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EXHIBIT 4.1
SENIOR SECURED NOTE
$15,600,000 Seattle, Washington
February 10, 2000
For value received, ▇▇▇▇▇.▇▇▇, INC., a Delaware corporation
("BORROWER"), unconditionally promises to pay to the order of COINSTAR, INC., a
Delaware corporation ("LENDER"), the principal sum of Fifteen Million Six
Hundred Thousand Dollars ($15,600,000), or so much thereof as Lender may
actually loan ("ADVANCE") to Borrower under this note (this "NOTE"), plus
interest on the outstanding advances from the date of each advance until repaid
at the rate of interest announced from time to time by Imperial Bank as its
Prime Commercial Lending Rate, plus 3% per annum, compounded annually, plus all
of Lender's reasonable attorneys' fees and costs, at the times and in the manner
provided for in this Note. In the event Imperial Bank ceases to announce or
publish its Prime Commercial Lending Rate, the Lender will set the interest rate
by using a comparable index or reference rate. This is a senior secured advance
note.
1. AUTHORIZED INDIVIDUALS; AUTHORIZED DOCUMENTS; BORROWER REPRESENTATION
REGARDING EACH ADVANCE
▇▇▇▇▇▇▇▇ has authorized its Chief Executive Officer or its Chief
Financial Officer each acting alone, to request advances on behalf of ▇▇▇▇▇▇▇▇.
Copies, certified as true and in effect by the Board of Directors of Borrower,
of resolutions of the Board of Directors of Borrower authorizing those
individuals to obtain advances from Lender and obligating Borrower to repay
those advances with interest, fees and costs, will be provided to Lender at the
time this Note is executed (i.e., signed and delivered to Lender by a duly
authorized representative of Borrower). Borrower will bear all risk of loss
resulting from an unauthorized advance and from misappropriation of funds
disbursed pursuant to an authorized advance. ▇▇▇▇▇▇ shall have no duty of
inquiry as to authorization for any advance or for use of advance proceeds
following disbursement into ▇▇▇▇▇▇▇▇'s account. In connection with each advance,
Borrower shall be deemed to have made each of the representations and warranties
set forth in Section 10 herein as of the date of the requested advance.
2. ADVANCES
All advances outstanding as of the date hereof shall be deemed advances
under this Note. As of the date hereof, $5,600,000 has been advanced by Lender
to
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Borrower and is deemed to be outstanding under this Note. ▇▇▇▇▇▇ will keep
records as to each advance, which will be conclusive evidence of all advances
absent manifest error.
3. PAYMENT
Borrower shall pay all outstanding principal plus all accrued interest
on demand; provided, however, that demand may not be made before the earlier of
(i) the date when Borrower has raised in the aggregate at least $100,000,000 in
additional capital, (ii) the closing of a transaction in which the holders of
the Company's Preferred Stock and Warrants outstanding on the date of this Note
receive cash or registered securities in an amount equal to the then fair market
value for their shares and warrants, (iii) the closing of the Company's initial
public offering, as long as the underwriters for that offering have agreed to
such demand and (iv) such date, if any, as may be consented to by Borrower in
connection with the incurrance of additional debt as contemplated by Section
11(c). Demand may be made before such time upon the occurrence of an Event of
Default (as defined in Section 13 herein). Unless otherwise agreed or required
by applicable law, interest will accrue on the outstanding principal at the
rates set forth herein and as long as Lender has not made demand for payment
and/or no Event of Default exists, all accrued interest on the advances
hereunder shall be added to and become a part of the principal outstanding under
this Note on an annual basis on each anniversary of the date hereof.
4. PREPAYMENT
Borrower shall have the right at any time and from time to time to
prepay the principal hereof in whole or in part without premium or penalty.
5. DEFAULT RATE
Following demand for payment under this Note or acceleration of this
Note by reason of ▇▇▇▇▇▇▇▇'s default, interest will be payable at a default rate
equal to five percent (5%) in excess of the rate that would otherwise be
applicable.
6. OUT-OF-POCKET COSTS REIMBURSEMENT
Borrower will pay on demand all reasonable costs incurred by ▇▇▇▇▇▇ in
enforcing the obligations evidenced by this Note or any of the other documents
related to the advance evidenced by this Note (collectively, the "Related
Documents"), including reasonable attorneys' fees and the costs of foreclosure
against any collateral security, whether or not a civil action or similar
proceeding (including claims and adversary proceedings in the bankruptcy court)
is commenced or pursued to judgment
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or an appeal thereof is filed or pursued to completion. Interest will accrue on
the unpaid balance of such costs at the default rate from the tenth (10th)
business day following the demand until such costs are paid.
7. USE OF PROCEEDS
Borrower represents and covenants that the proceeds of the loan made to
Borrower and evidenced by this Note will be used by Borrower only for working
capital purposes. Borrower represents and warrants that the proceeds of the loan
under this Note will be used only for commercial or business purposes, and will
not be used to acquire any "margin stock" as that term is used in Regulation U
of the Federal Reserve Board or to redeem outstanding securities, unless
consented to by Lender.
8. ▇▇▇▇▇▇▇▇'S WAIVERS
Borrower waives notice of acceptance, notice, presentment, demand,
protest, dishonor, and notice of dishonor.
9. ▇▇▇▇▇▇'S PREROGATIVES
Lender may forbear and/or extend the maturity date or renew this Note
one or more times on such terms as Lender may specify. ▇▇▇▇▇▇'s forbearance or
other failure to exercise any right or remedy upon ▇▇▇▇▇▇▇▇'s default shall not
constitute a waiver or grounds for the claim of estoppel with respect to the
default or the term involved while such default continues or in connection with
any future default.
10. ▇▇▇▇▇▇▇▇'S REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
(a) Borrower has been duly formed as a corporation under Delaware law
and has filed all assumed business names and other certificates required by law
in connection with the formation and business operation of Borrower.
(b) Borrower has been duly authorized, in accordance with the terms of
its certificate of incorporation, to execute, deliver and perform Borrower's
obligations under this Note and the Related Documents.
(c) This Note and each of the Related Documents have been executed by
duly authorized representatives of ▇▇▇▇▇▇▇▇, and have been delivered to Lender
by a representative of Borrower who has been duly authorized to perform such
act.
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(d) This Note and each of the Related Documents are the legally valid
and binding obligations of Borrower, enforceable against Borrower and third
persons in accordance with their terms except as such enforcement may be delayed
or restricted under insolvency laws and principles of equity affecting the
rights and remedies of creditors generally.
(e) The execution and delivery of this Note and each of the Related
Documents and the performance of the obligations evidenced by this Note and each
of the Related Documents will not violate any law applicable to Borrower or
constitute a default or breach of any contract to which Borrower is a party or
by which its properties are bound.
(f) There is no litigation, prosecution, investigation or other
proceeding of any nature whatsoever, to the knowledge of Borrower, now pending
or threatened, involving Borrower or its properties which would have a material
adverse impact on the ability of Borrower to perform the obligations evidenced
by this Note.
(g) The financial information provided by Borrower to Lender is true and
correct in all material respects and accurately presents the financial condition
of Borrower as of the date of such information.
(h) Borrower is not in default in the performance of any material
obligation to any third person except for those obligations which are being
contested in good faith by appropriate means and with an adequate reserve
maintained for payment in the event of an adverse outcome.
(i) Borrower is in compliance with all applicable laws, regulations and
orders of governmental subdivisions and agencies, the noncompliance of which
would be material to Borrower's financial condition, business or properties.
(j) ▇▇▇▇▇▇▇▇ has filed all tax returns required by law to be filed and
has paid all taxes and similar government impositions when due except for those
taxes and impositions being contested by Borrower in good faith by appropriate
means and with an adequate reserve maintained for payment in the event of an
adverse outcome.
(k) ▇▇▇▇▇▇▇▇ is not insolvent and is not the subject of any insolvency
proceedings as those terms are defined in RCW 62A.1-201(22) and (23). There has
been no material adverse change in Borrower's business, financial condition, and
properties since the date of the last financial statements provided to Lender.
(l) There has been no material adverse change in the financial
condition, results of operation, prospects or otherwise of the Borrower since
the date of this Note or of an advance, whichever is later.
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11. BORROWER'S COVENANTS
Unless Borrower shall have obtained the prior written consent of ▇▇▇▇▇▇,
Borrower covenants and agrees that until all amounts, including principal,
interest and other amounts due under this Note, are paid in full:
(a) Borrower will at all times preserve and keep in full force and
effect its existence as a corporation.
(b) Borrower will not create or suffer to exist any liens upon or with
respect to any of its properties, whether now owned or hereinafter acquired,
other than such liens as will not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of the Borrower.
(c) Borrower will not create or suffer to exist any debt other than the
debt evidenced by this Note that is payable before repayment of this Note.
(d) Borrower will promptly and fully comply with all laws, regulations
and orders, the noncompliance with which would have a material adverse impact on
Borrower's financial condition, business or property.
(e) Borrower will file all tax returns required by law to be filed and
will pay all taxes and similar government impositions being contested by
Borrower in good faith by appropriate means and with an adequate reserve
maintained for payment in the event of an adverse outcome.
(f) Borrower will provide to Lender such information as may be required
to keep ▇▇▇▇▇▇ currently and completely informed as to all material matters
involving the business, financial condition and property of Borrower, including
pending and threatened litigation and other governmental proceedings.
(g) Borrower will promptly and in no case later than two (2) business
days after Borrower has knowledge of the occurrence of an Event of Default (as
defined in Section 13 hereof) or an event, act or condition that, with notice or
lapse of time or both, would constitute an Event of Default, provide Lender with
a certificate of the chief executive officer of Borrower specifying the nature
thereof and ▇▇▇▇▇▇▇▇'s proposed response thereto.
(h) Borrower will promptly notify Lender in writing of any loss, damage,
investigation, action, suit, proceeding or claim relating to a material portion
of the assets and properties of Borrower that may result in any material adverse
change in Borrower's business, operations, properties, assets or condition
(financial or otherwise).
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(i) Borrower will keep its books of accounting in accordance with
generally accepted accounting principles, consistently applied, and furnish to
Lender:
(i) All such financial information as may reasonably be
requested by ▇▇▇▇▇▇;
(ii) Promptly upon filing its federal income tax return, a copy
of ▇▇▇▇▇▇▇▇'s federal income tax return, together with all schedules
thereto; and
(iii) As soon as practicable and in any event within thirty (30)
days after the close of each fiscal quarter of Borrower, projections of
Borrower's sources and uses of funds for the immediately following nine
(9) months (broken down on a month-by-month basis), in form and
substance satisfactory to Lender.
12. SECURITY FOR LOANS
As security for the payment and performance of its obligations
hereunder, the Borrower hereby grants the Lender a security interest in all of
the Borrower's right, title and interest in and to the collateral described in
the Security Agreement and Intellectual Property Security Agreement executed by
the Borrower in favor of the Lender.
13. EVENTS OF DEFAULT
▇▇▇▇▇▇ acknowledges that the only basis for demand to be made on this
Note prior to the occurrence of any of the events described in clauses (i), (ii)
or (iii) of Section 3 shall be the following "EVENTS OF DEFAULT":
(a) Failure of Borrower to pay any principal under this Note when due or
failure to pay any interest or other amount due under this Note within five (5)
business days after the date due; or
(b) Breach of either of the covenants set forth in Section 11 (b) or
(c); or
(c) The liquidation of the Borrower; or
(d) A court having proper jurisdiction shall enter a decree or order for
relief in respect to Borrower in an involuntary case under Title 11 of the
United States Code entitled "BANKRUPTCY" (as now and hereinafter in effect, or
any successor thereto, the "BANKRUPTCY CODE") or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed or any other similar relief shall be granted under any
applicable federal or state law; or
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(e) An involuntary case shall be commenced against Borrower under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Borrower or all or a substantial part
of its property shall have been entered, or the involuntary appointment of an
interim receiver, trustee or other custodian of Borrower for all or a
substantial part of its property shall have occurred, or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of Borrower; or
(f) An order for relief shall be entered with respect to Borrower, or
Borrower shall commence a voluntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case or to the conversion of an involuntary case to a voluntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property, or Borrower shall make an assignment for the benefit of creditors, or
Borrower shall be unable or fail or shall admit in writing its inability to pay
its debts as such debts become due, or any member of Borrower shall authorize
action to approve any of the foregoing.
14. REMEDIES
After the occurrence and during the continuation of any Event of
Default, Lender may, but shall not be obligated to, immediately demand payment
of this Note without prior notice and may immediately proceed to exercise all
rights and remedies that Lender may have against Borrower and any collateral of
Borrower. All rights and remedies of Lender are cumulative and not exclusive and
the commencement or partial exercise of any such right or remedy shall not
preclude Lender from the exercise of any other right or remedy until the debts
evidenced by this Note are paid in full. ▇▇▇▇▇▇'s rights specifically include
the right of setoff against any obligations owed by ▇▇▇▇▇▇ to Borrower against
▇▇▇▇▇▇▇▇'s obligations to Lender as evidenced by this Note.
15. PARTICIPATIONS; NO BORROWER ASSIGNMENT; SUCCESSORS AND ASSIGNS
Lender shall have the unconditional right to sell participation
interests in this Note, the Related Documents and the collateral of Borrower.
Borrower shall not have the right to assign its rights or obligations under this
Note and any attempted assignment also shall be a default by Borrower under this
Note. Subject to the foregoing restrictions on Borrower assignment, this Note
and the Related Documents
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shall bind and inure to the benefit of the respective successors and assigns of
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇.
16. INTEGRATION; SUPPLEMENTING DOCUMENTS
This Note and the Related Documents are the final and complete
expression of the agreement of the parties hereto and are intended to supersede
any prior or contemporaneous oral or written understandings and agreements
relating to this Note and the collateral security between the parties hereto.
This Note and the Related Documents are intended to complement and supplement
one another. However, in the event of a direct conflict in terms or conditions,
the terms and conditions of this Note shall govern those contained in any of the
Related Documents.
17. CHOICE OF LAW
Borrower and ▇▇▇▇▇▇ have selected Washington law, except for any of its
choice of law provisions that would make the law of another jurisdiction
applicable to this Note, to govern the construction and enforcement of this
Note. In construing this Note and the Related Documents, resort first shall be
had to the definitions and substantive terms of the Uniform Commercial Code and
the Bankruptcy Code before any other source.
18. JURISDICTIONAL CONSENT
Borrower hereby submits to the jurisdiction of any state or federal
court sitting in Seattle, Washington, in any action or proceeding relating to
this Note and hereby waives any claim that such a forum is inconvenient or that
there is a more convenient forum.
19. SAVINGS CLAUSE
If any term of this Note is hereafter determined to be illegal or
unenforceable, that term will be deemed deleted without invalidating the
remaining terms and, to the fullest extent permitted by law, Borrower hereby
waives any provision of law which renders any term illegal or unenforceable. In
the event that (a) the amount of interest and fees payable by Borrower under
this Note is later determined to be usurious and (b) Borrower is not prohibited
from pleading the defense of usury or maintaining any action thereon or
therefor, any such interest in excess of the maximum allowable rate
automatically shall be deemed to have been applied to principal.
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20. STATUTORY DISCLAIMER
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
▇▇▇▇▇.▇▇▇, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Executive Officer
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