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EXECUTION COPY
WARRANT REGISTRATION RIGHTS AGREEMENT
Dated as of October 22, 1996
By and Among
COINSTAR, INC.
and
XXXXX XXXXXX INC.
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WARRANT REGISTRATION RIGHTS AGREEMENT
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of October 22, 1996, by and among COINSTAR, INC., a Delaware
corporation (the "COMPANY"), and XXXXX XXXXXX INC. (the "INITIAL PURCHASER").
This Agreement is made pursuant to the Purchase Agreement dated October
22, 1996, among the Company and the Initial Purchaser (the "PURCHASE
AGREEMENT"), relating to, among other things, the sale by the Company to the
Initial Purchaser of an aggregate of 95,000 Units, consisting in the aggregate
of (i) $95,000,000 principal amount at maturity of 13% Senior Subordinated
Discount Notes due October 1, 2006 (the "NOTES") and (ii) 95,000 Warrants (the
"INITIAL WARRANTS"), each representing the right to purchase initially seven
shares of Common Stock, $.001 par value of the Company (the "COMMON STOCK").
In addition, the Company will be obligated to issue additional warrants to
holders of the Notes upon the occurrence of the Contingent Event (as defined
in that certain Warrant Agreement dated as of the date hereof between the
Company and The Bank of New York as warrant agent, the "WARRANT AGREEMENT")
(the "CONTINGENT WARRANTS", and together with the Initial Warrants, the
"WARRANTS"). In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide to the Purchaser and the Holders
(as defined herein), among other things, the registration rights for the
Warrant Shares (as defined herein) set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the obligations of the
Purchaser under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
As used in this agreement, the following defined terms shall have the
following meanings:
"ADVICE" has the meaning ascribed to such term in the last paragraph of
Section 4 hereof.
"AFFILIATE" means, when used with reference to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, the referent Person or such other Person, as the
case may be. For the purposes of this definition, the term "CONTROL" when
used with respect to any specified Person means the power to direct or cause
the direction of management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "AFFILIATED," "CONTROLLING" and "CONTROLLED" have
meanings correlative of the foregoing. The Purchaser nor any of its
Affiliates shall be deemed to be an Affiliate of the Company or of any of its
subsidiaries or Affiliates.
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"CAPITAL STOCK" means any and all shares, interests, rights to purchase,
warrants, options, participations, or other equivalents of or interests
(however designated) of corporate stock of the Company, including each class
of common stock and preferred stock of the Company, together with any
warrants, rights, or options to purchase or acquire any of the foregoing.
"COMMON STOCK" has the meaning ascribed to such term in the preamble
hereof.
"COMPANY" shall have the meaning ascribed to that term in the preamble of
this Agreement and shall also include the Company's permitted successors and
assigns.
"CONTINGENT WARRANTS" has the meaning ascribed to such term in the
preamble hereof.
"DEMAND REGISTRATION" has the meaning ascribed to such term in Section
2.2(a) hereof.
"DISQUALIFIED CAPITAL STOCK" has the meaning ascribed to such term in the
Warrant Agreement.
"DTC" has the meaning ascribed to such term in Section 4(i) hereof.
"EQUITY INTERESTS" has the meaning ascribed to such term in the Warrant
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.
"EXERCISE EVENT" has the meaning ascribed to such term in the Warrant
Agreement.
"HOLDER" shall mean the Purchaser, for so long as it owns any Warrants or
Warrant Shares, and each of its successors, assigns and direct and indirect
transferees who become registered owners of such Warrants or Warrant Shares.
"INCLUDED SECURITIES" has the meaning ascribed to such term in Section
2.2(a) hereof.
"INDEMNIFIED PARTY" has the meaning ascribed to such term in Section 5(c)
hereof.
"INDEMNIFYING PARTY" has the meaning ascribed to such term in Section
5(c) hereof.
"INDENTURE" means the Indenture, of even date herewith, between the
Company and The Bank of New York as Trustee, pursuant to which the Notes are
issued.
"INITIAL PURCHASER" has the meaning ascribed to such term in the preamble
hereof.
"INITIAL WARRANTS" has the meaning ascribed to such term in the preamble
hereof.
"INSPECTORS" has the meaning ascribed to such term in Section 4(a) hereof.
"INVESTORS' RIGHTS AGREEMENT" means that certain Second Amended and
Restated Investors' Rights Agreement dated August 27, 1996, as amended on
October 22, 1996, among Xxxx X. Xxxxxx and the investors listed on Exhibit A
thereto.
"LEGAL HOLIDAY" shall mean a Saturday, a Sunday or a day on which banking
institutions in New York, New York are required by law, regulation or
executive order to remain closed.
"NOTES" has the meaning ascribed to such term in the preamble hereof.
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"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"PIGGY-BACK REGISTRATION" has the meaning ascribed to such term in
Section 2.3 hereof.
"PROSPECTUS" means the prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule
430A promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"PUBLIC EQUITY OFFERING" means the consummation of an offering of Equity
Interests (other than Disqualified Capital Stock) by the Company to the public
pursuant to a registration statement filed with the Commission, the aggregate
proceeds of which exceed $10 million.
"PURCHASE AGREEMENT" has the meaning ascribed to such term in the
preamble hereof.
"REGISTRABLE SECURITIES" means any of (i) the Warrant Shares and (ii) any
other securities issued or issuable with respect to any Warrant Shares by way
of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise, unless, in each case, such Warrant Shares and securities, if any,
have been offered and sold to the Holder pursuant to an effective Registration
Statement under the Securities Act declared effective prior to the
exercisability of the Warrants or such Warrant Shares and securities, if any,
may be sold to the public pursuant to Rule 144 without any restriction on the
amount of securities which may be sold by such Holder or the satisfaction of
any condition. As to any particular Registrable Securities held by a Holder,
such securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the exercise or offering of such
securities by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been exercised and/or disposed
of by such Holder pursuant to such Registration Statement, (ii) such
securities may at the time of determination be sold to the public pursuant to
Rule 144 without any restriction on the amount of securities which may be sold
by such Holder (or any similar provision then in force, but not Rule 144A)
promulgated under the Securities Act without the lapse of any further time or
the satisfaction of any condition, (iii) such securities shall have been
otherwise transferred by such Holder and new certificates for such securities
not bearing a legend restricting further transfer shall have been delivered by
the Company or its transfer agent and subsequent disposition of such
securities shall not require registration or qualification under the
Securities Act or any similar state law then in force or (iv) such securities
shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean all expenses incident to the Company's
performance of or compliance with this Agreement, including, without
limitation, all SEC and stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including, without limitation,
reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications
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of the Registrable Securities), printing expenses, messenger, telephone and
delivery expenses, fees and disbursements of counsel for the Company and all
independent certified public accountants, the fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (but not
including any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of Registrable Securities by Holders of such
Registrable Securities) and other reasonable out-of-pocket expenses of Holders
(it being understood that Registration Expenses shall not include, as to the
fees and expenses of counsel, the fees and expenses of more than one counsel
for the Holders).
"REGISTRATION STATEMENT" shall mean any appropriate registration
statement of the Company filed with the SEC pursuant to the Securities Act
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"REQUISITE SECURITIES" shall mean a number of Registrable Securities
equal to not less than 25% of the Registrable Securities held in the aggregate
by all Holders; PROVIDED, HOWEVER, that with respect to any action to be taken
at the request of the Holders of the Registrable Securities prior to such time
as the Warrants have expired pursuant to the terms thereof and of the Warrant
Agreement, each Warrant outstanding shall be deemed to represent that number
of Registrable Securities for which such Warrant would be then exercisable
(without giving effect to the Cashless Exercise feature referred to in the
Warrant Agreement).
"RULE 144" shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
"RULE 144A" shall mean Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"SELLING HOLDER" shall mean a Holder who is selling Registrable
Securities in accordance with the provisions of Section 2.1, 2.2 or 2.3.
"SHELF REGISTRATION" has the meaning ascribed to such term in Section
2.1(a) hereof.
"WARRANTS" has the meaning ascribed to such term in the preamble hereof.
"WARRANT AGENT" means The Bank of New York and any successor Warrant
Agent for the Warrants pursuant to the Warrant Agreement.
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"WARRANT AGREEMENT" has the meaning ascribed to such term in the preamble
hereof.
"WARRANT SHARE PROSPECTUS" means the prospectus included in any Warrant
Share Registration Statement (including, without limitation, any prospectus
subject to completion and a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, and
all other amendments and supplements to the Warrant Share Prospectus,
including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Warrant Share
Prospectus.
"WARRANT SHARE REGISTRATION STATEMENT" has the meaning ascribed to that
term in Section 5(a) hereof.
"WARRANT SHARES" means the shares of Common Stock delivered or
deliverable upon exercise of the Warrants; PROVIDED that Warrant Shares shall
not include such shares of Common Stock deliverable upon exercise of the
Contingent Warrants until the Contingent Warrants have been issued.
SECTION 2. REGISTRATION RIGHTS
SECTION 2.1. REGISTRATION IN CONNECTION WITH A PUBLIC EQUITY
OFFERING
If an Exercise Event occurs as a result of a Public Equity Offering, Holders
owning, individually or in the aggregate, not less than the Requisite Securities
may request that the Company:
(a) file and use its best efforts to cause to become effective under
the Securities Act a "shelf" Registration Statement with respect to all
Registrable Securities on any appropriate form pursuant to Rule 415 (or similar
rule that may be adopted by the SEC) (the "Shelf Registration") covering the
issuance of the Warrant Shares by the Company upon exercise, or if such issuance
is not then permitted to be registered by applicable rule or policy of the SEC,
covering resales of the Warrant Shares. The Company shall use its best efforts
to keep the Shelf Registration continuously effective and usable for 30 days
following the consummation of the Public Equity Offering, and to the extent that
the Shelf Registration is not kept effective for one or more days during such
period, the Company shall be required to extend the effectiveness of the Shelf
Registration for a like number of days after the expiration of such 30 day
period. In addition, such 30-day period shall be extended on a day for day
basis for every day that Holders of Registrable Securities not sold in the
underwritten offering are subject to the holdback provided for in Section 2.5
below; and
(b) include the issuance of the Warrant Shares by the Company upon
exercise, or if such issuance is not then permitted to be registered by
applicable rule or policy of the SEC, the resale of the Warrant Shares, in the
Registration Statement filed in connection with the Public Equity Offering. In
such event, and if the managing underwriters determine that marketing factors
require a limitation of the number of shares to be underwritten and so advises
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the Company, then there shall be included in such underwritten offering the
amount of such Registrable Securities which in the opinion of such underwriters
can be sold, and such amount shall be allocated pro rata among the Holders of
such Registrable Securities and all other holders of other securities of the
Company which have a right to request inclusion therein on the basis of the
number of Registrable Securities and the number of shares of common stock
underlying such other securities of the Company held by such Holders and such
other holders.
SECTION 2.2. DEMAND REGISTRATION AFTER PUBLIC EQUITY OFFERING
(a) At any time and from time to time after the occurrence of a
Public Equity Offering, Holders owning, individually or in the aggregate, not
less than the Requisite Securities may make a written request, on two occasions
(each, a "Demand Registration"), that the Company register the issuance of the
Warrant Shares by the Company upon exercise, or if such issuance is not then
permitted to be registered by applicable rule or policy of the SEC, the resale
of the Warrant Shares, under the Securities Act. The Company shall file with
the SEC and use its best efforts to cause to become effective under the
Securities Act a Registration Statement with respect to such Registrable
Securities within (i) 45 days of receipt of such written request for a Demand
Registration if the Company is then eligible to register an offering pursuant to
Form S-3 under the Securities Act; (ii) 90 days of receipt of such written
request for a Demand Registration if the Company is not then eligible to
register an offering pursuant to Form S-3 under the Securities Act but is then
qualified as a reporting company under the Exchange Act; or (iii) 180 days of
receipt of such written request for a Demand Registration in any other case.
Any such request will specify the number of Registrable Securities proposed to
be sold and will also specify the intended method of disposition thereof. The
Company shall give written notice of such registration request to all other
Holders of Registrable Securities within 15 days after the receipt thereof.
Within 20 days after receipt by any Holder of Registrable Securities of such
notice from the Company, such Holder may request in writing that such Holder's
Registrable Securities be included in such Registration Statement and the
Company shall include in such Registration Statement the Registrable Securities
of any such Holder requested to be so included (the "Included Securities").
Each such request by such other Holders shall specify the number of Included
Securities proposed to be sold and the intended method of disposition thereof.
Subject to Sections 2.2(b) and 2.2(f) hereof, the Company shall be required to
register Registrable Securities pursuant to this Section 2.2(a) on a maximum of
two separate occasions; provided, however, that the Company may be required on
one additional occasion to register Registrable Securities issued or issuable in
connection with the Contingent Warrants if the holders of such Registrable
Securities have not been offered an opportunity to include such Registrable
Securities in a Registration Statement pursuant to a Demand Registration.
Subject to Section 2.2(f) hereof, no other securities of the Company
except (i) Registrable Securities held by any Holder, (ii) equity securities
to be offered and sold for the account of the Company and (iii) any equity
securities of the Company held by the parties to the Investors' Rights
Agreement or by any Person having "piggy-back" registration rights pursuant to
any contractual obligation of the Company shall be included in a Demand
Registration. The inclusion of any such securities for the account of the
Company or any other Person shall be on the same terms as that of the
Registrable Securities.
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(b) EFFECTIVE REGISTRATION. A Registration Statement will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the SEC and the Company has complied in all material
respects with all of its obligations under this Agreement with respect thereto;
PROVIDED, HOWEVER, that if, after such Registration Statement has become
effective, the offering of Registrable Securities pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction or other order
or requirement of the SEC or any other governmental or administrative agency or
court that prevents, restrains or otherwise limits the sale of Registrable
Securities pursuant to such Registration Statement for any reason not
attributable to any Holder participating in such registration and such
Registration Statement has not become effective within a reasonable time period
thereafter (not to exceed 30 days), such Registration Statement will be deemed
not to have been effected. If (i) a registration requested pursuant to this
Section 2.2 is deemed not to have been effected or (ii) a Demand Registration
does not remain effective under the Securities Act until at least the earlier of
(A) an aggregate of 180 days after the effective date thereof or (B) the
consummation of the distribution by the Holders of all of the Registrable
Securities covered thereby, then such registration shall not count towards
determining if the Company has satisfied its obligation to effect two Demand
Registrations pursuant to this Section 2.2. For purposes of calculating the
180-day period referred to in the preceding sentence, any period of time during
which such Registration Statement was not in effect shall be excluded. The
Holders of Registrable Securities shall be permitted to withdraw all or any part
of the Registrable Securities from a Demand Registration at any time prior to
the effective date of such Demand Registration PROVIDED, HOWEVER, that should
the Holders of Registrable Securities remaining after such withdrawal own,
individually or in the aggregate, less than the Requisite Securities, the
Company shall have the right to terminate or withdraw any registration initiated
by it under Section 2.2 prior to the effectiveness of such registration.
(c) RESTRICTIONS ON SALE BY HOLDERS. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to Section 2.1 or 2.2 and are to be sold by the Holder thereunder
agrees, if and to the extent reasonably requested by the managing underwriter or
underwriters in an underwritten primary offering of common stock or common
equivalents the gross proceeds of which equal at least $10 million, not to
effect any public sale or distribution of Registrable Securities of the Company
of the same class as any securities included in such Registration Statement,
including a sale pursuant to Rule 144 (except as part of such underwritten
offering), during the 10 day period prior to, and during the 120 day period
beginning on, the closing date of each underwritten offering made pursuant to
such Registration Statement, to the extent timely notified in writing by the
Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.2(c) shall not apply to any Holder
of Registrable Securities if such Holder is prevented by applicable statute or
regulation from entering into any such agreement; PROVIDED, HOWEVER, that any
such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
Registrable Securities commencing on the date of sale of such Registrable
Securities unless it has provided 45 days' prior written notice of such sale
or distribution to the underwriter or underwriters.
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(d) UNDERWRITTEN REGISTRATIONS. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Holders of not less than a majority of the
Registrable Securities to be sold thereunder and will be reasonably acceptable
to the Company.
No Holder of Registrable Securities may participate in any underwritten
registration pursuant to a Registration Statement filed under this Agreement
unless such Holder (a) agrees to (i) sell such Holder's Registrable Securities
on the basis provided in and in compliance with any underwriting arrangements
approved by the Holders of not less than a majority of the Registrable
Securities to be sold thereunder and (ii) comply with Rules 10b-6 and 10b-7
under the Exchange Act and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements;
PROVIDED, HOWEVER, that no Holder of Registrable Securities shall be required
to enter into a custody or escrow agreement or power of attorney with respect
to Registrable Securities to be sold in connection with such underwriting
arrangements.
(e) EXPENSES. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to Sections 2.1, 2.2 and
2.3 hereof. Each Holder of Registrable Securities shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to a Registration
Statement requested pursuant to Section 2.1 or 2.2.
(f) PRIORITY IN DEMAND REGISTRATION. In a registration pursuant to
Section 2.2 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders who have requested such Demand
Registration or who have sought inclusion therein that in such underwriter's or
underwriters' opinion the total number of securities which the Selling Holders
and any other Person desiring to participate in such registration intend to
include in such offering is such as to adversely affect the success of such
offering, including the price at which such securities can be sold, then the
Company will be required to include in such registration only the amount of
securities which it is so advised should be included in such registration. In
such event, securities shall be registered in such registration in the following
order of priority: (i) FIRST, the securities which have been requested to be
included in such registration by the Holders of Registrable Securities,
(ii) SECOND, provided that no securities sought to be included by the Holders of
Registrable Securities have been excluded from such registration, the securities
of the parties of the Investors' Rights Agreement, (iii) THIRD, provided that no
securities sought to be included by the Holders or the other parties to the
Investors' Rights Agreement have been excluded from such registration, the
securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments of the Company (pro rata based on the
amount of securities held by such Persons) and (iv) fourth, provided that no
securities of any other Person sought to be included therein have been excluded
from such registration, securities to be offered and sold for the account of the
Company.
If 25% or more of the Registrable Securities which the Holders have
requested to be included in a registration statement pursuant to Section 2.2
hereof have been excluded from such
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registration statement pursuant to the provisions of the foregoing paragraph,
then such registration shall not count towards determining whether the Company
has satisfied its obligation to effect two Demand Registrations pursuant to
Section 2.2 hereof.
SECTION 2.3. PIGGY-BACK REGISTRATION
(a) If at any time the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering by the Company
for its own account or for the account of any of its security holders of any
class of its common equity securities (other than (i) a Registration Statement
filed by the Company in connection with the Company's initial Public Equity
Offering, (ii) a Registration Statement on Form S-4 or S-8 (or any substitute
form that may be adopted by the SEC) or (iii) a Registration Statement filed in
connection with an exchange offer or offering of securities solely to the
Company's existing security holders), then the Company shall give written
notice of such proposed filing to the Holders of Registrable Securities as soon
as practicable (but in no event fewer than 15 days before the anticipated filing
date or 10 days if the Company is subject to filing reports under the Exchange
Act and able to use Form S-3 under the Securities Act), and such notice shall
offer such Holders the opportunity to register such number of shares of
Registrable Securities as each such Holder may request in writing not later than
15 days prior to the anticipated effective date of the Registration Statement
(or eight days of the notice of the proposed filing if the Company is subject to
filing reports under the Exchange Act and able to use Form S-3 under the
Securities Act) after receipt of such written notice from the Company (which
request shall specify the Registrable Securities intended to be disposed of by
such Selling Holder and the intended method of distribution thereof) (a "Piggy-
Back Registration"). The Company shall use its best efforts to keep such Piggy-
Back Registration continuously effective under the Securities Act until at least
the earlier of (A) 180 days after the effective date thereof or (B) the
consummation of the distribution by the Holders of all of the Registrable
Securities covered thereby. The Company shall use its commercially reasonable
efforts to cause the managing underwriter or underwriters, if any, of such
proposed offering to permit the Registrable Securities requested to be included
in a Piggy-Back Registration to be included on the same terms and conditions as
any similar securities of the Company or any other security holder included
therein, subject to the restrictions set forth in Section 2.3(b), and to permit
the sale or other disposition of such Registrable Securities in accordance with
the intended method of distribution thereof. Any Selling Holder shall have the
right to withdraw its request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 2.3 by giving written notice to
the Company of its request to withdraw. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective or the Company
may elect to delay the registration; PROVIDED, HOWEVER, that the Company shall
give prompt written notice thereof to participating Selling Holders. The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Section 2.3, and each
Holder of Registrable Securities shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder's Registrable Securities pursuant to a Registration Statement
effected pursuant to this Section 2.3.
No registration effected under this Section 2.3, and no failure to effect
a registration under this Section 2.3, shall relieve the Company of its
obligation to effect a registration upon the
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request of Holders of Registrable Securities pursuant to Section 2.1 or 2.2
hereof, and no failure to effect a registration under this Section 2.3 and to
complete the sale of securities registered thereunder in connection therewith
shall relieve the Company of any other obligation under this Agreement.
(b) PRIORITY IN PIGGY-BACK REGISTRATION.
In a registration pursuant to Section 2.3 hereof involving an
underwritten offering, if the managing underwriter or underwriters of such
underwritten offering have informed, in writing, the Company and the Selling
Holders requesting inclusion in such offering that in such underwriter's or
underwriters' opinion the total number of securities which the Company, the
Selling Holders and any other Persons desiring to participate in such
registration intend to include in such offering is such as to adversely affect
the success of such offering, including the price at which such securities can
be sold, then the Company will be required to include in such registration
only the amount of securities which it is so advised should be included in
such registration. In such event: (x) in cases only involving the
registration for sale of securities for the Company's own account (other than
pursuant to the exercise of piggyback rights herein and in other contractual
commitments of the Company), securities shall be registered in such offering
in the following order of priority: (i) FIRST, the securities which the
Company proposes to register, (ii) SECOND, provided that no securities sought
to be included by the Company have been excluded from such registration, the
securities which have been requested to be included in such registration by
the Holders of Registrable Securities and the parties to the Investors' Rights
Agreement, pro rata between the Holders and the parties to the Investors'
Rights Agreement based upon the respective amounts of Registrable Securities
and securities held by such Holders and parties, and (iii) THIRD, provided
that no securities sought to be included by the Company or the Holders or the
parties to the Investors' Rights Agreement have been excluded from such
registration, the securities of other Persons entitled to exercise
"piggy-back" registration rights pursuant to contractual commitments of the
Company (pro rata based on the amount of securities held by such Persons); (y)
in cases not involving the registration for sale of securities for the
Company's own account only, not for the account of any party to the Investors'
Rights Agreement, securities shall be registered in such offering in the
following order of priority: (i) FIRST, the securities of any Person whose
exercise of a "demand" registration right pursuant to a contractual commitment
of the Company is the basis for the registration (provided that if such Person
is a Holder of Registrable Securities, as among Holders of Registrable
Securities there shall be no priority and Registrable Securities sought to be
included by Holders of Registrable Securities shall be included pro rata based
on the amount of securities held by such Persons), (ii) SECOND, provided that
no securities of such Person referred to in the immediately preceding clause
(i) have been excluded from such registration, the securities which have been
requested to be included in such registration by the Holders of Registrable
Securities and the parties to the Investors' Rights Agreement, pro rata
between the Holders and the parties to the Investors' Rights Agreement based
upon the respective amounts of Registrable Securities and securities held by
such Holders and parties, and (iii) THIRD, provided that no securities of such
Person referred to in the immediately preceding clause (i) or of the Holders
or of the parties to the Investors' Rights Agreement have been excluded from
such registration, securities of other Persons entitled to exercise
"piggy-back" registration rights pursuant to contractual commitments (pro rata
based on the amount of securities held by such Persons) and (iv) FOURTH,
provided that no securities of any other Person have been excluded from
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such registration, the securities which the Company proposes to register; and
(z) in cases involving the registration for sale of securities for a party to
the Investors' Rights Agreement, securities shall be registered in such offering
in the following order of priority: (i) FIRST, the securities which have been
requested to be included in such registration by the Holders and by the parties
to the Investors' Rights Agreement pro rata based upon the respective amounts of
Registrable Securities and securities held by such Holders and parties, and (ii)
SECOND, provided that no securities of the Holders or of the parties to the
Investors' Rights Agreement have been excluded from such registration,
securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments (pro rata based on the amount of
securities held by such Persons) and (iii) THIRD, provided that no securities of
any other Person has been excluded from such registration, the securities which
the Company proposes to register; PROVIDED, HOWEVER, that in cases involving the
registration for sale of securities pursuant to Section 4.3 of the Investors'
Rights Agreement, securities shall be registered in such offering in the
following order of priority: (i) FIRST, the securities requested to be included
in such registration by the Holders pursuant to this Agreement, by the parties
to the Investors' Rights Agreement and by other Persons entitled to exercise
"piggy-back" registration rights pursuant to contractual commitments, pro rata
based upon the number of securities held by such Holders, parties and other
Persons, respectively and (ii) SECOND, provided that no securities of any other
Person has been excluded from such registration, the securities which the
Company proposes to register.
If, as a result of the provisions of this Section 2.3(b), any Selling
Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Selling Holder has requested to be included,
such Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration.
SECTION 2.4. LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO
OBLIGATIONS UNDER REGISTRATION COVENANTS. The obligations of the Company set
forth in Sections 2.2 and 2.3 hereof are subject to each of the following
limitations, conditions and qualifications:
(i) Subject to the next sentence of this paragraph, the Company shall
be entitled to postpone, for a reasonable period of time, the filing or
effectiveness of, or suspend the rights of any Holders to make sales pursuant
to, any Registration Statement otherwise required to be prepared, filed and made
and kept effective by it pursuant to Section 2.2 or 2.3 thereunder; provided,
however, that the duration of such postponement or suspension may not exceed the
earlier to occur of (A) 15 days after the cessation of the circumstances
described in the next sentence of this paragraph on which such postponement or
suspension is based or (B) 90 days after the date of the determination of the
Board of Directors referred to in the next sentence, and the duration of such
postponement or suspension shall be excluded from the calculation of the 180-day
period described in Section 2.2(b) and the 30-day period described in Section
2.1(a) hereof. Such postponement or suspension may be effected only if the
Board of Directors of the Company determines reasonably and in good faith that
the filing or effectiveness of, or sales pursuant to, such Registration
Statement would materially impede, delay or interfere with any material
financing, offer or sale of securities, acquisition, corporate reorganization or
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other significant transaction involving the Company or any of its Subsidiaries
which material financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction is under active consideration at
the time of such postponement or suspension; provided, however, that the Company
shall not be entitled to such postponement or suspension more than twice in any
twelve-month period. If the Company shall so postpone the filing of a
Registration Statement it shall, as promptly as possible, deliver a certificate
signed by the Chief Executive Officer or President of the Company to the Selling
Holders as to such determination, and the Selling Holders shall (y) have the
right, in the case of a postponement of the filing or effectiveness of a
Registration Statement, upon the affirmative vote of the Holders of not less
than a majority of the Registrable Securities to be included in such
Registration Statement, to withdraw the request for registration by giving
written notice to the Company within 10 days after receipt of such notice or (z)
in the case of a suspension of the right to make sales, receive an extension of
the registration period equal to the number of days of the suspension. Any
Demand Registration as to which the withdrawal election referred to in the
preceding sentence has been effected shall not be counted for purposes of the
two Demand Registrations the Company is required to effect pursuant to Section
2.2 hereof;
(ii) The Company shall not be required by this Agreement to file a
registration statement with respect to a Demand Registration during the period
starting with the date of filing of, and within 90 days immediately following,
the effective date of any registration statement under the Securities Act
pertaining to a firmly underwritten offering of equity securities of the Company
for its own account; PROVIDED that this clause (ii) shall not apply from and
after April 1, 2006.
(iii) The Company shall not be required by this Agreement to file
a registration statement with respect to a Demand Registration during the period
starting with the date of filing of, and within 60 days immediately following,
the effective date of any registration statement pertaining to a firmly
underwritten offering of Common Stock of the Company for the account of any
security holder of the Company; PROVIDED, HOWEVER, that the Company shall not be
entitled to invoke this clause (iii) more than once during any 12-month period.
(iv) The Company's obligations shall be subject to the obligations of
the Selling Holders, which the Selling Holders acknowledge, to furnish all
information and materials required of such Selling Holders and to take any and
all actions required of such Selling Holders as may be required under
applicable federal and state securities laws and regulations to permit the
Company to comply with all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such Registration Statement; and
(v) The Company shall not be obligated to cause any special audit to
be undertaken in connection with any registration pursuant to this Agreement
unless such audit is required by the SEC or requested by the underwriters with
respect to such registration.
SECTION 2.5. RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS. The
Company covenants and agrees that (i) it shall not, and that it shall not cause
or permit any of its subsidiaries to, effect any public sale or distribution of
any securities of the same class as any of the Registrable Securities or any
securities convertible into or exchangeable or exercisable for
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such securities (or any option or other right for such securities), other than
any Common Stock and/or options, warrants or other Common Stock purchase rights,
and the Common Stock issued pursuant to such option, warrants or other rights,
to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or
other arrangements that are approved by the Board of Directors of the Company,
during the 10-day period prior to, and during the 120-day period beginning on,
the commencement of any underwritten offering of Registrable Securities pursuant
to a Demand Registration which has been requested pursuant to this Agreement,
prior to the Company or any of its subsidiaries publicly announcing its
intention to effect any such public sale or distribution; (ii) the Company will
not, and the Company will not cause or permit any subsidiary of the Company to,
after the date hereof, enter into any agreement or contract that conflicts with
or limits or prohibits the full and timely exercise by the Holders of
Registrable Securities of the rights herein to request a Shelf Registration or
Demand Registration or to join in any Piggy-Back Registration subject to the
other terms and provisions hereof except that the Investors' Rights Agreement
may be modified or amended to name additional investors as parties to that
Agreement; and (iii) that it shall use its reasonable best efforts to secure the
written agreement of each of its officers and directors to not effect any public
sale or distribution of any securities of the same class as the Registrable
Securities (or any securities convertible into or exchangeable or exercisable
for any such securities), or any option or right for such securities during the
period described in clause (i) of this Section 2.5.
SECTION 2.6. RULE 144 AND RULE 144A. The Company covenants that it
will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations adopted by the SEC thereunder in
a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder or beneficial owner of
Registrable Securities, make available such information necessary to permit
sales pursuant to Rule 144A under the Securities Act. The Company further
covenants that it will take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144(k) and Rule 144A under the Securities Act, as such Rules may be amended from
time to time, or (b) any similar rule or regulation hereafter adopted by the SEC
(it being expressly understood that the foregoing shall not create any
obligation on the part of the Company to file periodic reports or other reports
under the Exchange Act at any time that it is not then required to file such
reports pursuant to the Exchange Act). Upon the request of any Holder of
Registrable Securities, the Company will in a timely manner deliver to such
Holder a written statement as to whether it has complied with such information
requirements.
SECTION 3. "MARKET STAND-OFF" AGREEMENT.
(a) Each Holder hereby agrees that it shall not, to the extent
requested by a managing underwriter of common stock or common equivalents of the
Company, sell or otherwise transfer or dispose of any Registrable Securities of
the Company then owned by such Holder (other than to donees or partners of the
Holder who agree to be similarly bound) for up to 180 days following the date of
the final Prospectus in connection with the Registration Statement
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of the Company filed under the Securities Act; PROVIDED, HOWEVER, that such
agreement (i) shall be applicable only to the first such registration statement
of the Company that covers shares of stock to be sold on its behalf to the
public in an underwritten offering, (ii) shall not be applicable to Registrable
Securities sold pursuant to such registration statement, and (iii) shall only be
applicable if the managing underwriters request such agreement from each Holder.
(b) In order to enforce the foregoing covenant, the Company shall
have the right to impose stop transfer instructions with respect to the
Registrable Securities (and the Registrable Securities of every other person
subject to the foregoing restriction) until the end of such period. The
provisions of this Section 3 shall be binding upon any transferee of any
Registrable Securities.
SECTION 4. REGISTRATION PROCEDURES. In connection with the obligations
of the Company with respect to any Registration Statement pursuant to
Sections 2.1, 2.2, 2.3 and 2.6 hereof, the Company shall, except as otherwise
provided:
(a) Prepare and file with the SEC as soon as practicable each such
Registration Statement (but in any event on or prior to the date of filing
thereof required under this Agreement) and cause such Registration Statement to
become effective and remain effective as provided herein; PROVIDED, HOWEVER,
that before filing any such Registration Statement or any Prospectus (for
registrations pursuant to Sections 2.1, 2.2 and 2.3 hereof) or any amendments or
supplements thereto (only for registrations pursuant to Section 2.1 and 2.2
hereof) (including documents that would be incorporated or deemed to be
incorporated therein by reference, including such documents filed under the
Exchange Act that would be incorporated therein by reference), the Company shall
afford promptly to the Holders of the Registrable Securities covered by such
Registration Statement, their counsel and the managing underwriter or
underwriters, if any, an opportunity to review copies of all such documents
proposed to be filed a reasonable time prior to the proposed filing thereof.
The Company shall not file any Registration Statement or Prospectus (for
registrations pursuant to Sections 2.1, 2.2 and 2.3 hereof) or any amendments or
supplements thereto (only for registrations pursuant to Section 2.1 and 2.2
hereof) if the Holders of a majority of the Registrable Securities covered by
such Registration Statement, their counsel, or the managing underwriter or
underwriters, if any, shall reasonably object in writing to any information
contained therein or omitted therefrom unless failure to file any such amendment
or supplement would likely result, in the Company's reasonable judgment based on
the advice of counsel, in a violation of the Securities Act or other applicable
law.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods prescribed
hereby; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such prospectus as so supplemented.
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(c) Notify the Holders of Registrable Securities, their counsel and
the managing underwriter or underwriters, if any, promptly (but in any event
within two (2) Business Days), and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules and exhibits), (ii) of the issuance
by the SEC of any stop order suspending the effectiveness of such Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation or threatening of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Securities the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 4(m) below, to
the knowledge of the Company, cease to be true and correct in any material
respect, (iv) of the receipt by the Company of any notification with respect to
(A) the suspension of the qualification or exemption from qualification of the
Registration Statement or any of the Registrable Securities covered thereby for
offer or sale in any jurisdiction, or (B) the initiation of any proceeding for
such purpose, (v) of the happening of any event, the existence of any condition
or information becoming known that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of such
Registration Statement, it will conform in all material respects with the
requirements of the Securities Act and it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, not misleading, and that in
the case of the Prospectus, it will conform in all material respects with the
requirements of the Securities Act and it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
Company's reasonable determination that a post-effective amendment to such
Registration Statement would be appropriate.
(d) Use every reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities covered
thereby for sale in any jurisdiction, and, if any such order is issued, to
obtain the withdrawal of any such order at the earliest practicable moment.
(e) If requested by the managing underwriter or underwriters, if any,
or the Holders of a majority of the Registrable Securities being sold in
connection with an underwriting offering (only for registrations pursuant to
Section 2.1 and 2.2 hereof), (i) promptly incorporate in a prospectus supplement
or post-effective amendment such information as the managing underwriter or
underwriters, if any, or such Holders reasonably request to be included therein
to comply with applicable law, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
prospectus supplement or post- effective amendment, and (iii) supplement or make
amendments to such Registration Statement.
15
(f) Furnish to each Holder of Registrable Securities who so requests
and to counsel for the Holders of Registrable Securities and each managing
underwriter, if any, without charge, upon request, one conformed copy of the
Registration Statement and each post-effective amendment thereto, including
financial statements and schedules, and of all documents incorporated or deemed
to be incorporated therein by reference and all exhibits (including exhibits
incorporated by reference).
(g) Deliver to each Holder of Registrable Securities, their counsel
and each underwriter, if any, without charge, as many copies of each Prospectus
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 4, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders of Registrable Securities
and the underwriter or underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to register or
qualify, and cooperate with the Holders of Registrable Securities, the
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the managing underwriter or underwriters reasonably request in writing, or, in
the event of a non-underwritten offering, as the Holders of a majority of the
Registrable Securities may request; PROVIDED, HOWEVER, that where Registrable
Securities are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
4(h); keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the securities covered thereby; PROVIDED, HOWEVER, that the Company will not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) become subject to taxation in any jurisdiction where it is not then so
subject.
(i) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two business days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering.
(j) [Intentionally Omitted]
16
(k) Upon the occurrence of any event contemplated by Section 4(c)(v)
or 4(c)(vi) above, as promptly as practicable prepare a supplement or post-
effective amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and, subject to Section 4(a) hereof, file such with the SEC so that,
as thereafter delivered to the purchasers of Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(l) Prior to the effective date of a Registration Statement,
(i) provide the registrar for the Registrable Securities with certificates for
such securities in a form eligible for deposit with DTC and (ii) provide a CUSIP
number for such securities.
(m) Enter into an underwriting agreement in form, scope and substance
as is customary in underwritten offerings and take all such other actions as
are reasonably requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or disposition of such Registrable
Securities in any underwritten offering to be made of the Registrable Securities
in accordance with this Agreement, and in such connection, (i) make such
representations and warranties to the underwriter or underwriters, with respect
to the business of the Company and the subsidiaries of the Company, and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) use reasonable
efforts to obtain opinion of counsel to the Company, addressed to the
underwriter or underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by underwriters; (iii) use reasonable efforts to obtain "cold comfort"
letters from the independent certified public accountants of the Company (and,
if applicable, the subsidiaries of the Company) and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement, addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as reasonably requested by the managing underwriter or underwriters and
as permitted by the Statement of Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, the same shall contain customary
indemnification provisions and procedures with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder.
(n) Make available for inspection by a representative of the Holders
of Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney or accountant
retained by such representative of the Holders or underwriter (collectively, the
"INSPECTORS"), at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
properties of the Company and the subsidiaries of the Company, and cause the
officers, directors and employees of the Company and the subsidiaries of the
Company to supply all
17
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement; PROVIDED, HOWEVER, that all
material non-public information shall be kept confidential by such Inspector and
shall not be used for any purpose other than as contemplated hereby, except to
the extent that (i) the disclosure of such information is necessary or advisable
to avoid or correct a misstatement or omission in the Registration Statement or
in any Prospectus; PROVIDED, HOWEVER, that prior notice is given to the Company,
and the Company's legal counsel and such Holder's legal counsel concur that
disclosure is required, (ii) the release of such information is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction,
(iii) disclosure of such information is necessary or advisable in connection
with any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, relating to
or involving this Agreement or any of the transactions contemplated hereby or
arising thereunder; PROVIDED, HOWEVER, that prior notice shall be provided as
soon as practicable to the Company of the potential disclosure of any
information by such Inspector pursuant to clauses (ii) or (iii) of this sentence
to permit the Company to obtain a protective order (or waive the provisions of
this paragraph (n)) and that such Inspector shall take all actions as are
reasonably necessary to protect the confidentiality of such information (if
practicable) to the extent such action is otherwise not inconsistent with, an
impairment of or in derogation of the rights and interests of the Holder or any
Inspector, or (iv) such information has been made generally available to the
public.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than
forty-five (45) days after the end of any 12 month period (or ninety (90) days
after the end of any 12 month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Securities
are sold to an underwriter or to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to an underwriter or to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of the relevant
Registration Statement, which statements shall cover said 12 month periods.
(p) Use its best efforts to cause all Registrable Securities relating
to such Registration Statement to be listed on each securities exchange, if any,
on which similar securities issued by the Company are then listed.
(q) Cooperate with the Selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends and
registered in such names as the Selling Holders may reasonably request at least
one business day prior to the closing of any sale of Registrable Securities.
Each seller of Registrable Securities as to which any registration is being
effected agrees, as a condition to the registration obligations with respect to
such Holder provided herein, to furnish to the Company such information
regarding such seller and the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing to comply with the
Securities Act and other applicable law. The Company may exclude from such
18
registration the Registrable Securities of any seller for so long as such seller
fails to furnish such information within a reasonable time after receiving such
request. If the identity of a seller of Registrable Securities is to be
disclosed in the Registration Statement, such seller shall be permitted to
include all information regarding such seller as it shall reasonably request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(ii), 4(c)(iv),
4(c)(v), or 4(c)(vi) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by the Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(k) hereof), or until it is advised
in writing (the "ADVICE") by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any amendments or
supplements thereto, and, if so directed by the Company, such Holder will, at
the Company's expense, deliver to the Company all copies, other than permanent
file copies, then in such Holder's actual possession of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice;
PROVIDED, HOWEVER, that nothing herein shall create any obligation on the part
of any Holder to undertake to retrieve or return any such Prospectus not within
the actual possession or control of such Holder. In the event the Company shall
give any such notice, the period of time for which a Registration Statement is
required thereunder to be effective shall be extended by the number of days
during such periods from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 4(k) hereof or (y)
the Advice.
SECTION 5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Holder
and each Person, if any, who controls such Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, or is
under common control with, or is controlled by, such Holder, from and against
all losses, claims, damages and liabilities (including, without limitation,
and subject to clause (c) of this Section 5 below, the reasonable legal fees
and other reasonable out-of-pocket expenses actually incurred by any Holder or
any such controlling or affiliated Person in connection with any suit, action
or proceeding or any claim asserted), caused by, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto) pursuant to which
Registrable Securities were registered under the Securities Act, or caused by
any omission or alleged omission to state in any such Registration Statement a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or caused by any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state in any such preliminary prospectus or Prospectus a
material fact required to be stated in any such preliminary prospectus or
Prospectus or necessary to make the statements in any such preliminary
prospectus or Prospectus in light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
19
information relating to any Holder furnished to the Company in writing by such
Holder expressly for use in any such Registration Statement or Prospectus;
PROVIDED, HOWEVER, that the Company shall not be required to indemnify any such
Person if such untrue statement or omission or alleged untrue statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus, or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by such indemnified Person resulted from any action, claim or suit by
an Person who purchased Registrable Securities which are the subject thereof
from such indemnified Person and it is established in the related proceeding
that such indemnified Person failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Securities sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 4 hereof or as a result of the failure of the Company to
provide such Prospectus.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign any Registration
Statement, and each Person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Holder, but
only with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto). The liability of any Holder under this paragraph shall in
no event exceed the proceeds received by such Holder from sales of Registrable
Securities giving rise to such obligations.
(c) In case any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "INDEMNIFIED PARTY") shall promptly notify
the Person against which such indemnity may be sought (the "INDEMNIFYING PARTY")
in writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred of such counsel relating to such proceeding;
PROVIDED, HOWEVER, that the failure to so notify the indemnifying party shall
not relieve it of any obligation or liability which it may have thereunder or
otherwise. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the contrary, (ii) the
indemnifying party shall have failed to retain within a reasonable period of
time counsel reasonably satisfactory to such indemnified party or parties or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both such indemnified party or parties and the indemnifying parties or
an affiliate of the indemnifying parties or such indemnified parties and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between the indemnifying party or
parties and the indemnified party or parties. It is understood that the
indemnifying parties shall not, in connection with any one
20
such proceeding or separate but substantially similar or related proceedings in
the same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for such
indemnified party or parties and that all such fees and expenses shall be
reimbursed within reasonable time of the request after the incurrence thereof.
Any such separate firm for the Holders and such control Persons of the Holders
shall be designated in writing by Holders who sold a majority in interest of
Registrable Securities sold by all such Holders and reasonably acceptable to the
Company and any such separate firm for the Company, its directors, its officers
and such control Persons of the Company shall be designated in writing by the
Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed) but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify and hold harmless the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party (which consent
shall not be unreasonably withheld), effect any settlement or compliance of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party, or indemnity could have been sought thereunder by such
indemnified party, unless such settlement or compliance involves only the
payment of money damages that are actually paid by the indemnifying party or
includes an unconditional written release of such indemnified party in form and
substance reasonably satisfactory to such indemnified party of such indemnified
party from all liability or claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 5 is unavailable to, or insufficient to hold harmless, an
indemnified party in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Company on the one hand and the Holders on the other hand from the offering
of such Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, not only such relative benefits but
also the relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Holders on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of discounts and commissions but before
deducting expenses) of the Warrants sold pursuant to the Purchase Agreement
received by the Company bears to the total proceeds received by such Holder from
the sale of Registrable Securities, as the case may be. The relative fault of
the Company on the one hand and the Holders on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
21
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 5(d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in Section 5(d) above shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses actually incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, in no event shall a Holder be required to
contribute any amount in excess of the amount by which proceeds received by such
Holder from sales of Registrable Securities exceeds the amount of any damages
that such Holder has otherwise been required to pay or has paid by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 5 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Purchaser or any person who controls a
Purchaser, the Company, their respective directors or officers or any person
controlling the Company and (ii) any termination of this Agreement.
SECTION 6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company represents and warrants
to the Holders that it has not entered into nor will the Company on or after the
date of this Agreement enter into, or cause or permit any of its subsidiaries to
enter into, any agreement which is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders thereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities, if any, under
any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the prior
written consent of Holders of not less than a majority in number of the then
outstanding Initial Warrants and/or majority in number of the then outstanding
Contingent Warrants, each voting as a separate class,
22
as applicable, for the purpose of adding any provision to or changing in any
manner or eliminating any of the provisions of this Agreement or modifying in
any manner the rights of the holders of the outstanding Initial Warrants and/or
Contingent Warrants, as applicable; PROVIDED, HOWEVER, that Section 5 hereof and
this Section 6(b) may not be amended, modified or supplemented without the prior
written consent of each Holder (including any Person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Securities may be given by the Holders of not less than a
majority of the Registrable Securities proposed to be sold by such Holders
pursuant to such Registration Statement.
(c) NOTICES. All notices and other communications provided for or
permitted thereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address of Holder as set forth
in the register for the Warrants or the Warrant Shares, which address initially
is, with respect to the Purchaser, the address set forth in the Purchase
Agreement; and (ii) if to the Company, initially at the address set forth below
the Company's name on the signature pages hereto and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 6(c), and thereafter at such other address notice of which is given in
accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if Personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Warrants and/or Registrable Securities, in any manner, whether by
operation of law or otherwise, such Warrants and/or Registrable Securities shall
be held subject to all of the terms of this Agreement, and by taking and holding
such Warrants and/or Registrable Securities such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such Person shall be entitled to receive the
benefits hereof.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
23
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Each of the parties hereto hereby irrevocably and unconditionally: (i)
submits itself and its property in any legal action or proceeding relating to
this Warrant Rights Registration Agreement or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive jurisdiction of the courts
of the State of New York and the courts of the United States of America for the
Southern District of New York, and appellate courts thereof, and consents and
agrees to such action or proceeding being brought in such courts; and (ii)
waives any objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding was
brought in any inconvenient court and agrees not to plead or claim the same.
(h) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(i) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, the Warrant Agreement and, solely with respect to the Contingent
Warrants, the Indenture is intended by the parties as a final expression of
their agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. This Agreement, the Purchase Agreement,
the Warrant Agreement and, solely with respect to the Contingent Warrants, the
Indenture supersede all prior agreements and understandings between the parties
with respect to such subject matter.
(j) ATTORNEYS' FEES. As between the parties to this Agreement, in
any action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
(k) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities or Warrants is required thereunder, Registrable Securities or
Warrants held by the Company or by any of its
24
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted (in either the numerator or the denominator) in determining
whether such consent or approval was given by the Holders of such required
percentage.
(l) REMEDIES. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, in the Purchase Agreement or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COINSTAR, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------
Title: CEO and President
---------------------------------
Address for Notices:
00000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
XXXXX XXXXXX INC.
Address for Notices:
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
---------------------------------
Title: Vice President
---------------------------------
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
