COINSTAR, INC.
SERIES E PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
TABLE OF CONTENTS
1. AGREEMENT TO SELL AND PURCHASE. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Authorization of Shares. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Sale and Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. CLOSING, DELIVERY AND PAYMENT.. . . . . . . . . . . . . . . . . . . . . . 2
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.. . . . . . . . . . . . . . 2
3.1 Organization, Good Standing and Qualification. . . . . . . . . . . . 2
3.2 Capitalization; Voting Rights. . . . . . . . . . . . . . . . . . . . 2
3.3 Authorization of the Financing Documents; Binding Obligations. . . . 3
3.4 No Consent or Approval Required. . . . . . . . . . . . . . . . . . . 3
3.5 Compliance with Other Instruments. . . . . . . . . . . . . . . . . . 4
3.6 Offering Valid . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . . . 4
4.1 Requisite Power and Authority. . . . . . . . . . . . . . . . . . . . 4
4.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Investment Representations . . . . . . . . . . . . . . . . . . . . . 5
4.4 Purchaser Bears Economic Risk. . . . . . . . . . . . . . . . . . . . 5
4.5 Accredited Investor. . . . . . . . . . . . . . . . . . . . . . . . . 5
4.6 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.7 Company Information. . . . . . . . . . . . . . . . . . . . . . . . . 6
4.8 Restricted Securities. . . . . . . . . . . . . . . . . . . . . . . . 6
4.9 Transfer Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 6
5. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Conditions to Purchaser's Obligations at the Closing . . . . . . . . 6
5.2 Conditions to Obligations of the Company . . . . . . . . . . . . . . 7
6. AFFIRMATIVE COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . 8
6.1 Rights of First Refusal. . . . . . . . . . . . . . . . . . . . . . . 8
7. THE COMPANY'S RIGHT TO REPURCHASE . . . . . . . . . . . . . . . . . . . . 9
7.1 Repurchase Option. . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Exercise of Repurchase Option. . . . . . . . . . . . . . . . . . . .10
8. MISCELLANEOUS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . .12
8.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .12
8.6 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
TABLE OF CONTENTS, CONT.
PAGE
8.7 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . .12
8.8 Delays or Omissions. . . . . . . . . . . . . . . . . . . . . . . . .12
8.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
8.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
8.11 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .13
8.12 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . .13
8.13 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
8.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
8.15 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
2
INDEX OF EXHIBITS
Schedule of Purchasers Exhibit A
Restated Certificate Exhibit B
Form of Warrants Exhibit C
Second Amended and Restated
Investor's Rights Agreement Exhibit D
Second Amended and
Restated Voting Agreement Exhibit E
COINSTAR, INC.
SERIES E PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
THIS SERIES E PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is entered into as of August 27, 1996, by and among Coinstar, Inc.,
a Delaware corporation (the "Company"), and Acorn Ventures ("Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of (i) up
to an aggregate of 100,000 shares of its Series E-1 Preferred Stock (the
"Shares"); (ii) warrants to purchase up to an aggregate of 350,000 shares of
its Series E-2 Preferred Stock (the "$12 Warrants") and (iii) warrants to
purchase up to an aggregate of 550,000 shares of its Series E-3 Preferred
Stock (the $16 Warrants") (unless noted otherwise, the $12 Warrants and $16
Warrants are hereinafter referred to collectively as the "Warrants" and the
Series E-1 Preferred Stock, Series E-2 Preferred Stock and Series E-3
Preferred Stock are hereinafter referred to collectively as the "Series E
Preferred Stock");
WHEREAS, Purchaser desires to purchase the Shares and the Warrants
on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares and the
Warrants to Purchaser on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing, the
Company shall have authorized (i) the sale and issuance to Purchaser of the
Shares and the Warrants, and (ii) the issuance of such additional shares of
Series E Preferred Stock to be issued pursuant to the exercise of the
Warrants (the "Warrant Shares") and (iii) the issuance of such shares of
Common Stock to be issued for conversion of the Shares and the Warrant Shares
(the "Conversion Shares"). The Shares, the Warrant Shares and the Conversion
Shares shall have the rights, preferences, privileges and restrictions set
forth in the Amended and Restated Certificate of Incorporation of the
Company, as amended, in the form attached hereto as Exhibit B (the "Restated
Certificate"). The Warrants shall be in the form and have the rights set
forth in the form of warrant agreement attached hereto as Exhibit C.
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, at the Closing (as hereinafter defined) the Company hereby agrees to
issue and sell to the Purchaser and the Purchaser agrees to purchase from the
Company, the number of Shares and the Warrants set forth
1.
opposite such Purchaser's name on Exhibit A, at the purchase price of six
dollars ($6.00) for each share of Series E-1 Preferred Stock, sixty cents
($0.60) for each share purchasable under the $12 Warrant and $0.388636 for
each share purchasable under the $16 Warrant. The aggregate purchase price
for the Shares and Warrants being acquired by the Purchaser shall also be set
forth on Exhibit A.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING DATE. The purchase and sale of the Shares and
Warrants hereunder shall take place on the date hereof or at such other time
upon which the Company and the Purchaser shall agree (the "Closing").
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to Purchaser certificates representing the
number of Shares and warrant certificates or agreements representing the
Warrants to be purchased at the Closing by Purchaser, against payment of the
purchase price therefor by cashier's check or wire transfer made payable to
the order of the Company, or by cancellation of Company indebtedness. At the
Closing, the Company will deliver a certificate dated as of such Closing
Date, signed by the President of the Company, certifying that the
representations and warranties set forth in Section 3 of the Agreement are
true and correct as of the Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power
and authority to own and operate its properties and assets, to execute and
deliver this Agreement, the Second Amended and Restated Investors' Rights
Agreement in the form attached hereto as Exhibit D, the Second Amended and
Restated Voting Agreement in the form attached hereto as Exhibit E (the
Second Amended and Restated Investors' Rights Agreement and the Second and
Amended Voting Agreement are collectively referred to hereinafter as the
"Financing Documents"), to issue and sell the Shares and the Warrants
hereunder, to issue the Warrant Shares upon exercise of the Warrants, to
issue the Conversion Shares, to carry out the provisions of the Financing
Documents and the Restated Certificate and to carry on its business as
presently conducted and as presently proposed to be conducted. The Company
is duly qualified and is authorized to do business and is in good standing as
a foreign corporation in all jurisdictions in which the nature of its
activities and of its properties (both owned and leased) makes such
qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the Company or its
business. The Company has never, nor does it presently, directly or
indirectly own more than ten percent of the equity securities of any other
corporation, partnership or similar entity, joint venture or similar
arrangement.
2.
3.2 CAPITALIZATION; VOTING RIGHTS. The capital structure of the
Company, immediately upon consummation of the Closing, will be as set forth
on Schedule 3.2. All issued and outstanding shares of the Company's Common
Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock have been duly authorized and validly
issued, are fully paid and nonassessable, and were issued in compliance with
all applicable state and federal laws concerning the issuance of securities.
The rights, preferences, privileges and restrictions of the Shares and the
Warrant Shares are as stated in the Restated Certificate. The Conversion
Shares have been duly and validly reserved for issuance. Except as set forth
on Schedule 3.2, and except as may be granted pursuant to the Financing
Documents, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities or any stock
appreciation rights or other equity linked arrangements. When issued in
compliance with the provisions of this Agreement and the Restated
Certificate, the Shares, the Warrant Shares and the Conversion Shares will be
validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances; provided, however, that the Shares, the Warrants, the
Warrant Shares and the Conversion Shares may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.
3.3 AUTHORIZATION OF THE FINANCING DOCUMENTS; BINDING OBLIGATIONS.
All corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization of the Financing Documents, the
performance of all obligations of the Company thereunder and the
authorization, sale, issuance and delivery of the Shares, the Warrants and
the Warrant Shares pursuant hereto and the Conversion Shares pursuant to the
Restated Certificate has been taken or will be taken prior to the Closing.
The Financing Documents, when executed and delivered, will be valid and
binding obligations of the Company enforceable in accordance with their
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; (ii) general principles of equity that
restrict the availability of equitable remedies; and (iii) to the extent that
the enforceability of the indemnification provisions in Section 4.6 of the
Second Amended and Restated Investors' Rights Agreement may be limited by
applicable laws. The execution, delivery and performance of the Financing
Documents, the consummation of the transactions contemplated thereby and
compliance with the provisions thereof by the Company, and the issuance, sale
and delivery of the Shares, the Warrant Shares and the Conversion Shares will
not (a) violate any provision of law, statute, rule or regulation, or any
ruling, writ, injunction or other judgment or decree of any court,
administrative agency or other governmental body applicable to the Company or
any of its properties or assets or (b) conflict with or result in any breach
of any of the terms, conditions or provisions of, or constitute (with due
notice or lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation
of any lien or encumbrance upon any of the properties or assets of the
Company under, the Restated Certificate or Bylaws, or any contract by which
the Company or any of its assets or properties is bound. The sale of the
Shares, the Warrants, the Warrant Shares and the subsequent conversion of
Shares and Warrant Shares into Conversion Shares are not and will not be
subject to any preemptive rights or rights
3.
of first refusal other than the preemptive right set forth in the Amended and
Restated Investors' Rights Agreement dated December 15, 1995 which has been
properly waived or complied with.
3.4 NO CONSENT OR APPROVAL REQUIRED. Except for the filing of the
Restated Certificate as specified herein, no consent of any person and no
consent, approval or authorization of, or declaration to or filing with, any
governmental or regulatory authority is required for the valid authorization,
execution and delivery by the Company of any Financing Document or for the
consummation of the transactions contemplated thereby or for the valid
authorization, issuance and delivery of the Shares or for the valid
authorization, reservation, issuance and delivery of the Warrant Shares or
the Conversion Shares, other than those consents, approvals, authorizations,
declarations or filings which have been obtained or made, as the case may be.
3.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Restated Certificate (and was not in
default under its certificate of incorporation immediately prior to the
filing of the Restated Certificate) or Bylaws, or of any provision of any
mortgage, indenture, lease, purchase or similar order or any other agreement,
instrument or contract to which it is party or by which the Company or any of
its properties is bound or of any judgment, decree, order or writ applicable
to the Company which would materially and adversely affect (individually, or
in the aggregate) the business, assets, liabilities, financial condition,
operations or prospects of the Company. The execution, delivery, and
performance of and compliance with the Financing Documents and the issuance
and sale of the Shares, Warrants, Warrant Shares and of the Conversion Shares
pursuant to the Restated Certificate, will not result in any such material
violation, or be in conflict with or constitute a default under any such
term, or result in the creation of any mortgage, pledge, lien, encumbrance or
charge upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit license,
authorization or approval applicable to the Company, its business or
operations or any of its assets or properties. There is no condition, event
or act which constitutes, or to the best knowledge of the Company which after
notice, lapse of time or both would constitute a default under any of the
foregoing.
3.6 OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchaser contained in Section 4.3 hereof, the offer,
sale and issuance of the Shares and the Warrants, the sale and issuance of
the Warrant Shares upon exercise of the Warrants and the issuance of the
Conversion Shares will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all
applicable state securities laws. Neither the Company nor any agent on its
behalf has solicited or will solicit any offers to sell or has offered to
sell or will offer to sell all or any part of the Shares, the Warrants or the
Warrant Shares to any person or persons so as to bring the sale of such
Shares, Warrant or Warrant Shares by the Company within the registration
provisions of the Securities Act.
4.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby
represents and warrants to the Company as follows (which representations and
warranties do not lessen or obviate the representations and warranties of the
Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Financing Documents and to carry out their
provisions. All action on Purchaser's part required for the lawful execution
and delivery of this Agreement and the Financing Documents have been or will
be effectively taken prior to the Closing. Upon their execution and
delivery, this Agreement and the Financing Documents will be valid and
binding obligations of Purchaser, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, (ii) general principles of equity that restrict the
availability of equitable remedies, and (iii) to the extent that the
enforceability of the indemnification provisions of the Investors' Rights
Agreement may be limited by applicable laws.
4.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental or banking authority on the part of Purchaser required in
connection with the consummation of the transactions contemplated in the
Agreement or the Financing Documents have been or shall have been obtained
prior to and be effective as of the Closing.
4.3 INVESTMENT REPRESENTATIONS. Purchaser understands that
neither the Shares, Warrants, Warrant Shares nor the Conversion Shares have
been registered under the Securities Act. Purchaser also understands that
the Shares and the Warrants are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in this Agreement. Purchaser
hereby represents and warrants as follows:
4.4 PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk
of this investment indefinitely unless the Shares and the Warrant Shares (or
the Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. Purchaser understands that the
Company has no present intention of registering the Shares, the Warrants, the
Warrant Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any
portion of the Shares, Warrant Shares or the Conversion Shares under the
circumstances, in the amounts or at the times Purchaser might propose.
4.5 ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities
Act.
5.
4.6 INVESTMENT. Purchaser is acquiring the Shares (or any of the
Common Stock into which the Shares or the Warrant Shares are convertible) for
investment for its own account and not with a view to, or for resale in
connection with, any distribution thereof, and Purchaser has no present
intention of selling or distributing the Shares, the Warrants and, if issued,
the Warrant Shares (or any of the Common Stock into which the Shares or the
Warrant Shares are convertible). Purchaser understands that the Shares, the
Warrants and, if issued, the Warrant Shares (and the Common Stock into which
the Shares or the Warrant Shares are convertible) to be purchased by it have
not been registered under the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.
4.7 COMPANY INFORMATION. Purchaser has received and read the
Company's Business Plan and Financial Statements and has had an opportunity
to discuss the Company's business, management and financial affairs with
directors, officers and management of the Company and has had the opportunity
to review the Company's operations and facilities. Purchaser has also had
the opportunity to ask questions of and receive answers from, the Company and
its management regarding the terms and conditions of this investment.
4.8 RESTRICTED SECURITIES. Purchaser acknowledges and agrees that
the Shares, the Warrants and, if issued, the Warrant Shares and the
Conversion Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Purchaser has been advised or is aware of the provisions of Rule
144 promulgated under the Securities Act, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: the availability of
certain current public information about the Company, the resale occurring
not less than two years after a party has purchased and paid for the security
to be sold, the sale being through an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934) and the number of shares being sold
during any three-month period not exceeding specified limitations.
4.9 TRANSFER RESTRICTIONS. The Purchaser acknowledges and agrees
that the Shares, the Warrants and, if issued, the Warrant Shares and the
Conversion Shares are subject to restrictions on transfer as set forth in the
Second Amended and Restated Investors' Rights Agreement.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
Purchaser's obligations to purchase the Shares and the Warrants at each
Closing are subject to the satisfaction, at or prior to the Closing, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects as of the
Closing Date with the same force and effect as if they had been made as of
the Closing Date, and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to
the Closing.
6.
(b) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement and the
Financing Documents (except for such as may be properly obtained subsequent
to the Closing).
(c) FILING OF RESTATED CERTIFICATE. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(d) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers or their counsel, copies of all corporate documents of the Company
as Purchasers shall reasonably request.
(e) RESERVATION OF WARRANT SHARES. The Warrant Shares
issuable upon exercise of the Warrants shall have been duly authorized and
reserved for issuance upon such conversion.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares
issuable upon conversion of the Shares and the Warrant Shares shall have been
duly authorized and reserved for issuance upon such conversion.
(g) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchasers a Compliance Certificate, executed by the President or the
Chief Financial Officer of the Company, dated the date of the Closing, to the
effect that the conditions to be performed by the Company specified in this
Section 5.1 have been satisfied.
(h) INVESTORS' RIGHTS AGREEMENT. The Second Amended and
Restated Investors' Rights Agreement substantially in the form attached
hereto as Exhibit D shall have been executed and delivered by the parties
thereto.
(i) VOTING AGREEMENT. The Second Amended and Restated Voting
Agreement substantially in the form attached hereto as Exhibit E shall have
been executed and delivered by the parties thereto.
(j) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall
be reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at each Closing is subject to the
satisfaction, on or prior to the Closing, of the following conditions:
7.
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Purchasers in Section 4 hereof shall be true and
correct in all material respects at the date of the Closing, with the same
force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have
performed and complied with all agreements and conditions herein required to
be performed or complied with by Purchasers on or before the Closing.
(c) INVESTORS' RIGHTS AGREEMENT. The Second Amended and
Restated Investors' Rights Agreement substantially in the form attached
hereto as Exhibit D shall have been executed and delivered by the Purchasers.
(d) VOTING AGREEMENT. The Second Amended and Restated Voting
Agreement substantially in the form attached hereto as Exhibit E shall have
been executed and delivered by the parties thereto.
(e) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement, the
Second Amended and Restated Investors' Rights Agreement and the Second
Amended and Restated Voting Agreement (except for such as may be properly
obtained subsequent to the Closing).
(e) FILING OF RESTATED CERTIFICATE. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware.
6. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees as follows:
6.1 RIGHTS OF FIRST REFUSAL. At all times prior to the closing of
the Company's first firmly underwritten public offering registered under the
Securities Act, the Company shall maintain in effect with respect to all
outstanding shares of Common Stock a right of first refusal with respect to
any proposed sale or transfer of shares of Common Stock substantially in the
form of Article XIV, Section 45 of the Company's Bylaws. If, at any time
prior to the closing of the Company's first firmly underwritten public
offering registered under the Securities Act, the Company elects not to
exercise the right of first refusal as to the sale or transfer of any shares
of Common Stock, including without limitation, shares issued upon exercise of
employee stock options or pursuant to any employee compensation or stock
purchase program, the Company shall assign such right of first refusal pro
rata among the Purchasers as follows:
(a) Within 10 days following the receipt of a notice from a
holder of Common Stock (a "Transferring Holder") advising the Company of such
holder's desire to transfer any shares of Common Stock subject to the
Company's right of first refusal (an "Offer"), the Company shall make an
election as to whether it chooses to exercise its right to purchase such
8.
shares, and if the Company elects not to purchase such shares it shall
immediately deliver written notice (a "Notice of Offer") of its election not
to exercise its right of first refusal and of its assignment of such right to
each Purchaser. Each Purchaser shall have the right and option, for a period
of 15 days after delivery of the Notice of Offer to the Purchaser, to accept,
at the purchase price and on the terms specified in the Notice of Offer (A)
such Purchaser's Proportionate Percentage, as defined in Section 6.2(d), of
the securities offered pursuant to the Offer and (B) any of the securities
offered pursuant to the Offer which are not accepted by the other Purchasers,
in which case such securities not deemed to have been offered to and accepted
by the Purchasers shall be deemed to have been offered to and accepted by the
Purchasers which exercised their option under this clause (B), pro rata in
accordance with their respective Proportionate Percentages (excluding, for
the purpose of such calculation, any Purchaser not exercising his option
under this clause (B)). Acceptance of the Offer shall be made by each
Purchaser by the delivery of a written notice to the Company and the
Transferring Holder within said 20-day period, which notice shall indicate
such Purchaser's election to exercise his rights under this Section 6.2 and
shall specify the number of securities which such Purchaser wishes to
purchase and whether such Purchaser wishes to exercise his rights under
clause (B) above.
(b) Transfers of securities under the terms of this Section
6.2(b) shall be made at the offices of the Company on a mutually satisfactory
business day within 15 days after the expiration of the applicable time
periods. Delivery of certificates or other instruments evidencing such
securities duly endorsed for transfer shall be made on such date against
payment of the purchase price therefor.
(c) If effective acceptances shall not be received pursuant
to Section 6.2(b) with respect to all securities offered for sale pursuant to
the aforesaid Notice of Offer, then the Transferring Holder may transfer to a
third party all of the securities so offered for sale or any part thereof at
the price and on the identical terms stated in the original Notice of Offer
and in accordance with Article XIV, Section 45 of the Bylaws.
(d) For purposes of this Section 6.2 only, the term
"Purchaser" shall mean each Purchaser under this Agreement; each Purchaser
under that certain Series C Preferred Stock and Warrant Purchase Agreement,
dated as of February 15, 1995 (the "Series C Agreement") and each Purchaser
under that certain Series D Preferred Stock and Warrant Purchase Agreement
dated as of December 15, 1995 (the "Series D Agreement") and the term
"Proportionate Percentage" shall mean, with respect to a Purchaser, a
fraction (expressed as a percentage) the numerator of which is equal to the
sum of the total number of shares of (A) Shares, Warrant Shares and
Conversion Shares, on an as-converted basis, (B) Shares, Warrant Shares and
Conversion Shares as defined under the Series C Agreement, on an as-converted
basis, and (C) Shares, Warrant Shares and Conversion Shares, defined under
the Series D Agreement, on an as converted basis, (such sum being referred to
hereinafter as the "Series C, Series D and Series E Equivalents") held by
such Purchaser and the denominator of which is the total number of Series C,
Series D and Series E Equivalents held by all Purchasers.
(e) This Section 6.2 may be amended or waived only upon the
written consent of the Company and the holders of a majority of the Series C,
Series D and Series E Equivalents.
9.
7. THE COMPANY'S RIGHT TO REPURCHASE
7.1 REPURCHASE OPTION. The Warrants and the Warrant Shares are
subject to repurchase by the Company on the following terms (the "Repurchase
Option"):
(a) If the Company has not closed a financing of $20 million
or more prior to December 31, 1996 (a "Qualified Financing"), one-hundred
percent (100%) of the Warrants and the Warrant Shares may be repurchased by
the Company on the terms and for the amount set forth in section 7.2 below.
(b) If the Company has closed a Qualified Financing prior to
December 31, 1996, the Company may repurchase the Warrants and the Warrant
Shares as follows:
IF THE QUALIFIED FINANCING IS: THE COMPANY MAY REPURCHASE:
------------------------------ ---------------------------
$45 million or more 0.00%
at least $40 million but less than $45 million 16.67%
at least $35 million but less than $40 million 33.33%
at least $30 million but less than $35 million 50.00%
at least $25 million but less than $30 million 66.67%
at least $20 million but less than $25 million 83.33%
The repurchase percentage shall be applied equally to the $12
Warrants, the $16 Warrants and the Warrant Shares relating to each. Such
Warrants and Warrant Shares remaining after the Company has exercised its
Repurchase Option shall be referred to as the "Remaining Warrants" and
"Remaining Warrant Shares," respectively. The parties intend to review the
Qualified Financing amounts listed above and such amounts may be revised with
the mutual consent of the parties.
(c) In addition, fifty percent (50%) of the Remaining
Warrants and Remaining Warrant Shares shall be subject to repurchase by the
Company (the "Further Repurchase Option") if the Company Valuation (as
defined below) does not equal or exceed $250 million on December 31, 1997
(the "Final Valuation Date"). The "Company Valuation" shall be equal to the
difference between (i) the number of Shares Outstanding (as defined below)
multiplied by the fair market value of one share of Common Stock (the "Share
Value"), minus (ii) the Equity Proceeds (as defined below) received by the
Company after August 1, 1996. Notwithstanding the foregoing, in the event
that the closing value of the Standard & Poor's 500 Index (the "S&P 500"), as
reported on December 31, 1997, is less than 80% the closing value of the S&P
500 as reported on July 1, 1996, the Final Valuation Date will be extended
until June 30, 1998.
10.
For the purpose of this Agreement, "Shares Outstanding" shall
mean the number of shares of Common Stock outstanding, assuming the
conversion of all outstanding shares of Preferred Stock and the exercise of
all outstanding options and in-the-money warrants to purchase Common or
Preferred Stock of the Company, and "Equity Proceeds" shall mean the sum of
(i) the fair market value of all consideration received by the Company in
consideration for the issuance of equity securities of the Company and (ii)
the aggregate consideration that the Company would receive upon the exercise
of all outstanding options and in-the-money warrants.
In the event the Company's Common Stock is publicly traded,
the "Share Value" shall be the closing price per share of the Common Stock of
the Company as reported on a national securities exchange or on the
over-the-counter market. In the event the Company's Common Stock is not
publicly traded, the parties shall mutually agree on the Share Value
PROVIDED, HOWEVER, that if the parties are unable to agree on a Share Value
within thirty (30) days of the Final Valuation Date, a mutually agreed upon
independent appraiser shall determine the Share Value.
7.2 EXERCISE OF REPURCHASE OPTION. If the Company elects to
exercise the Repurchase Option, it must notify the Holder not more than
ninety (90) days after the earlier of a Qualified Financing or December 31,
1996. If the Company elects to exercise the Further Repurchase Option, it
must notify the Holder not more than ninety (90) days after the Final
Valuation Date. The notice shall indicate how many of the Warrants and
Warrant Shares are being repurchased, the Repurchase Price (as defined below)
and a date for the closing of the repurchase (such date being not later than
thirty (30) days after the date of the notice). At the closing of either the
Repurchase Option or the Further Repurchase Option, the Holder shall deliver
the Warrants and, if applicable, the certificate(s) representing the Warrant
Shares and the Company shall deliver the Repurchase Price (as defined below)
and a new warrant or stock certificate representing the number of shares not
repurchased by the Company. The "Repurchase Price" shall be equal to the sum
of (A) the number of Warrants being repurchased multiplied by the respective
Warrant Purchase Price for each Warrant being repurchased (I.E., $0.60 for
the $12 Warrants and $0.389 for the $16 Warrants), plus (B) the number of
Warrant Shares being repurchased multiplied by the difference between the
respective Stock Purchase Price and the respective Warrant Purchase Price for
the Warrant Shares being repurchased. The parties acknowledge that the
"Repurchase Price" formula reflects their intent to set the aggregate
repurchase price for the Warrants and Warrant Shares equal to Purchaser's
actual cost in obtaining such Warrants and Warrant Shares.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, in all respects the laws of the State of
Washington. Each of the parties hereto hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Western District of
Washington and of any Washington state court sitting in the county of King,
State of Washington for the purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby. Each
of the parties hereto irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or
11.
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
8.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation and the closing of the
transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
8.3 INDEMNIFICATION.
(a) The Company shall indemnify, defend and hold the
Purchaser harmless from and against all liability, loss or damage, together
with all reasonable costs and expenses related thereto (including legal and
accounting fees and expenses), (i) arising from the untruth, inaccuracy or
breach of any of the representations or warranties of the Company herein or
any facts or circumstances constituting any such untruth, inaccuracy or
breach, (ii) arising from the breach of any covenant or agreement of the
Company or any facts or circumstances constituting such breach or (iii) with
respect to any liability for any brokers' or finders' fees or compensation
owing or alleged to be owing in connection with the transactions contemplated
hereby.
(b) The Purchaser shall indemnify, defend and hold the Company
harmless from and against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses), (i) arising from the untruth, inaccuracy or breach of any of
the representations or warranties of the Purchaser contained in Section 4, or
(ii) arising from the breach of any covenant or agreement of such Purchaser
herein.
8.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by
each person who shall be a holder of the Shares, the Warrants, the Warrant
Shares or the Conversion Shares from time to time.
8.5 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the other Financing Documents and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein
and therein.
8.6 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
12.
8.7 AMENDMENT AND WAIVER.
(a) Except as otherwise provided herein, this Agreement may
be amended or modified only upon the written consent of the Company and
holders of at least a majority of the outstanding shares of Series E
Preferred Stock (including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of at least a majority of
the outstanding shares of Series E Preferred Stock (including any Conversion
Shares into which the Shares have been converted that have not been sold to
the public).
8.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission
to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement, the
Financing Documents or the Restated Certificate, shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character
on any Purchaser's part of any breach, default or noncompliance under this
Agreement or under the Restated Certificate or any waiver on such party's
part of any provisions or conditions of the Agreement must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, the Restated Certificate, Bylaws,
or otherwise afforded to any party, shall be cumulative and not alternative.
8.9 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified; (ii) when sent by confirmed telex or facsimile
if sent during normal business hours of the recipient, if not, then on the
next business day; (iii) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid; or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent to the Company at the address as set forth on the signature
page hereof and to Purchaser at the address set forth on Exhibit A attached
hereto or at such other address as the Company or Purchaser may designate by
ten (10) days advance written notice to the other parties hereto.
8.10 EXPENSES. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance
of the Agreement.
8.11 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party
in such dispute shall be entitled to recover from the losing party all
reasonable fees, costs and expenses of enforcing any right of such prevailing
party under or with respect to this Agreement, including without limitation,
such
13.
reasonable fees and expenses of attorneys and accountants, which shall
include, without limitation, all fees, costs and expenses of appeals.
8.12 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.13 PRONOUNS. All pronouns contained herein and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the parties hereto may require.
8.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.15 BROKER'S FEES. Each party hereto represents and warrants that
no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any
broker's or finder's fee or any other commission directly or indirectly in
connection with the transactions contemplated herein. Each party hereto
further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in
this Section 8.15 being untrue.
[THIS SPACE INTENTIONALLY LEFT BLANK]
14.
IN WITNESS WHEREOF, the parties hereto have executed the SERIES E
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT as of the date set forth in
the first paragraph hereof.
COMPANY: PURCHASER:
COINSTAR, INC. ACORN VENTURES
By: By:
--------------------------------- ----------------------------------
Xxxx Xxxxxx, President
00000 X.X. 00xx Xxxxxx Name: --------------------------------
Xxxxx 000
Xxxxxxxx, XX 00000 Title:
-------------------------------
Address:
------------------------------
15.
EXHIBIT A
SCHEDULE OF PURCHASERS
$12 $16 AGGREGATE PURCHASE
WARRANT WARRANT PRICE FOR SHARES AND
NAME SHARES SHARES SHARES WARRANTS
--------------------- ------ ------- ------- --------------------
Acorn Ventures, Inc.
Xx. Xxxxx Xxxxx
11400 X.X. 0xx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000 100,000 350,000 550,000 $ 1,023,750
------- ------- ------- -----------
TOTAL: 100,000 350,000 550,000 $ 1,023,750
