RESTRICTED STOCK PURCHASE AGREEMENT
Exhibit 4.1
This Restricted Stock Purchase Agreement (this “Agreement”) is made as of July 17, 2009,
between Coinstar, Inc., a Delaware corporation (the “Company”), and Sony Pictures Home
Entertainment Inc., a Delaware corporation (“Sony”).
Reference herein is made to that certain Copy Depth License Agreement executed between Redbox
Automated Retail, LLC, a Delaware limited liability company and a wholly owned subsidiary of the
Company (“Redbox”), and Sony, dated as of July 1, 2009 (the “License Agreement”). Capitalized
terms not explicitly defined in this Agreement but defined in the License Agreement shall have the
same meanings as set forth with respect to such terms in the License Agreement.
| 1. | Restricted Stock Issuance |
In connection with the License Agreement and subject to the terms and conditions of this
Agreement, the Company hereby agrees to issue to Sony a number of shares of the Company’s common
stock, par value $0.001 per share (“Common Stock”), equal to (i) $5,000,000 divided by (ii) the
Agreement Date Closing Price (as defined below) (collectively, the “Shares”). For purposes of this
Agreement, the “Agreement Date Closing Price” shall mean the average of the closing price per share
of the Company’s Common Stock as listed on the Nasdaq market for the ten full Nasdaq trading days
prior to, but not including, the date of this Agreement.
The Company shall issue the Shares as soon as practicable following the date of this
Agreement, and in any event within five business days following the date of this Agreement.
| 2. | Vesting |
2.1 Shares that have vested and are no longer subject to forfeiture according to the vesting
schedule set forth below or according to the provisions of Section 2.2 are referred to herein as
“Vested Shares.” Shares that are not vested and remain subject to forfeiture and the restrictions
hereunder are referred to herein as “Unvested Shares.”
Provided that the Unvested Shares have not, prior to their becoming Vested Shares, been
forfeited pursuant to Section 6 below, the restrictions on the Unvested Shares will lapse and the
Unvested Shares will become Vested Shares and no longer be subject to forfeiture according to the
following schedule:
| Dates on Which Unvested Shares Become Vested Shares |
Number of Unvested Shares Becoming Vested Shares on Corresponding Vesting Date |
||
| License Date | 10% of the Shares | ||
| August 1, 2011 | 25% of the Shares | ||
| August 1, 2012 | 25% of the Shares | ||
| August 1, 2013 | 25% of the Shares | ||
| August 1, 2014 | 15% of the Shares |
2.2 Accelerated Vesting
All of the Unvested Shares shall automatically become Vested Shares, and the restrictions
under this Agreement on such Unvested Shares will lapse and such Unvested Shares will no longer be
subject to forfeiture upon the occurrence of any of the following events:
(a) a “change of control” of the Company, which shall mean for purposes of this Section: (i) a
merger or consolidation of the Company with or into another corporation or other entity (with
respect to which less than a majority of the outstanding voting power of the surviving or
consolidated corporation is held by persons who are shareholders of the Company immediately prior
to such event); (ii) the sale or transfer of all or substantially all of the properties or assets
of the Company; (iii) any purchase by any party (or group of affiliated parties) of shares of
capital stock of the Company (either through a negotiated stock purchase or a tender for such
shares), the effect of which is that such party (or group of affiliated parties) that did not
beneficially own a majority of the voting power of the outstanding shares of capital stock of the
Company immediately prior to such purchase beneficially owns at least a majority of such voting
power immediately after such purchase; (iv) the redemption or repurchase of shares representing a
majority of the voting power of the outstanding shares of capital stock of the Company; or (v) any
other change of control of fifty percent (50%) or more of the outstanding Common Stock or voting
power of the Company in a single transaction or series of related transactions;
(b) a “change of control” of Redbox, which shall mean for purposes of this Section: (i) a
merger or consolidation of Redbox with or into another corporation or other entity (with respect to
which less than a majority of the outstanding voting power of the surviving or consolidated
corporation is held by the Company or its subsidiaries); (ii) the sale, lease or transfer of all or
substantially all of the properties or assets of Redbox; (iii) any purchase by any party (or group
of affiliated parties) of equity in Redbox, the effect of which is that such party (or group of
affiliated parties) that did not beneficially own a majority of
the voting power of Redbox immediately prior to such purchase beneficially owns at least a
majority of such voting power immediately after such purchase; or (iv) any other change of control
of fifty percent (50%) or more of the outstanding voting power of Redbox in a single transaction or
series of related transactions;
(c) the occurrence of a “Redbox Significant Event of Default,” which shall mean for purposes
of this Section the occurrence of any of the following: (i) any Redbox Termination Event that
results in the termination of the License Agreement by SPHE; (ii) any Redbox Termination Event
(regardless of whether the License Agreement is Terminated) where the amount or damages at issue is
Fifty Thousand Dollars ($50,000) or more; or (iii) either five or more Redbox Events of Default
during the Term of the License Agreement or three or more Redbox Events of Default during any
12-month period during the Term of the License Agreement;
(d) The failure of the Company and/or its Common Stock to meet the continued listing
requirements for the Nasdaq market or other national stock exchange, such that the Common Stock is
or will be downgraded to the OTC Bulletin Board or otherwise cease trading on such stock exchange;
or
(e) upon (i) either the Company or Redbox becoming unable to pay its debts; (ii) a petition
being presented or a meeting being convened for the purpose of considering a resolution for the
making of an administration order, the winding-up, bankruptcy or dissolution of the Company or
Redbox; (iii) the Company or Redbox becoming insolvent; (iv) a petition under any bankruptcy or
analogous act being filed by or against the Company or Redbox (which petition, if filed against
Redbox, will not have been dismissed by the relevant authority within thirty (30) days thereafter);
(v) the Company or Redbox executing an assignment for the benefit of creditors; (vi) a receiver
being appointed for the assets of the Company or Redbox; (vii) the Company or Redbox taking
advantage of any applicable bankruptcy, insolvency or reorganization or any other like statute; or
(viii) the Company or Redbox ceasing to conduct all or substantially all of its day-to-day business
operations.
3. Transfer Restrictions
Any direct sale, transfer, assignment, encumbrance, pledge, hypothecation, conveyance in
trust, gift, transfer by bequest, devise or descent, or other transfer or disposition of Unvested
Shares shall be strictly prohibited and void unless the Company consents to any such transaction
(with any such consent being solely at the discretion of the Company); provided, however, that Sony
may transfer Unvested Shares at any time to one or more of its U.S. affiliates upon fifteen (15)
days’ prior written notice to the Company provided that any such affiliate transferee provides to
the Company a written acknowledgement that it agrees to join as a party to this Agreement,
including, but not limited to, agreeing to the terms, conditions, representations and obligations
of Sony.
4. Status of Participant
Upon issuance of the Shares, Sony will be recorded as a registered stockholder of the Company
with respect to the Shares. The Company and its transfer agent will promptly
provide to Sony written conformation of such issuance and recordation. Upon issuance of the
Shares, Sony will have in connection with the Shares all rights of a holder of Common Stock of the
Company, including, without limitation, voting rights and rights to dividends and distributions in
respect of the Shares; provided, however, that Unvested Shares will be subject to forfeiture
pursuant to Section 6.
5. Securities Law Compliance; Certain Representations
5.1 The Shares to be acquired by Sony under this Agreement will be acquired for investment for
Sony’s own account, not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof. Sony has no present intention of selling, granting any participation in, or
otherwise distributing the Shares. Sony does not have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant participations to such person or
entity or to any other person or entity, with respect to any of the Shares. Sony represents and
warrants that it (a) has been furnished with all information which it deems necessary to evaluate
the merits and risks of receipt of the Shares, (b) has had the opportunity to ask questions and
receive answers concerning the information received about the Shares and the Company, and (c) has
been given the opportunity to obtain any additional information it deems necessary to verify the
accuracy of any information obtained concerning the Shares and the Company. Sony is an “accredited
investor” under Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”).
5.2 Sony hereby agrees that it will in no event sell or distribute all or any part of the
Shares unless (a) there is an effective registration statement under the Securities Act, and
applicable state and other securities laws covering any such transaction involving the Shares or
(b) the Company receives an opinion of Sony’s legal counsel (which counsel may be Sony’s internal
corporate counsel, and which opinion is reasonable or customary in form and substance) stating that
such transaction is exempt from registration or the Company otherwise satisfies itself that such
transaction is exempt from registration. The Company shall provide promptly to Sony all
information reasonably requested in connection with preparing such opinion. Sony understands that
the Company has no obligation to register the Shares with the Securities and Exchange Commission
(the “SEC”) and has not represented to Sony that the Company will so register the Shares.
5.3 Sony confirms that it has been advised, prior to its receipt of the Shares, that neither
the offering of the Shares nor any offering materials have been reviewed by any administrator or
other governmental entity under the Securities Act or any other applicable securities act.
5.4 The Company represents and warrants that each of the issuance and delivery of the Shares
in accordance with the Agreement, as well as the execution and delivery of this Agreement, has been
duly authorized by all necessary corporate action on the part of the Company, that all such Shares
have been duly reserved for issuance and that the Shares will, upon issuance, be duly and validly
issued, fully paid and nonassessable and free and clear of any liens or encumbrances except for
restrictions on transfer set forth herein and under applicable securities laws (subject only to the
vesting and forfeiture provision in this
Agreement). The Company further represents and warrants that, (a) the Company is not, and
never has been a “shell company” as defined under Rule 144 of the Securities Act and (b) assuming
the accuracy of Section 5.1, the offer, sale and issuance of the Shares to Sony does not require
registration under the Securities Act and is in compliance with applicable federal and state
securities laws.
6. Termination of License Agreement; Forfeiture of Unvested Shares
In the event of (i) termination or expiration of the License Agreement due to Sony’s election
to cause an early expiration of the License Agreement pursuant to the proviso in the last sentence
of Section 2 of the Principal Terms of the License Agreement or (ii) so long as there has been no
acceleration of vesting pursuant to Section 2.2, immediately following termination or expiration of
the License Agreement for any other reason, then no further vesting of Unvested Shares shall take
place, all remaining Unvested Shares shall be immediately forfeited by Sony (or any applicable
transferee) as of the date of termination or expiration of the License Agreement without payment of
any consideration therefor, and Sony (or any applicable transferee) shall have no further rights
with respect to such Unvested Shares.
7. No Section 83(b) Election for Shares; Independent Tax Advice
Sony acknowledges that it has not provided, and will not be providing, any services to the
Company or to Redbox under the License Agreement or otherwise. As such, Sony hereby confirms that
the Shares are not being transferred in connection with the performance of services within the
meaning of Section 83(a) of the Internal Revenue Code of 1986 (the “Code”), and Sony is not
entitled to, and will not make, an election with respect to the Unvested Shares under Section 83(b)
of the Code.
SONY FURTHER ACKNOWLEDGES THAT THE COMPANY HAS DIRECTED SONY TO SEEK INDEPENDENT ADVICE
REGARDING THE APPLICABLE PROVISIONS OF THE CODE AND THE INCOME TAX LAWS OF ANY APPLICABLE
MUNICIPALITY, STATE OR FOREIGN COUNTRY WHERE SONY IS OR MAY BE SUBJECT TO TAX.
Sony acknowledges that determining the actual tax consequences to Sony of receiving or
disposing of the Shares may be complicated. These tax consequences will depend, in part, on Sony’s
specific situation and may also depend on the resolution of currently uncertain tax law and other
variables not within the control of the Company. Sony is aware that it should consult a competent
and independent tax advisor for a full understanding of the specific tax consequences of receiving
or disposing of the Shares. Prior to executing this Agreement, Sony either has consulted with a
competent tax advisor independent of the Company to obtain tax advice concerning the Shares in
light of its specific situation or has had the opportunity to consult with such a tax advisor but
has chosen not to do so.
8. Book Entry Registration of the Shares
The Company will issue the Shares by registering the Shares in book entry form with the
Company’s transfer agent in Sony’s name and the applicable restrictions will be noted in the
records of the Company’s transfer agent and in the book entry system. No certificate(s)
representing Unvested Shares will be issued until the Shares, or the applicable portion of such
Shares, become Vested Shares. Subject to provision by Sony of any documentation reasonably
requested by the Company, upon written request by Sony the Company will provide to the transfer
agent (and to such other persons as may be reasonably required) such documentation as is reasonably
necessary to (a) remove any restrictions under this Agreement with respect to the Unvested Shares
that have become Vested Shares or (b) otherwise facilitate a lawful transfer of Unvested Shares or
Vested Shares pursuant to the terms and conditions of this Agreement.
9. Stop-Transfer Notices and Restrictive Legends
9.1 Sony understands and agrees that, in order to ensure compliance with the restrictions and
forfeiture conditions referred to in this Agreement, the Company may issue appropriate
“stop-transfer” and other instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same effect in its own
records. The Company will not be required to (a) transfer on its books any Shares that have been
sold or transferred in violation of the provisions of this Agreement or (b) treat as the owner of
the Shares, or otherwise accord voting, or dividend rights to any transferee to whom the Shares
have been transferred in contravention of this Agreement.
9.2 The restrictions noted in the records of the Company’s transfer agent and any certificate
or certificates representing the Shares shall bear the following legends in substantially the
following form (as well as any other legends required by applicable state and federal corporate
securities laws) as reasonably deemed appropriate by the Company:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION OR OTHER TRANSFER THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR THE COMPANY’S RECEIPT OF AN OPINION OF TRANSFEROR’S
LEGAL COUNSEL STATING THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION OR THE COMPANY
OTHERWISE SATISFIES ITSELF THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION.
Notwithstanding the foregoing, upon Sony’s request, promptly following the date that Vested Shares
may be sold under Rule 144 without volume restrictions or manner of sale limitations, the Company
shall cause its legal counsel to issue a legal opinion to the Company’s transfer
agent and to Sony (which opinion shall be reasonable in form and substance) that any and all
certificates representing such Vested Shares shall be issued free of all legends.
| 10. | Rule 144 Reporting |
10.1 With a view to making available the benefits of certain rules and regulations of the SEC
that will permit the sale of the Vested Shares without registration with the SEC, the Company
agrees to:
(a) make and keep public information available, as such terms are understood and defined in
Rule 144(c)(i) of the Securities Act, at all times until the one year anniversary from the date on
which there are no remaining Unvested Shares held by Sony under this Agreement;
(b) file with the SEC in a timely manner all reports and other documents required to be filed
by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
(c) so long as Sony owns any Shares, upon request by Sony, if the Company is not filing
reports and other documents under the Exchange Act, the Company will make available other
information as required by, and so long as necessary to permit sales of the Shares pursuant to,
Rule 144A (including the provision of information to Sony and prospective purchasers designated by
Sony pursuant to Rule 144A(d)(4)) and, commencing at such time as sales are permitted under Rule
144, Rule 144A, and in any event shall make available (either by mailing a copy thereof, by posting
on the Company’s website, or by press release) to Sony a copy of:
(i) the Company’s annual consolidated financial statements (including at least balance sheets,
statements of profit and loss, statements of stockholders’ equity and statements of cash flows)
prepared in accordance with generally accepted accounting principles in the United States, no later
than 90 days after the end of each fiscal year of the Company; and
(ii) the Company’s quarterly consolidated financial statements (including at least balance
sheets, statements of profit and loss, statements of stockholders’ equity and statements of cash
flows) prepared in a manner substantially consistent with the preparation of the Company’s annual
consolidated financial statements, no later than 45 days after the end of each fiscal quarter of
the Company.
10.2 If the Company shall fail for any reason to satisfy the requirements of clause (a) or (b)
of this Section 10 (a “Public Information Failure”) then, in addition to Sony’s other available
remedies, the Company shall pay to Sony, in cash, as partial liquidated damages and not as a
penalty, by reason of any such delay in or reduction of its ability to sell the Vested Shares then
held by Sony (or a U.S. affiliate of Sony), an amount in cash equal to two percent (2.0%) of the
aggregate value of the Vested Shares then held by Sony (or a U.S. affiliate of Sony) valued at the
higher of the Agreement Date Closing Price or the average closing price per share of the Company’s
Common Stock for the ten full trading days prior to, but not including, the day of the Public Information Failure on the day of a Public
Information Failure and on every thirtieth (30th) day (pro rated for periods totaling
less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure
is cured
and (ii) such time that such public information is no longer required for Sony to
transfer its Vested Shares pursuant to Rule 144. The payments to which Sony shall be entitled
pursuant to this Section 10.2 are referred to herein as “Public Information Failure Payments.”
Public Information Failure Payments shall be paid on the earlier of (1) the last day of the
calendar month during which such Public Information Failure Payments are incurred and (2) the third
(3rd) business day after the event or failure giving rise to the Public Information
Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at a rate
equal to the lesser of 1.5% per month (prorated for partial months) or the maximum amount allowed
by applicable law until paid in full. Nothing herein shall limit Sony’s right to pursue actual
damages for the Public Information Failure, and Sony shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief.
| 11. | Tax Withholding |
Sony shall provide such certificates as reasonably requested by the Company to enable the
Company to comply with any applicable information reporting or withholding requirements with
respect to the Shares, and such certificates may include, among other things, a properly executed
IRS Form W-9.
| 12. | General Provisions |
12.1 Notices
Whenever any notice is required or permitted hereunder, such notice must be in writing and
personally delivered or sent by facsimile or mail. Any notice required or permitted to be
delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered
or facsimile distributed with verifiable receipt, or, whether actually received or not, on the
third business day after it is deposited in the United States mail, certified or registered,
postage prepaid, addressed to the party who is to receive it at the address or facsimile number
that such party has theretofore specified by written notice delivered in accordance herewith. The
Company or Sony may change, by written notice to the other, the address previously specified for
receiving notices. Unless changed pursuant to the terms of this Section, notices delivered to the
Company shall be addressed as follows:
Company:
|
Coinstar, Inc. Attn: General Counsel 0000 000xx Xxxxxx XX Xxxxxxxx, XX 00000 Fax.: (000) 000-0000 |
|
| and notices delivered to Sony shall be addressed as follows: | ||
Sony:
|
Sony Pictures Home Entertainment Inc. c/o Sony Pictures Entertainment Inc. 00000 Xxxx Xxxxxxxxxx Xxxxxxxxx |
|
| Xxxxxx Xxxx, XX 00000 Attention: General Counsel Facsimile: (000) 000-0000 |
12.2 No Waiver
No waiver of any provision of this Agreement will be valid unless in writing and signed by the
party against whom such waiver is sought to be enforced, nor will failure to enforce any right
hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.
12.3 Undertaking
Each party hereby agrees to take whatever additional action and execute whatever additional
documents the other party may reasonably deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on such party pursuant to the express
provisions of this Agreement.
12.4 Entire Contract
This Agreement constitutes the entire agreement between the parties hereto with regard to the
subject matter hereof and supersedes all prior oral or written agreements on the subject.
12.5 Successors and Assigns
The provisions of this Agreement will inure to the benefit of, and be binding on, the Company
and its successors and assigns and Sony’s successors and assigns and transferees by operation of
law, whether or not any such party will have become a party to this Agreement and agreed in writing
to join herein and be bound by the terms and conditions hereof.
12.6 Counterparts
This Agreement may be executed in two or more counterparts, each of which will be deemed an
original, but which, upon execution, will constitute one and the same instrument.
12.7 Governing Law; Dispute Resolution
The provisions of this Agreement shall be governed by the laws of the state of Delaware,
without giving effect to principles of conflicts of law. The provisions of Section 6.2 of Schedule
A to the License Agreement are hereby incorporated into this Agreement such that the procedures set forth in such Section 6.2 (and its subsections) shall apply to
any action or proceeding arising in connection with, touching upon, or relating to this Agreement.
12.8 Confidentiality
The parties acknowledge and agree that the Company may disclose this Agreement in summary
tabular form in its next filing on Form 10-Q in to the extent such disclosure is required by the
Exchange Act in order to be in compliance with the requirements of Part II, Item 2 of such Form.
Except as provided in the preceding sentence, the parties hereto will keep the terms and existence
of this Agreement confidential and will not now or hereafter divulge any of this information to any
third party except (a) with the prior written consent of the other party; (b) as otherwise may be
required by law or legal process or, so long as such disclosure is made pursuant to binding
confidentiality obligations, as may be required in connection with profit participants or guild
obligations; (c) during the course of litigation, so long as the disclosure of such terms and
conditions is restricted in the same manner as is the confidential information of other litigating
parties; or (d) in confidence to its affiliates or its, or its affiliates’, legal counsel,
accountants, banks, and financing sources and their advisors in connection with complying with or
administering its obligations with respect to this Agreement; provided, however, that in (b) and
(c) above, to the extent permitted by law, (i) the disclosing party will use all reasonably
available legal means to minimize the disclosure to third parties, including, without limitation,
seeking a confidential treatment request or protective order whenever appropriate or available; and
(ii) the disclosing party will provide the other party with at least ten (10) days’ prior written
notice of such disclosure.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement dated as of the date first set
forth above.
| COINSTAR, INC. |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | Xxxx Xxxxx | |||
| Title: | Chief Executive Officer | |||
| SONY PICTURES HOME ENTERTAINMENT INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | Executive Vice President | |||
