions contemplated hereby are, and will be,
advisable, fair and in the best interests of the Borrower or


 


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Paycenters, as is relevant, and its shareholders or members, and (ii) approved
this Agreement, and all related agreements, exhibits, schedules and the
transactions contemplated hereby.


 


SECTION 5.03.  Taxes.  The
Borrower and the Subsidiaries have filed all tax returns (federal, state, and
local) required to be filed and have paid all taxes, assessments, and
governmental charges and levies thereon to be due, including interest and
penalties (except for the taxes described in (i) that certain Notice of
Federal Tax Lien dated as of August 2, 2004, relating to Borrower’s tax
periods ending March 31, 2003, June 30, 2003, December 31, 2003
and March 31, 2004, and (ii) that certain Notice of Federal Tax Lien
dated as of October 8, 2004 relating to Borrower’s tax period ending June 30,
2004; all of which will be satisfied following the disbursement of the initial
Installment in accordance with Section 2.06(i)).


 


SECTION 5.04.  Financial Statements. 
The Borrower has provided to Lender full and complete copies of the
consolidated balance sheets of Borrower and the Subsidiaries as of March 31,
2003, March 31, 2004, and March 31, 2005 and the related statements
of income and retained earnings of the Borrower and Subsidiaries for the fiscal
years then ended, and the accompanying footnotes.  The Borrower has also provided to Lender full
and complete copies of the interim balance sheet of the Borrower and
Subsidiaries as of August 31, 2005, and the related statement of income
and retained earnings for the five (5) month period then ended. All
financial statements provided to Lender are complete and correct and fairly
present the financial condition of the Borrower and Subsidiaries as at such
dates and the results of the operations of the Borrower for the periods covered
by such statements, all in accordance with GAAP consistently applied (subject
to year-end adjustments in the case of the interim financial statements), and
since August 31, 2005, there has been no material adverse change in the
condition (financial or otherwise), business, or operations of the
Borrower.  There are no liabilities of
the Borrower, fixed or contingent, which are material but are not reflected in
the financial statements provided to Lender or in the notes thereto, other than
liabilities arising in the ordinary course of business since August 31,
2005.  No information, exhibit, or report
furnished by the Borrower to the Lender in connection with the negotiation of
this Agreement contained any material misstatement of fact or omitted to state
a material fact or any fact necessary to make the statement contained therein
not materially misleading.


 


SECTION 5.05.  Good Title to and Condition of Assets.  Borrower and the Subsidiaries have good and
marketable title to all of their assets, free and clear of any Liens, except
for Liens granted to Lender under the Security Agreement and Liens listed on Schedule 5.05
to this Agreement, and the Borrower’s and Subsidiaries’ fixed assets currently
in use or necessary for normal sales levels, are in good operating condition,
normal wear and tear excepted.


 


SECTION 5.06.  Litigation. There are no actions, suits,
claims, governmental investigations or arbitration proceedings pending or, to
the knowledge of the Borrower or Paycenters, threatened against the Borrower or
the Subsidiaries, or any of its assets, or which question the validity or
enforceability of this Agreement or any action contemplated herein.  There are no outstanding unsatisfied orders,
decrees or stipulations issued by any federal, state, local or foreign judicial
or administrative authority in any proceeding to which the Borrower or the
Subsidiaries is or was a party or which apply to any of the Borrower’s or
Subsidiaries’ assets.


 


11





















 


SECTION 5.07.  Compliance with Laws.  
The Borrower and the Subsidiaries are in compliance with all laws,
rules, regulations and orders applicable to them and neither have been cited,
fined or otherwise notified of any asserted past or present failure to comply
with any laws and no proceeding with respect to any such violation is
pending.  The Borrower and Subsidiaries
have not made any payment of funds in connection with the business of the
Borrower or Subsidiaries prohibited by law, and no funds have been set aside to
be used in connection with the business of the Borrower and Paycenters for any
payment prohibited by law.


 


SECTION 5.08.  Operation of Business.  The Borrower and Subsidiaries  possess all licenses, permits, franchises,
patents, copyrights, trademarks, and trade names, or right thereto, to conduct
their respective business substantially as now conducted and as presently
proposed to be conducted, and the Borrower and Subsidiaries are not in
violation of any valid rights of others with respect to any of the foregoing.


 


SECTION 5.09.  Liabilities. The Borrower the Subsidiaries
have no liabilities or obligations, either accrued, absolute, contingent or
otherwise, except:  (a) liabilities
set forth on the most recent balance sheet provided to Lender listed in Section 5.04;
and (b) normal liabilities incurred in the ordinary course of business
since the date of the last balance sheet provided by Borrower and Subsidiaries
to Lender described in Section 5.04.


 


SECTION 5.10.  Ownership of Paycenters.  Borrower owns all of the membership interests
in each of the Subsidiaries and there are no issued and outstanding or promised
rights possessed by any other person or entity to acquire any membership
interest, of whatever nature or quality, in any of the Subsidiaries.


 


ARTICLE VI


COVENANTS


 


So long as any amount remains unpaid under
the Loan, the Borrower and Subsidiaries will:


 


SECTION 6.01.  Maintenance of Existence. 
Preserve and maintain their existence and good standing in the
jurisdiction of their organization, and qualify and remain qualified in each
jurisdiction in which such qualification is required;


 


SECTION 6.02.  Maintenance of Records. 
Keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, reflecting all
financial transactions of the Borrower;


 


SECTION 6.03.  Maintenance of Properties. 
Maintain, keep, and preserve, all of its properties (tangible and
intangible) necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted;


 


SECTION 6.04.  Conduct of Business. 
Continue to engage in an efficient and economical manner in a business
of the same general type as conducted by it on the date of this Agreement and
to take no actions outside the ordinary course of its business, except the
Merger, without prior written consent of Lender;


 


12





















 


SECTION 6.05.  Maintenance of Insurance. 
Maintain insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are
usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof;


 


SECTION 6.06.  Compliance With Laws. 
Comply in all respects with all applicable laws, rules, regulations, and
orders, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments, and governmental charges imposed upon
it or upon its property;


 


SECTION 6.07.  Right of Inspection. 
At any reasonable time and from time to time, permit the Lender or any
agent or representative thereof to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, the
Borrower and the Subsidiaries to discuss the affairs, finances, and accounts of
the Borrower and the Subsidiaries with any of their respective officers and
directors and the Borrower’s and Subsidiaries’ independent accountants;


 


SECTION 6.08.  Reporting Requirements. 
Furnish to the Lender:


 


(1)                                 Quarterly
financial statements.  As soon as availables and in
any event within forty-five (45) days after the end of each of the first three
quarters of each fiscal year of the Borrower and Subsidiaries, balance sheets
of the Borrower and Subsidiaries as of the end of such quarter, statements of
income and retained earnings of the Borrower and Subsidiaries  for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, and a statement
of change in financial position of the Borrower and Subsidiaries for the
portion of the fiscal year ended with the last day of such quarter, all in
reasonable detail and stating in comparative form the respective figures for
the corresponding date and period in the previous fiscal year and all prepared
in accordance with GAAP consistently applied and certified by the chief
financial officer of the Borrower and each Subsidiary (subject to year-end
adjustments);


 


(2)                                 Annual financial
statements.  As soon as available and in any event within
ninety (90) days after the end of each fiscal year of the Borrower and each
Subsidiary, a balance sheet of the Borrower and Subsidiaries as of the end of
such fiscal year, a statement of income and retained earnings of the Borrower
and Subsidiaries for such fiscal year, and a statement of change in financial
position of the Borrower and Subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the respective figures for
the corresponding date and period in the prior fiscal year and all prepared in
accordance with GAAP consistently applied and as to the consolidated statements
accompanied by an opinion thereon to the Lender by independent accountants
selected by the Borrower and the Subsidiaries and acceptable to the Lender;


 


13





















 


(3)                                 Management
letters.  Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or the Subsidiaries by independent certified
public accountants in connection with examination of the financial statements
of the Borrower and the Subsidiaries made by such accountants;


 


(4)                                 Notice of
litigation.  Promptly after the commencement thereof,
notice of all actions, suits, proceedings, investigations or inquiries before
any court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Borrower or the
Subsidiaries , which, if determined adversely to the Borrower or the
Subsidiaries, could have a material adverse effect on the financial condition,
properties, or operations of the Borrower or the Subsidiaries;


 


(5)                                 Notice of Events
of Default.  As soon as possible ,and in any event within
five (5) days after the occurrence of each Event of Default, a written
notice setting forth the details of such Event of Default and the action which
is proposed to be taken by the Borrower or any Subsidiary with respect thereto;


 


(6)                                 Reports to other
creditors.  Promptly after the furnishing thereof, copies
of any statement or report furnished to any other party pursuant to the terms
of any indenture, loan, or credit or similar agreement and not otherwise
required to be furnished to the Lender pursuant to any other clause of this Section 6.08;
and


 


(7)                                 General
information.  Such other information respecting the
condition or operations, financial or otherwise, of the Borrower and the
Subsidiaries as the Lender may from time to time reasonably request.


 


SECTION 6.09.  Liens.  Not
create, incur, assume, or suffer to exist, without prior written approval of
Lender, any Lien upon or with respect to any of its properties, now owned or
hereafter acquired, other than the Liens created in favor of the Lender by the
Security Agreement and Pledge Agreement and the liens set forth on Schedule 5.05
to this Agreement, provided, however that the liens set forth on items 2 and 4
of Schedule 5.05 shall be paid with the proceeds of the first Installment.


 


SECTION 6.10.  Dividends.  Not
declare or pay any dividends; or purchase, redeem, retire, or otherwise acquire
for value any of its shares or membership interests now or hereafter outstanding;
or make any distribution of assets to its shareholders or members as such
whether in cash, assets, or obligations of the Borrower or the
Subsidiaries,  as the case may be, or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption, or retirement of, any of its
membership interests; or make any other distribution by reduction of capital or
otherwise in respect of any of their shares or membership interests;


 


SECTION 6.11.  Sale of Assets. 
Not sell, lease, assign, transfer, or otherwise dispose of, any of its
now owned or hereafter acquired assets, except: (1) for inventory disposed
of in the ordinary course of business; or (2) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
and


 


14





















 


SECTION 6.12.
 Audit.  Promptly retain an independent
registered public accounting firm, acceptable to Lender, and provide to Lender
audited financial statements, on or before March 16, 2006, on a
consolidated basis, for the Borrower’s fiscal years ending March 31, 2005,
March 31, 2004, and March 31, 2003 in accordance with GAAP and the
Standards of the Public Company Accounting Oversight Board (United States).  Unless otherwise provided to Lender
hereunder, Borrower shall also provide to Lender, at such time as reasonably
requested by Lender: (1) audited financial statements, on a consolidated
basis, in accordance with GAAP and the Standards of the Public Company
Accounting Oversight Board (United States) for Borrower’s three fiscal years
ending prior to the Merger Effective Date, and (ii) interim financial
statements that have been reviewed by an independent certified public
accounting firm, acceptable to Lender, for the period between the date of the
last audited financial statement provided to Lender and the earlier of the
Merger Effective Date or September 30 in the year of the Merger Effective
Date.


 


SECTION 6.13    Maintenance of Complete Ownership.   Borrower
agrees that it shall retain complete ownership and be the sole member of the
Subsidiaries until the expiration of the Merger Option Expiration Date (or
before completion of the Merger if the Merger Option is elected by the Lender)
and Borrower shall not issue to any person or entity, for any reason, any
rights to acquire shares or a membership interest in the Subsidiaries, grant or
permit to exist a Lien on any shares or membership interest in a Subsidiary
(other than the Lien set forth in item 1 on Schedule 5.05) or promise any
person or entity any such rights to acquire a membership interest in the
Subsidiaries until the expiration of the Merger Option Expiration Date.


 


SECTION 6.14.  Reasonable Best Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, each party agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other party in doing,
all things necessary to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement and the Loan Documents.


 


ARTICLE VII


EVENTS
OF DEFAULT


 


SECTION 7.01.  Events of Default. 
Each of the following events shall be an “Event of Default”:


 


(1)                                  The Borrower should fail to pay
the principal of, or interest on, the Notes as and when due and payable, or an
Event of Default occurs under any of the Loan Documents;


 


(2)                                  Any representation or warranty
made or deemed made by the Borrower in this Agreement, or in any certificate,
document, opinion, or financial or other statement furnished at any time under
or in any Loan Document shall prove to have been false or misleading on or as
of the date made;


 


15





















 


(3)                                  The Borrower or Subsidiaries
should fail to perform or observe any term, covenant, or obligation in any Loan
Document to which it is a party;


 


(4)                                  The Borrower or any Subsidiaries
shall (a) fail to pay any indebtedness for borrowed money (other than the
Notes) of the Borrower or Subsidiary, as the case may be, or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise), or (b) fail to perform or observe any
term, covenant, or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness, when required to be
performed or observed, if the effect of such failure to perform or observe is
to accelerate, or to permit the acceleration after the giving of notice or
passage of time, or both, of the maturity of such indebtedness, whether or not
such failure to perform or observe shall be waived by the holder of such
indebtedness; or any such indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;


 


(5)                                  The Borrower or any Subsidiary (a) shall
generally not, or shall be unable to, or shall admit in writing its inability
to pay its debts as such debts become due; or (b) shall make an assignment
for the benefits of creditors, petition or apply to any tribunal for the
appointment of a custodian, receiver, or trustee for it or a substantial part of
its assets; or (c) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or (d) shall
have any such petition or application filed or any such proceeding commenced
against it in which an order for relief is entered or adjudication or
appointment is made and which remains undismissed for a period of thirty (30)
days or more; or (e) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application, or proceeding,
or order for relief, or the appointment of a custodian, receiver, or trustee
for all or any substantial part of its properties; or (f) shall suffer any
such custodianship, receivership, or trusteeship;


 


(6)                                  The Security Agreement or Pledge
Agreement shall at any time after its execution and delivery and for any reason
cease: (a) to create a valid and perfected first priority security
interest in and to the property purported to be subject to such Security
Agreement or Pledge Agreement, or (b) to be in full force and effect or
shall be declared null and void, or the validity or enforceability thereof
shall be contested by the Borrower or Paycenters;


 


(7)                                  The Borrower or Paycenters shall
deny Borrower or Paycenters has any further liability or obligation under the
Security Agreement or Pledge Agreement or the Borrower or Paycenters shall fail
to perform any of its obligations under the Security Agreement or Pledge
Agreement;


 


(8)                                  The Borrower fails to obtain,
within sixty (60) days following delivery by the Lender of the Confirmation
Notice, all required approvals from Borrower’s shareholders that may be
necessary to consummate the Merger; or


 


16





















 


(9)                                  The Borrower fails to deliver to
Lender the executed Replacement Note, in form and substance acceptable to
Lender, within five (5) business days after an Interest Deferral
Termination Date (other than the Merger Effective Date).


 


SECTION 7.02.  Remedies. 
In
the event of the occurrence of an Event of Default hereunder, Lender may,
without presentment, demand, protest, or further notice of any kind (all of
which the Maker hereby waives), declare all principal and interest under the
Notes and any other amounts payable under the Loan, Notes, and this Agreement,
to be immediately due and payable. 
Lender may also exercise any and all other rights and remedies available
to it at law and in equity, in addition to the rights granted to it under the
Security Agreement and the Pledge Agreement. 
Borrower and the Subsidiaries jointly and severally agree to pay to
Lender, on demand, all reasonable costs and expenses incurred by Lender in connection
with enforcing any rights and remedies available to Lender, including all
reasonable attorneys’ fees incurred by Lender and advances made by Lender to
protect or preserve the value of the collateral secured under the Security
Agreement and Pledge Agreement.


 


ARTICLE VIII


MISCELLANEOUS


 


SECTION 8.01.  Amendments, Etc. 
No amendment, modification, termination, or waiver of any provision of
any Loan Document to which the Borrower is a party shall in any event be
effective unless the same shall be in writing and signed by the Lender, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.


 


SECTION 8.02.  Notices, Etc. 
All notices and other communications provided for under this Agreement
and under the other Loan Documents to which the Borrower is a party shall be in
writing (including telegraphic communication) and mailed, sent by facsimile or
delivered, if to the Borrower, at its address at 8370 W. Cheyenne Ave, #109-300
Las Vegas, NV 89129, Attention: Ken Antos, and if to the Lender, at its address
at 10275 Minnetonka Boulevard, Suite 310, Wayzata, MN 55305
Attention:  Kenneth W. Brimmer, Chief
Executive Officer, or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 8.02.  All such notices and communications shall,
when mailed, be effective five (5) days after deposited in the mails,
shall be effective immediately upon delivery or confirmation of successful
facsimile transfer.


 


SECTION 8.03.  No Waiver; Remedies. 
No failure on the part of the Lender to exercise, and no delay in
exercising, any right, power, or remedy under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right under any such documents preclude any other or further exercise thereof
or the exercise of any other right.  The
remedies provided in the Loan Documents are cumulative and not exclusive of any
remedies provided by law.


 


17





















 


SECTION 8.04.  Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of the Lender.  In addition to Lender’s other rights under
this Agreement, Lender may assign all or a portion of Lender’s rights and
obligations under this Agreement to STEN without any notice to, or consent
from, Borrower.


 


SECTION 8.05.  Costs, Expenses, and Taxes. 
The Borrower agrees to pay on demand all costs and expenses in
connection with the preparation, execution, delivery, filing, recording, and
administration of the Loan Documents, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Lender, and local
counsel who may be retained by said counsel, with respect thereto and with
respect to advising the Lender as its rights and responsibilities under the
Loan Documents, and all costs and expenses, if any in connection with the
enforcement of the Loan Documents.  In
addition, the Borrower shall pay any and all taxes and fees payable in
connection with the execution, delivery, filing, and recording of any Loan
Document or document contemplated thereunder, and agrees to save the Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.


 


SECTION 8.06.  Governing
Law; Jurisdiction; Service of Process; Venue. The Loan Documents
shall be governed by and construed in accordance with the internal laws of the
State of Minnesota without giving effect to its choice of law provisions.  Any judicial proceeding against or on behalf
of Borrower with respect to any Loan Document or any related agreement shall be
brought in solely any federal or state court
of competent jurisdiction located in Hennepin County in the State of
Minnesota.  By execution and delivery of
each Loan Document to which it is a party, Borrower and Subsidiaries (i) accept
the exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any judgment rendered thereby, (ii) waive personal service of
process, (iii) agree that service of process upon it may be made by
certified or registered mail, return receipt requested, and (iv) waive any
objection to jurisdiction and venue of any action instituted hereunder and
agrees not to assert any defense based on lack of jurisdiction, venue,
convenience or forum non conveniens. 
Nothing shall affect the right of the Lender to serve process in any
manner permitted by law or shall limit the right of the Lender to bring
proceedings against Borrower or any Subsidiary in the courts of any other
jurisdiction having jurisdiction.  Any
judicial proceedings against the Lender involving, directly or
indirectly, any Loan Document or any related agreement shall be brought
solely in a federal or state court located in Hennepin County in the State of
Minnesota.  All parties acknowledge that
they participated in the negotiation and drafting of this Agreement with the
assistance of counsel and that, accordingly, no party shall move or petition a
court construing this Agreement to construe it more stringently against one
party than against any other.


 


SECTION 8.07.  Severability of Provisions. 
Any provision of the Loan Documents which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of the Loan Documents or affecting the validity or
enforceability of such provision in any other jurisdiction.


 


18





















 


SECTION 8.08.  Headings.  Article and
Section headings in the Loan Documents are included herein for the
convenience of reference only and shall not constitute a part of the Loan
Documents for any other purpose.


 


SECTION 8.09  Waiver of Jury Trial.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER
THE LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES WITH RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. 
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.


 


[signature
page to follow]


 


19





















 


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.


 


 


	
   

  	
  SITE EQUITIES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth Antos

  
	
   

  	
  Its:   Chief Executive
  Officer/President

  
	
   

  	
   

  
	
   

  	
  “Borrower”

  
	
   

  	
   

  
	
   

  	
  AND

  
	
   

  	
   

  
	
   

  	
  PAYCENTERS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth Antos

  
	
   

  	
  Its:  Manager

  
	
   

  	
   

  
	
   

  	
  “Paycenters”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STEN AQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth W. Brimmer

  
	
   

  	
  Its: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Lender”

  



 


 


[Exhibits to Loan and Merger Option Agreement
omitted from this Exhibit 10.1 to the extent filed separately as
exhibits.]


 





















 


EXHIBIT B


TERM SHEET
FOR


AGREEMENT
AND PLAN OF MERGER


 


1.               The Merger shall
be accomplished in accordance with the laws of the state of Minnesota and other
applicable jurisdictions.


 


2.               All necessary consents of the parties shall
be received.


 


3.               The Lender, the Borrower and Paycenters each
agree to take, and to cause the other Subsidiaries to take, commercially
reasonable steps to cause the Merger Effective Date to occur no later than 120
calendar days after the Confirmation Notice.


 


4.               As Merger consideration and effective upon
the Merger Effective Date, the Note shall be cancelled and the Borrower’s
shareholders immediately prior to the Merger will receive an aggregate number
of shares of STEN common stock , such that: (i) STEN’s shareholders
immediately prior to the Merger will own 50.25% of the common stock outstanding
of STEN after the Merger, (ii) Borrower’s Shareholders will own 49.75% of
the common stock outstanding of STEN after the Merger.  Such percentages will be determined on a
fully diluted basis, and are subject to adjustment as set forth in Section 5,
below.


 


5.               Immediately upon the Merger Effective Date,
STEN shall pay to the Lender the sum of $3,000,000; provided, however, that
STEN may, in STEN’s sole discretion, pay to the Lender an amount greater than
$3,000,000 (the “Base Contribution Amount”). 
Any such additional payment shall be made in increments of $1,000,000
and shall not exceed a maximum of $15,000,000. 
For each $1,000,000 in excess of the Base Contribution Amount that is
paid by STEN to the merged entity, the percentage ownership of STEN owned by
Borrower Shareholders immediately after the Merger will decrease by 125 basis
points. (For example, if STEN contributes an additional $15,000,000 to the
merged entity, the ownership of Borrower Shareholders in STEN immediately
following the Merger will be reduced from 49.75% to 31%). Any amount paid to
the Lender shall not be paid to Borrower’s Shareholders as merger
consideration, but shall be retained by the Lender as working capital.


 


6.               Following the effective date of the Merger,
the Board of Directors of the Lender will consist of seven (7) members,
three (3) designated by Lender, two (2) designated by Borrower and
two (2) independent directors mutually agreed to by Lender and
Borrower.  Each director will initially
serve for a three (3) – year term. 
Three (3) of the directors must qualify as “independent” for
purposes of the Securities Act of 1934, as amended, and under the Nasdaq
Marketplace Rules.


 


7.               Ken Antos and Mark Hill shall agree to
employment agreements with Lender, effective as of the Merger Effective Date,
acceptable to Lender.


 


8.               All accrued but unpaid salary on records
of  Borrower and the Subsidiaries, and
all debt owed to shareholders of Borrower or its subsidiaries, (including all
debt owed by Signal


 


2





















 


Sites, Inc. to Arthur Petrie under that
certain Promissory Note dated as of April 26, 2002 having a principal
amount of $1,080,000.00) shall be converted into Borrower’s common stock or
otherwise discharged and paid in full immediately before the Merger.


 


3