EXECUTION COPY
WARRANT AGREEMENT
Dated as of October 22, 1996
By and Between
COINSTAR, INC.
and
THE BANK OF NEW YORK
AS WARRANT AGENT
Warrants to Purchase 665,000 Shares of Common Stock
$.001 Par Value
WARRANT AGREEMENT
WARRANT AGREEMENT ("AGREEMENT"), dated as of October 22, 1996 by COINSTAR,
INC., a Delaware corporation (together with any successor thereto, the
"COMPANY"), and The Bank of New York, not in its individual capacity but solely
as warrant agent (with any successor Warrant Agent, the "WARRANT AGENT").
WHEREAS, the Company has entered into a purchase agreement (the
"PURCHASE AGREEMENT") dated October 22, 1996 with Xxxxx Xxxxxx Inc. (the
"INITIAL PURCHASER") in which the Company has agreed to sell to the Initial
Purchaser 95,000 units (the "UNITS") consisting in the aggregate of (i)
$95,000,000 aggregate principal amount at maturity of 13% Senior Subordinated
Discount Notes due October 1, 2006 (the "NOTES") of the Company to be issued
under an indenture dated as of October 1, 1996 (the "INDENTURE"), between the
Company and The Bank of New York, as trustee (in such capacity, the "TRUSTEE")
and (ii) 95,000 Warrants (the "INITIAL WARRANTS" and the certificates evidencing
the Initial Warrants being hereinafter referred to as "INITIAL WARRANT
CERTIFICATES"), 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 the
holders of the Notes upon the occurrence of the Contingent Event ( as defined
below) (the "CONTINGENT WARRANTS" and the certificates evidencing the Contingent
Warrants being hereinafter referred to as "CONTINGENT WARRANT CERTIFICATES"),
each representing the right to purchase initially three shares of Common Stock.
The Initial Warrants and the Contingent Warrants are referred to herein
collectively as the "WARRANTS," and the Initial Warrant Certificates and the
Contingent Warrant Certificates are referred to herein collectively as the
"WARRANT CERTIFICATES";
WHEREAS, the Company desires the Warrant Agent to assist the Company
in connection with the issuance, exchange, cancellation, replacement and
exercise of the Warrants, and in this Agreement wishes to set forth, among other
things, the terms and conditions on which the Warrants may be issued, exchanged,
canceled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND REGISTRATION
OF WARRANT CERTIFICATES
SECTION 1.1. ISSUANCE OF WARRANTS. The Initial Warrants shall be
issued in connection with the issuance of the Notes.
The Contingent Warrants shall be issued on October 1, 1998 to the then
current holders of the Notes if the Company has not consummated an offering of
Equity Interests (other than Disqualified Capital Stock) to the public pursuant
to a registration statement filed with the Commission, the gross proceeds of
which exceed $25 million, and an Exercise Event has not
otherwise occurred (the "Contingent Event"). See Section 2.2 for the
definitions of the terms in this sentence.
Each Warrant Certificate shall evidence the number of Warrants specified
therein, and each Warrant evidenced thereby shall represent the right, subject
to the provisions contained herein and therein, to purchase from the Company
(and the Company shall issue and sell to such holder of the Warrant) the number
of fully paid and non-assessable shares of Common Stock stated in the Warrant
(the shares purchasable upon exercise of a Warrant being hereinafter referred to
as the "SHARES" and, where appropriate, such term shall also mean the other
securities or property purchasable and deliverable upon exercise of a Warrant as
provided in Article V) at the price specified herein and therein, in each case
subject to adjustment as provided herein and therein.
SECTION 1.2. FORM OF WARRANT CERTIFICATES. The Warrant Certificates
will initially be issued in global form (the "GLOBAL WARRANTS"), substantially
in the form of EXHIBIT A hereto (with respect to the Initial Warrants) and
EXHIBIT B hereto (with respect to the Contingent Warrants) (in each case,
including footnote 1 thereto). In the future, Warrant Certificates may be
issued in registered form as definitive Warrant certificates (the "DEFINITIVE
WARRANTS"). The Warrant Certificates evidencing the Global Warrants or the
Definitive Warrants to be delivered pursuant to this Agreement shall be
substantially in the form set forth in EXHIBIT A hereto (with respect to the
Initial Warrants) and EXHIBIT B hereto (with respect to the Contingent
Warrants). Such Global Warrants shall represent such of the outstanding
Warrants as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Warrants from time to time
endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the amount of outstanding Warrants represented thereby
shall be made by the Warrant Agent and Depository (as defined below) in
accordance with instructions given by the holder thereof. The Depository Trust
Company shall act as the Depository with respect to the Global Warrants until a
successor shall be appointed by the Company and the Warrant Agent. Upon written
request, a Warrant holder may receive from the Warrant Agent Definitive Warrants
as set forth in Section 1.7 hereof.
SECTION 1.3. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by the chairman of its
Board of Directors, its president or any vice president and attested by its
secretary or assistant secretary. Such signatures may be the manual or
facsimile signatures of the present or any future such officers. Typographical
and other minor errors or defects in any such reproduction of any signature
shall not affect the validity or enforceability of any Warrant Certificate that
has been duly countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificate so
signed shall be countersigned and delivered by the Warrant Agent or disposed of
by the Company, such Warrant Certificate nevertheless may be countersigned and
delivered or disposed of as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of
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the execution of such Warrant Certificate, shall be the proper officers of the
Company, although at the date of the execution and delivery of this Agreement
any such person was not such an officer.
SECTION 1.4. AUTHENTICATION AND DELIVERY. Subject to the immediately
following paragraph, Warrant Certificates shall be authenticated by manual
signature and dated the date of authentication by the Warrant Agent and shall
not be valid for any purpose unless so authenticated and dated. The Warrant
Certificates shall be numbered and shall be registered in the Warrant Register
(as defined in Section 1.6 hereof).
Upon the receipt by the Warrant Agent of a written order of the Company,
which order shall be signed by the chairman of its Board of Directors, its
president or any vice president and attested by its secretary or assistant
secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants, the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.3 hereof, to authenticate
the Warrant Certificates and deliver them. Such authentication shall be by a
duly authorized signatory of the Warrant Agent (although it shall not be
necessary for the same signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company,
such Warrant Certificate nevertheless may be delivered or disposed of as though
the person who authenticated such Warrant Certificate had not ceased to be such
authorized signatory of the Warrant Agent; and any Warrant Certificate may be
authenticated on behalf of the Warrant Agent by such persons as, at the actual
time of authentication of such Warrant Certificates, shall be the duly
authorized signatories of the Warrant Agent, although at the time of the
execution and delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall be in
substantially the form set forth in Exhibits A and B.
SECTION 1.5. TEMPORARY WARRANT CERTIFICATES. Pending the preparation
of definitive Warrant Certificates, the Company may execute, and the Warrant
Agent shall authenticate and deliver, temporary Warrant Certificates, which are
printed, lithographed, typewritten or otherwise produced, substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Warrant Certificates may determine, as
evidenced by their execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 1.9 hereof.
Subject to the
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provisions of Section 4.1 hereof, such exchange shall be without charge to the
holder. Upon surrender for cancellation of any one or more temporary Warrant
Certificates, the Company shall execute, and the Warrant Agent shall
authenticate and deliver in exchange therefor, one or more definitive Warrant
Certificates representing in the aggregate a like number of Warrants. Until so
exchanged, the holder of a temporary Warrant Certificate shall in all respects
be entitled to the same benefits under this Agreement as a holder of a
definitive Warrant Certificate.
SECTION 1.6. REGISTRATION. The Company will keep, at the office or
agency maintained by the Company for such purpose, a register or registers in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of, and registration of transfer and exchange
of, Warrants as provided in this Article. Each person designated by the Company
from time to time as a person authorized to register the transfer and exchange
of the Warrants is hereinafter called, individually and collectively, the
"REGISTRAR." The Company hereby initially appoints the Warrant Agent as
Registrar. Upon written notice to the Warrant Agent and any acting Registrar,
the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one person (who may be the Company
and who need not be a Registrar) to act as repository of a master list of names
and addresses of the holders of Warrants (the "WARRANT REGISTER"). The Warrant
Agent will act as such repository unless and until some other person is, by
written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each
Registrar to furnish to such repository, on a current basis, such information as
to all registrations of transfer and exchanges effected by such Registrar, as
may be necessary to enable such repository to maintain the Warrant Register on
as current a basis as is practicable.
SECTION 1.7. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE WARRANTS. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number
of Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.7 hereof for such transactions are met; provided, however, that the Definitive
Warrants presented or surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Company and the Warrant Agent, duly executed by the
holder thereof or by his attorney, duly authorized in
writing; and
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(y) in the case of Warrants the offer and sale of which have
not been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and are presented for
transfer or exchange prior to (x) the date which is three
years after the later of the date of original issue and
the last date on which the Company or any affiliate of
the Company was the owner of such Warrant, or any
predecessor thereto and (y) such other date, if any, as
may be required by any subsequent change in applicable
law (the "RESALE RESTRICTION TERMINATION DATE"), such
Warrants shall be accompanied, in the sole discretion of
the Company, by the following additional information and
documents, as applicable, however, it being understood
that the Warrant Agent need not determine which clause
(A) through (D) below is applicable:
(A) if such Warrant is being delivered to the Warrant
Agent by a holder for registration in the name of
such holder, without transfer, a certification
from such holder to that effect (in substantially
the form of Exhibit B hereto); or
(B) if such Warrant is being transferred to a
qualified institutional buyer (as defined in Rule
144A under the Securities Act (a "QIB")) in
accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act, a certification to that effect (in
substantially the form of EXHIBIT C hereto); or
(C) if such Warrant is being transferred to an
"accredited investor" within the meaning of Rule
501(a) under the Securities Act (an "ACCREDITED
INVESTOR"), delivery of a Certificate of Transfer
in the form of EXHIBIT D hereto and an opinion of
counsel and/or other information satisfactory to
the Company to the effect that such transfer is in
compliance with the Securities Act; or
(D) if such Warrant is being transferred in reliance
on another exemption from the registration
requirements of the Securities Act, a
certification to that effect (in substantially the
form of EXHIBIT C hereto) and an opinion of
counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance
with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the
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Warrant Agent of a Definitive Warrant, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Warrant Agent,
together with:
(A) certification, substantially in the form of
EXHIBIT C hereto, that such Definitive Warrant is
being transferred to a QIB in accordance with Rule
144A under the Securities Act or to an Accredited
Investor pursuant to another available exemption
under such Act; and
(B) written instructions directing the Warrant Agent
to make, or to direct the Depository to make, an
endorsement on the Global Warrant to reflect an
increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depository to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall authenticate a new Global Warrant in the appropriate amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depository, in accordance with this Warrant Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR A
DEFINITIVE WARRANT.
(i) Any person having a beneficial interest in a Global
Warrant may upon request exchange such beneficial
interest for a Definitive Warrant. Upon receipt by the
Warrant Agent of written instructions or such other form
of instructions as is customary for the Depository from
the Depository or its nominee on behalf of any person
having a beneficial interest in a Global Warrant and upon
receipt by the Warrant Agent of a written order or such
other form of instructions as is customary for the
Depository or the person designated by the Depository as
having such a beneficial interest containing registration
instructions and, in the case of any such transfer or
exchange prior to the Resale Restriction Termination
Date, the following additional information and documents,
however, it being understood that the Warrant Agent need
not determine which clause (A) through (D) below is
applicable:
(A) if such beneficial interest is being transferred
to the person designated by the Depository as
being the beneficial owner, a certification from
such person to that effect (in substantially the
form of EXHIBIT C hereto); or
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(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective
registration statement in accordance with Rule 144
or Rule 904 under the Securities Act, a
certification to that effect from the transferee
or transferor (in substantially the form of
EXHIBIT C hereto); or
(C) if such beneficial interest is being transferred
to an Accredited Investor, delivery of a
Certificate of Transfer in the form of EXHIBIT D
hereto and an opinion of counsel and/or other
information satisfactory to the Company to the
effect that such transfer is in compliance with
the Securities Act; or
(D) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferee
or transferor (in substantially the form of
EXHIBIT B hereto) and an opinion of counsel from
the transferee or transferor reasonably acceptable
to the Company to the effect that such transfer is
in compliance with the Securities Act,
then the Warrant Agent will cause, in accordance with the
standing instructions and procedures existing between the
Depository and the Warrant Agent, the aggregate amount of
the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt of
an authentication order in the form of an Officers'
Certificate (as defined), the Warrant Agent will
authenticate and deliver to the transferee a Definitive
Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section
1.7(d) shall be registered in such names and in such
authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Warrant Agent in writing.
The Warrant Agent shall deliver such Definitive Warrants
to the persons in whose names such Warrants are so
registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 1.7), a Global Warrant
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the
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Depository or another nominee of the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of such successor Depository.
(f) AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITORY.
If at any time:
(i) the Depository for the Warrants notifies the Company that
the Depository is unwilling or unable to continue as
Depository for the Global Warrant and a successor
Depository for the Global Warrant is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of
Definitive Warrants under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
officers' certificate signed by two officers of the Company (one of whom must be
the principal executive officer, principal financial officer or principal
accounting officer) (an "OFFICERS' CERTIFICATE") requesting the authentication
and delivery of Definitive Warrants, will authenticate and deliver Definitive
Warrants, in an aggregate number equal to the aggregate number of warrants
represented by the Global Warrant, in exchange for such Global Warrant.
(g) LEGENDS.
(i) Except as permitted by the following paragraph (ii), each
Warrant Certificate evidencing the Global Warrants, the
Definitive Warrants (and all Warrants issued in exchange
therefor or substitution thereof) and the Warrant Shares
shall bear a legend substantially to the following
effect:
"THIS SECURITY EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX
XXX XXXXXX XXXXXX SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR
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OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (1) ABOVE.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule
144 under the Securities Act in accordance with this
Section 1.7 or under an effective registration statement
under the Securities Act:
(A) in the case of any Warrant that is a Definitive
Warrant, the Warrant Agent shall permit the holder
thereof to exchange such Warrant for a Definitive
Warrant that does not bear the legends set forth
above and rescind any related restriction on the
transfer of such Warrant; and
(B) any such Warrant represented by a Global Warrant
shall not be subject to the provisions set forth
in (i) above (such sales or transfers being
subject only to the provisions of Section 1.7(c)
hereof); PROVIDED, HOWEVER, that with respect to
any request for an exchange of a Warrant that is
represented by a Global Warrant for a Definitive
Warrant that does not bear the legends set forth
above, which request is made in reliance upon Rule
144 under the Securities Act, the holder thereof
shall certify in writing to the Warrant Agent that
such request is being made pursuant to Rule 144
under the Securities Act (such certification to be
substantially in the form of EXHIBIT C hereto).
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(iii) Any transfer purported to be effected without compliance
with the foregoing provisions in this paragraph (g) shall
be null and void.
(h) CANCELLATION AND/OR ADJUSTMENT OF A GLOBAL WARRANT. At such time
as all beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to or retained and canceled by the Warrant Agent. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, redeemed, repurchased or canceled, the number
of Warrants represented by such Global Warrant shall be reduced and an
endorsement shall be made on such Global Warrant, by the Warrant Agent to
reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
WARRANTS.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request,
and the Warrant Agent shall authenticate Definitive
Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon
any registration, transfer or exchange of Definitive
Warrants or Global Warrants shall be the valid
obligations of the Company, entitled to the same benefits
under this Warrant Agreement as the Definitive Warrants
or Global Warrants surrendered upon the registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of
any Warrant, the Warrant Agent and the Company may deem
and treat the person in whose name any Warrant is
registered as the absolute owner of such Warrant, and
neither the Warrant Agent nor the Company shall be
affected by notice to the contrary.
(j) PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of the Shares upon the exercise of
Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for the Shares in a name
other than that of the registered holder of a Warrant Certificate surrendered
upon the exercise of a Warrant, and the Company shall not be required to issue
or deliver such Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. No service charge shall be imposed for any transfer of
Warrants.
(k) INDEMNIFICATION. Each holder of a Warrant Certificate agrees to
indemnify the Company and the Warrant Agent against any liability that may
result from the transfer, exchange or assignment of such holder's Warrant
Certificate in violation of any provision of this Agreement and/or applicable
U.S. Federal or state securities law.
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SECTION 1.8. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED WARRANT
CERTIFICATES. Upon receipt by the Company and the Warrant Agent (or any agent
of the Company or the Warrant Agent, if requested by the Company or Warrant
Agent) of evidence satisfactory to them of the loss, theft, destruction,
defacement, or mutilation of any Warrant Certificate and of indemnity
satisfactory to them and, in the case of mutilation or defacement, upon
surrender thereof to the Warrant Agent for cancellation, then, in the absence of
notice to the Company or the Warrant Agent that such Warrant Certificate has
been acquired by a bona fide purchaser or holder in due course, the Company
shall execute, and an authorized signatory of the Warrant Agent shall manually
authenticate and deliver, in exchange for or in lieu of the lost, stolen,
destroyed, defaced or mutilated Warrant Certificate, a new Warrant Certificate
representing a like number of Warrants, bearing a number or other distinguishing
symbol not contemporaneously outstanding. Upon the issuance of any new Warrant
Certificate under this Section, the Company may require the payment from the
holder of such Warrant Certificate of a sum sufficient to cover any tax, stamp
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Warrant Agent and the
Registrar) in connection therewith. Every substitute Warrant Certificate
executed and delivered pursuant to this Section in lieu of any lost, stolen or
destroyed Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled to
the benefits of (but shall be subject to all the limitations of rights set forth
in) this Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section 1.8 are exclusive with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates and shall preclude (to the
extent lawful) any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance with
the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.9. OFFICES FOR EXERCISE, ETC. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York, (a) an office or agency where the
Warrant Certificates may be presented for exercise, (b) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 1.5 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect of
the Warrants or of this Agreement may be served. The Company may from time to
time change or rescind such designation, as it may deem desirable or expedient;
PROVIDED, HOWEVER, that an office or agency shall at all times be maintained in
the Borough of Manhattan, The City of New York, as provided in the first
sentence of this Section. In addition to such office or offices or agency or
agencies, the Company may from time to time designate and maintain one or more
additional offices or agencies within or outside The City of New York, where
Warrant Certificates may be presented for exercise or for registration of
transfer or for exchange, and the Company may from time to time change or
rescind such designation, as it may deem desirable or expedient. The Company
will give to the Warrant Agent
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written notice of the location of any such office or agency and of any change of
location thereof. The Company hereby designates the Warrant Agent at its
corporate trust office located at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000 (the "WARRANT AGENT OFFICE"), as the initial agency maintained for each
such purpose. In case the Company shall fail to maintain any such office or
agency or shall fail to give such notice of the location or of any change in the
location thereof, presentations and demands may be made and notice may be served
at the Warrant Agent Office and the Company appoints the Warrant Agent as its
agent to receive all such presentations, surrenders, notices and demands.
SECTION 1.10. OWNERSHIP OF WARRANT The Company or the Warrant Agent
may deem and treat the person in whose name the Warrant is registered as the
holder and owner hereof (notwithstanding any notations of ownership or writing
thereon made by any person other than the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary, until
presentment of this Warrant for registration of transfer as provided in this
Agreement.
ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.1. DURATION OF WARRANTS. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New York
time, on the earlier to occur of (i) 90 days after an Exercise Event which
causes such Warrants to become exercisable and (ii) October 1, 2006 (such
earlier date, the "EXPIRATION DATE"); PROVIDED, HOWEVER, that if the Company
delivers a notice to holders of Warrants and to the Warrant Agent prior to the
Expiration Date stating that upon advice of legal counsel to the Company, the
Warrants cannot be exercised without the benefit of an effective registration
statement and further stating that the Company does not expect such registration
statement to become effective on or before the Expiration Date, then the
Warrants shall expire on the third Business Day following the effectiveness of
such registration statement. Each Warrant may be exercised on any Business Day
(as defined below) on or after an Exercisability Date (as defined below) and on
or prior to the close of business on the Expiration Date.
Any Warrant not exercised before the close of business on the Expiration
Date shall become void, and all rights of the holder under the Warrant
Certificate evidencing such Warrant and under this Agreement shall cease.
"BUSINESS DAY" shall mean any day on which (i) banks in New York City, (ii)
the principal national securities exchange or market, if any, on which the
Common Stock is listed or admitted to trading and (iii) the principal national
securities exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
SECTION 2.2. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY.
(a) Subject to the provisions of this Agreement, a holder of Warrants
shall have the right to purchase from the Company (i) on and for 10 days
following a Co-Sale Event
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the number of fully paid and non-assessable Shares which shall be included in a
sale pursuant to Section 3 or 5 of the Co-Sale Agreement (and in no event
greater than the number of Shares set forth in the applicable Warrant
Certificate) and (ii) on or after the occurrence of an Exercise Event (the date
of the occurrence of an Exercise Event or a Co-Sale Event, as applicable, an
"EXERCISABILITY DATE") and on or prior to the close of business on the
Expiration Date the number of fully paid, registered and non-assessable Shares
set forth in the applicable Warrant Certificate, or, if a Co-Sale Event has
occurred, and a holder of Warrants has exercised a Warrant with respect to less
than all of the Shares set forth in the Warrant Certificate, such number of
remaining Shares, in each case subject to adjustment in accordance with Article
V hereof, at the purchase price of $.01 for each Share for which a Warrant is
exercised (the "EXERCISE PRICE"). The number and kind of Shares for which a
Warrant may be exercised (the "EXERCISE RATE") shall be subject to adjustment
from time to time as set forth in Article V hereof.
"CAPITAL STOCK" means: (i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock; (iii) in the case of a partnership or limited liability
company, partnership interests (whether general or limited) or other
membership interests; and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole to any "person" or "group" (within the meanings of
Sections 13(d)(3) and 14(d)(2), respectively, of the Exchange Act) other
than (y) the holders of the Company's Capital Stock as of the date of this
Agreement, or (z) the Principal or his Related Parties (as defined below),
(ii) the adoption of a plan relating to the liquidation or dissolution of
the Company and (iii) the consummation of any transaction (including any
merger or consolidation) the result of which is that any "person" or
"group" (as defined above), other than (y) the holders of the Company's
Capital Stock as of the date of this Agreement, or (z) the Principal and
his Related Parties, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the Voting Stock of the Company or (iv)
during any consecutive two-year period, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together
with any new directors whose election to such Board of Directors or whose
nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors of the Company then still in office
who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors of the Company then in
office.
For purposes of the foregoing definition of Change of Control, the transfer
(by lease, assignment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of the properties or assets of
one or more Subsidiaries of the Company, the
13
Capital Stock of which constitutes all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
"CO-SALE EVENT" means so long as an Exercise Event shall not have
previously occurred, the seventh day prior to any date on which a holder of
Warrants will sell all or a portion of the Warrants or Shares pursuant to
Sections 3 or 5 of the Amended and Restated Co-Sale Agreement dated as of
December 15, 1995 by and among the Company and the other Persons party thereto,
as amended or supplemented from time to time (the "Co-Sale Agreement").
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock to the extent that, by
is terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the stated maturity of the Notes.
"EQUITY INTERESTS" means, collectively, Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"EXERCISE EVENT" means, with respect to each Warrant, the date of the
earliest of: (1) the seventh day prior to the occurrence of a Change of
Control, (2) the consummation of a Public Equity Offering, (3) a consolidation,
merger or purchase of Assets involving the Company or any of its Subsidiaries
that results in the Common Stock of the Company being subject to registration
under the Exchange Act, (4) the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, or (5) 90 days prior to
October 1, 2006.
"PERSON" means any individual, corporation, company (including limited
liability company), partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or a government or any agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business..
"PLAN OF LIQUIDATION" means, with respect to any Person, a plan (including
by operation of law) that provides for, contemplates or the effectuation of
which is preceded or accompanied by (whether or not substantially
contemporaneously) (i) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of such Person otherwise than as an entirety
or substantially as an entirety and (ii) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and all or substantially all of the remaining assets of such Person
to holders of Capital Stock of such Person.
"PRINCIPAL" means Xx. Xxxx X. Xxxxxx.
"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
gross proceeds of which exceed $10 million.
14
"RELATED PARTY" means, with respect to any Principal, (i) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse, or immediate family
member (in the case of an individual) of such Principal or (ii) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Person referred to
in the immediately preceding clause (i).
"SUBSIDIARY," with respect to any Person, means (i) any corporation, a
majority of whose voting stock (defined as any class or classes of capital stock
having voting power under ordinary circumstances to elect a majority of the
Board of Directors) is owned, directly or indirectly, by the Company, by one or
more Subsidiaries, or by the Company and one or more Subsidiaries and (ii) any
other person (other than a corporation) in which the Company, one or more
Subsidiaries, or the Company and one or more Subsidiaries, directly or
indirectly, has at least a majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof. As of the Issue Date, the
Company has no Subsidiaries.
"VOTING STOCK" means, with respect to any specified Person, Capital Stock
with voting power, under ordinary circumstances and without regard to the
occurrence of any contingency, to elect the directors or other managers or
trustees of such Person.
(b) Warrants may be exercised on or after an Exercisability Date by
(i) surrendering at any office or agency maintained for that purpose by the
Company pursuant to Section 1.9 (each a "WARRANT EXERCISE OFFICE") the Warrant
Certificate evidencing such Warrants with the form of election to purchase
Shares set forth on the reverse side of the Warrant Certificate (the "ELECTION
TO EXERCISE") duly completed and signed by the registered holder or holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney, and in the case of a transfer, such signature shall be
guaranteed by an eligible guarantor institution, and (ii) paying in full the
Exercise Price for each such Warrant exercised and any other amounts required to
be paid pursuant to Section 1.7(j) hereof.
(c) Simultaneously with the exercise of each Warrant, payment in full
of the Exercise Price shall be made in cash or by certified or official bank
check or by wire transfer to be delivered to the office or agency where the
Warrant Certificate is being surrendered. Notwithstanding the foregoing
sentence, a Warrant may also be exercised solely by the surrender of the
Warrant, and without the payment of the Exercise Price in cash, for such number
of Shares equal to the product of (1) the number of Shares for which such
Warrant is exercisable with payment of the Exercise Price as of the date of
exercise and (2) the Cashless Exercise Ratio. For purposes of this Agreement,
the "CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of which is
the excess of the Current Market Value of the Common Stock on the date of
exercise (calculated as set forth in Section 5.1(o) hereof) over the Exercise
Price Per Share as of the date of exercise and the denominator of which is the
Current Market Value of the Common Stock on the date of exercise (calculated as
set forth in Section 5.1(o) hereof). An exercise of a Warrant in accordance
with the immediately preceding sentences is herein called a "CASHLESS EXERCISE."
Upon surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the number of
Shares deliverable upon a Cashless Exercise shall be equal to the number of
Warrants that the holder specifies is to be exercised
15
pursuant to a Cashless Exercise multiplied by the Cashless Exercise Ratio. All
provisions of this Agreement shall be applicable with respect to an exercise of
a Warrant Certificate pursuant to a Cashless Exercise for less than the full
number of Warrants represented thereby. "EXERCISE PRICE PER SHARE" means the
Exercise Price divided by the number of Shares for which a Warrant is then
exercisable (without giving effect to the Cashless Exercise option). No payment
or adjustment shall be made on account of any dividends on the Shares issued
upon exercise of a Warrant.
(d) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "EXERCISE DATE" for a Warrant shall be the date when all of the
items referred to in the first sentence of paragraphs (b) and (c) of this
Section 2.2 are received by the Warrant Agent at or prior to 11:00 a.m., New
York City time, on a Business Day and the exercise of the Warrants will be
effective as of such Exercise Date. If any items referred to in the first
sentence of paragraphs (b) and (c) are received after 11:00 a.m., New York City
time, on a Business Day, the exercise of the Warrants to which such item relates
will be effective on the next succeeding Business Day. Notwithstanding the
foregoing, in the case of an exercise of Warrants on the Expiration Date, if all
of the items referred to in the first sentence of paragraphs (b) and (c) are
received by the Warrant Agent at or prior to 5:00 p.m., New York City time, on
such Expiration Date, the exercise of the Warrants to which such items relate
will be effective on the Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price
(or election of the Cashless Exercise option), the Warrant Agent shall: (i)
except to the extent exercise of the Warrant has been effected through Cashless
Exercise, cause an amount equal to the Exercise Price to be paid to the Company
by crediting the same to the account designated by the Company in writing to the
Warrant Agent for that purpose; (ii) advise the Company immediately by telephone
of the amount so deposited to the Company's account and promptly confirm such
telephonic advice in writing; and (iii) as soon as practicable, advise the
Company in writing of the number of Warrants exercised in accordance with the
terms and conditions of this Agreement and the Warrant Certificates, the
instructions of each exercising holder of the Warrant Certificates with respect
to delivery of the Shares to which such holder is entitled upon such exercise,
and such other information as the Company shall reasonably request.
(f) Subject to Section 5.2 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, and in
any event within ten (10) days thereafter, the Company shall issue or cause to
be issued to or upon the written order of the registered holder of the Warrant
Certificate evidencing such exercised Warrant or Warrants, a certificate or
certificates evidencing the Shares to which such holder is entitled, in fully
registered form, registered in such name or names as may be directed by such
holder pursuant to the Election to Exercise, as set forth on the reverse of the
Warrant Certificate. Such certificate or certificates evidencing the Shares
shall be deemed to have been issued and any persons who are designated to be
named therein shall be deemed to have become the holder of record of such Shares
as of the close of business on the Exercise Date. After such exercise of any
Warrant or Warrants, the Company shall also issue or cause to be issued to or
upon the written order of the
16
registered holder of such Warrant Certificate, a new Warrant Certificate,
countersigned by the Warrant Agent pursuant to written instruction, evidencing
the number of Warrants, if any, remaining unexercised unless such Warrants shall
have expired.
SECTION 2.3. CANCELLATION OF WARRANT CERTIFICATES. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall at the Company's written instruction be canceled by it and
retired. The Warrant Agent shall cancel all Warrant Certificates properly
surrendered for exchange, substitution, transfer or exercise. The Warrant Agent
shall deliver such canceled Warrant Certificates to the Company.
SECTION 2.4. NOTICE OF AN EXERCISE EVENT OR CO-SALE EVENT. The
Company shall, to the extent reasonably practicable, not fewer than 30 days nor
more than 60 days prior to the occurrence of an Exercise Event or a Co-Sale
Event, send to the Warrant Agent and each holder of Warrants and to each
beneficial owner of the Warrants to the extent that the Warrants, if any, are
held of record by a depository or other agent, by first-class mail, at the
addresses appearing on the Warrant Register, a notice of the Exercise Event or
Co-Sale Event to occur, which notice shall describe the type of Exercise Event
or Co-Sale Event and the date of the proposed occurrence thereof and the date of
expiration of the right to exercise the Warrants prominently set forth in the
face of such notice.
ARTICLE III.
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.1. ENFORCEMENT OF RIGHTS.
(a) Notwithstanding any of the provisions of this Agreement, any
holder of any Warrant Certificate, without the consent of the Warrant Agent, the
holder of any Shares or the holder of any other Warrant Certificate, may, in and
for his own behalf, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, his right to exercise the
Warrant or Warrants evidenced by his Warrant Certificate in the manner provided
in such Warrant Certificate and in this Agreement.
(b) Except as set forth in this Article III, neither the Warrants nor
any Warrant Certificate shall entitle the holders thereof to any of the rights
of a holder of Shares, including, without limitation, the right to vote or to
receive any dividends or other payments or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
17
ARTICLE IV.
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.1. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrants and of the Shares
upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax or other governmental charge which may be payable in
respect of any transfer or exchange of any Warrant Certificates or any
certificates for Shares in a name other than the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant. In any such case, no
transfer or exchange shall be made unless or until the person or persons
requesting issuance thereof shall have paid to the Company the amount of such
tax or other governmental charge or shall have established to the satisfaction
of the Company that such tax or other governmental charge has been paid or an
exemption is available therefrom.
SECTION 4.2. QUALIFICATION UNDER THE SECURITIES LAWS. The Company
shall comply with the terms and provisions of the Warrant Registration Rights
Agreement by and between the Company and the Initial Purchaser dated as of the
date of this Agreement (the "Warrant Registration Rights Agreement") relating to
the registration or other qualification under the Securities Act of the offer
and sale by the Company of the Shares issuable upon exercise of the Warrants.
SECTION 4.3. REPURCHASE. In the event that the Company has not
consummated a Public Equity Offering by October 1, 2006 (the "Trigger Date"),
the Company shall, at its option, (i) make an offer to purchase, for cash at
fair market value, all outstanding Warrants and Shares issued (if permitted by
applicable law) or (ii) take all necessary action to cause all of the Shares
issued or issuable to be registered or otherwise qualified under the provisions
of the Securities Act pursuant to an effective registration statement within 120
days of the Trigger Date (if permitted by applicable law), in accordance with
the procedures set forth in Section 2.2 of the Warrant Registration Rights
Agreement, as if such registration were a Demand Registration as such term is
defined therein.
SECTION 4.4. RULES 144 AND 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 Securities and
Exchange Commission thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act 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 Warrants, 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 or
beneficial owner of Warrants may reasonably request, all to the extent required
from time to time to enable such holder or beneficial owner to sell Warrants
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 Securities and Exchange Commission (it being
expressly understood that the foregoing shall not create any
18
obligation on the part of the Company to file periodic 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).
SECTION 4.5. REPORTS. For long as the Company is not subject to the
reporting requirements of the Exchange Act, the Company shall furnish to all
holders of Warrants all audited and unaudited quarterly and annual financial
information that would be required to be contained in a filing with the
Securities and Exchange Commission on Forms 10-Q and 10-K if the Company were
required to file such forms.
SECTION 4.6. RIGHT OF FIRST REFUSAL. The Company hereby waives and
agrees not to exercise its right of first refusal pursuant to Section 45 of the
Company's Amended and Restated Bylaws with respect to any transfer of the
Warrants or the Warrant Shares.
ARTICLE V.
ADJUSTMENTS
SECTION 5.1. ADJUSTMENT OF EXERCISE RATE; NOTICES. The Exercise Rate
is subject to adjustment from time to time as provided in this Section.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the date
hereof, the Company:
(i) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) pays a dividend or makes a distribution on its Common
Stock in shares of its Capital Stock (other than Common
Stock or rights, warrants, or options for its Common
Stock to the extent such issuance or distribution is
covered by Section 5.3); or
(v) issues by reclassification of its Common Stock any shares
of its Capital Stock (other than rights, warrants or
options for its Common Stock);
then the Exercise Rate in effect immediately prior to such action shall be
adjusted so that the holder of a Warrant thereafter exercised may receive the
number of shares of Capital Stock of the Company which such holder would have
owned immediately following such action if such holder had exercised the Warrant
immediately prior to such action or immediately prior to the record date
applicable thereto, if any (regardless of whether the Warrants are then
exercisable and without giving effect to the Cashless Exercise option).
19
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification. In the event
that such dividend or distribution is not so paid or made or such subdivision,
combination or reclassification is not effected, the Exercise Rate shall again
be adjusted to be the Exercise Rate which would then be in effect if such record
date or effective date had not been so fixed. Any adjustment made pursuant to
this subsection (a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
If after an adjustment a holder of a Warrant upon exercise of such Warrant
may receive shares of two or more classes of Capital Stock of the Company, the
Exercise Rate shall thereafter be subject to adjustment upon the occurrence of
an action taken with respect to any such class of Capital Stock as is
contemplated by this Article V with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article V.
(b) ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT MARKET
VALUE. If, after the date hereof, the Company sells any Common Stock or any
securities convertible into or exchangeable or exercisable for the Common
Stock (other than (1) Contingent Warrants, (2) pursuant to the exercise of
the Warrants, any Common Stock or any security convertible into, or
exchangeable or exercisable for, the Common Stock as to which the issuance
thereof has previously been the subject of any required adjustment pursuant
to this Article V, (3) the issuance of Common Stock upon the conversion,
exchange or exercise of convertible, exchangeable or exercisable securities
of the Company outstanding on the date of this Agreement, including the
Warrants and Contingent Warrants issued pursuant to the Indenture (to the
extent in accordance with the terms of such securities as in effect on the
date of this Agreement), (4) any equity securities issued in connection with
an underwritten public offering at a price which a nationally -recognized
managing underwriter determines to equal the fair market value of such
securities, (5) Common Stock or options, warrants or other Common Stock
purchase rights, or the Common Stock issued pursuant to such options,
warrants or other rights, granted or sold to employees, officers or directors
of, or consultants or advisors to, the Company or any subsidiary pursuant to
stock purchase, stock option or other plans or arrangements that are approved
by the Board of Directors of the Company (collectively, "EMPLOYEE EQUITY
ARRANGEMENTS") or (6) equity securities issued in connection with strategic
transactions between the Company and one or more other entities (but not
including Affiliates (as defined in the Indenture)) that have been approved
by the Board of Directors of the Company (collectively, "STRATEGIC
TRANSACTIONS"), including (A) joint ventures, manufacturing, marketing or
distribution arrangements or (B) technology transfer or development
arrangements; PROVIDED, HOWEVER, that this exception shall not be applicable
to the extent that the aggregate number of shares of Common Stock issued or
issuable pursuant to Employee Equity Arrangements and Strategic Transactions
at less than current market value shall exceed 134,755 shares of Common
Stock) then, unless the Board of Directors determines in good faith that,
taking into account all relevant circumstances, the Company has not sold any
such securities for less than the Current Market Value, the Exercise Rate
shall be adjusted in accordance with the formula below:
E' = E x (O + N)
---------------
(O + (N x P/M))
20
where:
E' = the adjusted Exercise Rate;
E = the current Exercise Rate;
O = the number of shares of Common Stock outstanding (including shares
issuable upon conversion, exchange or exercise of convertible,
exchangeable or exerciseable securities of the Company) on the date of
sale of Common Stock at a price per share less than the Current Market
Value to which this paragraph (b) applies;
N = the number of shares of Common Stock so sold or the maximum stated
number of shares of Common Stock issuable upon the conversion,
exchange, or exercise of any such convertible, exchangeable or
exercisable securities, as the case may be;
P = the offering price per share pursuant to any such convertible,
exchangeable or exercisable securities so sold or the sale price of
the shares so sold, as the case may be, PLUS the consideration paid to
acquire such securities, if applicable; and
M = the Current Market Value as of the Time of Determination or at the
time of sale, as the case may be.
If the Exercise Rate is required to be adjusted, in determining the price
per share at which Common Stock or other securities are sold for the purposes of
such adjustment, (i) to the extent the price consists of cash, such price shall
be the amount of cash received by the Company before deduction of any
underwriting or similar commissions, concessions or compensation determined by
the Board of Directors to be paid or allowed by the Company in connection
therewith; (ii) to the extent the price consists of consideration other than
cash, such price shall be the fair market value of such consideration as
determined in good faith by the Board of Directors, taking into account all
relevant circumstances; and (iii) if Common Stock or other securities are sold
in a transaction involving other assets or consideration, such price shall be
the fair market value of the aggregate consideration received by the Company
which the Board of Directors determines in good faith to be allocable to such
Common Stock or other securities, taking into account all relevant
circumstances.
21
The adjustment shall become effective immediately after the record date for
the determination of stockholders entitled to receive the rights, warrants or
options to which this paragraph (b) applies or upon consummation of the sale of
Common Stock, as the case may be. To the extent that shares of Common Stock are
not delivered after the expiration of such rights, options or warrants, the
Exercise Rate shall be readjusted to the Exercise Rate which would otherwise be
in effect had the adjustment made upon the issuance of such rights, options or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. In the event that such rights, options or
warrants are not so issued, the Exercise Rate shall again be adjusted to be the
Exercise Rate which would then be in effect if such date fixed for determination
of stockholders entitled to receive such rights, options or warrants had not
been so fixed.
No adjustment shall be made under this paragraph (b) if the application of
the formula stated above in this paragraph (b) would result in a value of E'
that is lower than the value of E.
(c) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate is adjusted,
the Company shall promptly mail to holders of Warrants at the addresses
appearing on the Warrant Register a notice of the adjustment. The Company shall
file with the Warrant Agent and any other Registrar such notice and a
certificate from the Company's independent public accountants briefly stating
the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct.
Neither the Warrant Agent nor any such Registrar shall be under any duty or
responsibility with respect to any such certificate except to exhibit the same
during normal business hours to any holder desiring inspection thereof.
(d) MINIMUM ADJUSTMENT OF EXERCISE RATE. If the amount of the
Exercise Rate adjustment required pursuant to this Section would be less than
one percent (1%) of the Exercise Rate in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least 1% of such Exercise Rate
PROVIDED that, upon the exercise of this Warrant, all adjustments carried
forward and not theretofore made up to and including the date of such exercise
shall be made to the nearest one-one thousandth of a share.
(e) REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS. If the
Company, in a single transaction or through a series of related transactions,
consolidates with or merges with or into any other person or transfers (by
lease, assignment, sale or otherwise) all or substantially all of its properties
and assets to another person or group of affiliated persons (other than a sale
of all or substantially all of the assets of the Company in a transaction in
which the holders of Common Stock immediately prior to such transaction do not
receive securities, cash, or other assets of the Company or any other person) or
is a party to a merger or binding share exchange which reclassifies or changes
its outstanding Common Stock, the person obligated to deliver securities, cash
or other assets upon exercise of Warrants shall enter into a supplemental
warrant agreement. If the issuer of securities deliverable upon exercise of
Warrants is an affiliate of the successor Company, that issuer shall join in the
supplemental warrant agreement.
22
The supplemental warrant agreement shall provide that the holder of a
Warrant may exercise it for the kind and amount of securities, cash or other
assets which such holder would have received immediately after the
consolidation, merger, binding share exchange or transfer if such holder had
exercised the Warrant immediately before the effective date of the transaction
(whether or not the Warrants were then exercisable and without giving effect to
the Cashless Exercise option), assuming (to the extent applicable) that such
holder (i) was not a constituent person or an affiliate of a constituent person
to such transaction; (ii) made no election with respect thereto; and (iii) was
treated alike with the plurality of non-electing holders. The supplemental
warrant agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
V. The successor Company shall mail to holders of Warrants at the addresses
appearing on the Warrant Register a notice briefly describing the supplemental
warrant agreement.
If this paragraph (e) applies paragraph (a) shall not apply.
(f) COMPANY DETERMINATION FINAL. Any determination that the Company
or the Board of Directors of the Company must make pursuant to this Article V is
conclusive, in the absence of manifest error.
(g) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent has no
duty to determine when an adjustment under this Article V should be made, how it
should be made or what it should be. The Warrant Agent has no duty to determine
whether a supplemental warrant agreement under paragraph (e) need be entered
into or whether any provisions of any supplemental warrant agreement are
correct. The Warrant Agent shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon exercise of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Article V.
(h) ADJUSTMENT FOR TAX PURPOSES. The Company may make such increases
in the Exercise Rate, in addition to those otherwise required by this Section,
as it determines in its sole discretion to make in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients.
(i) UNDERLYING SHARES. The Company shall at all times reserve and
keep available, free from preemptive rights, out of its authorized but unissued
Common Stock or Common Stock held in the treasury of the Company, for the
purpose of effecting the exercise of Warrants, the full number of Shares then
deliverable upon the exercise of all Warrants then outstanding (without giving
effect to the Cashless Exercise Option), and the shares so deliverable shall be
fully paid and nonassessable and free from all liens and security interests.
(j) SPECIFICITY OF ADJUSTMENT. Irrespective of any adjustments in
the number or kind of shares purchasable upon the exercise of the Warrants,
Warrant Certificates theretofore or thereafter issued may continue to express
the same number and kind of Shares per Warrant as are stated on the Warrant
Certificates initially issuable pursuant to this Agreement.
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(k) ADJUSTMENTS TO PAR VALUE. The Company shall make such
adjustments to the par value of the Common Stock in order that, upon exercise of
the Warrants, the Shares will be fully paid and non-assessable.
(l) VOLUNTARY ADJUSTMENT. The Company from time to time may increase
the Exercise Rate by any number and for any period of time (PROVIDED, that such
period is not less than 20 Business Days). Whenever the Exercise Rate is so
increased, the Company shall mail to holders at the addresses appearing on the
Warrant Register and file with the Warrant Agent a notice of the increase. The
Company shall give the notice at least 15 days before the date the increased
Exercise Rate takes effect. The notice shall state the increased Exercise Rate
and the period it will be in effect. A voluntary increase in the Exercise Rate
does not change or adjust the Exercise Rate otherwise in effect as determined by
this Section 5.1.
(m) NO OTHER ADJUSTMENT FOR DIVIDENDS. Except as provided in this
Article V, no payment or adjustment will be made for dividends on any Common
Stock.
(n) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise Rate
under this Article V, any subsequent event requiring an adjustment under this
Article V shall cause an adjustment to the Exercise Rate as so adjusted.
(o) DEFINITIONS.
"CURRENT MARKET VALUE" per share of Common Stock or of any other security
at any date shall be (1) if the security is not registered under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (i) the value of the
security determined reasonably and in good faith by a disinterested majority of
the Board of Directors of the Company and certified in a board resolution, or,
if at the time there are not at least three disinterested members of the Board
of Directors, by a nationally recognized investment banking firm or appraisal
firm which is not an affiliate of the Company ("INDEPENDENT FINANCIAL EXPERT"),
or (2) if the security is registered under the Exchange Act, the lesser of (A)
the average of the daily closing bid prices for each Business Day during the
period commencing 15 Business Days before such date and ending on the date one
day prior to such date or, if the security has been registered under the
Exchange Act for less than 15 consecutive Business Days before such date, then
the average of the daily closing bid prices for all of the Business Days before
such date for which daily closing bid prices are available or (B) the closing
price on the date of issuance, except that in connection with any Employee
Equity Arrangement (as defined in Section 5.1(b), Current Market Value shall
equal 100% of the closing price of the Common Stock on the date such Employee
Equity Arrangement is awarded. If the closing bid is not determinable for at
least 10 Business Days in such period, the Current Market Value of the security
shall be determined as if the security were not registered under the Exchange
Act. For purposes of this definition, a director shall be deemed to be
"disinterested" if he or she is not, either directly or indirectly, purchasing
shares of Common Stock or other securities in connection with the transaction
giving rise to the requirement that the Board of Directors make a determination
of the value of such securities.
(p) Any adjustment to the Exercise Rate under this Article V which is
effective prior to the issuance of the Contingent Warrants shall be deemed
effective upon issuance of the
24
Contingent Warrants such that the Exercise Rate with respect to the Contingent
Warrants shall be the same as the Exercise Rate with respect to the Initial
Warrants on the date of issuance of the Contingent Warrants.
"TIME OF DETERMINATION" means the time and date of the determination of
stockholders entitled to receive rights, warrants, or options or a distribution,
in each case, to which paragraph (b) applies.
SECTION 5.2. FRACTIONAL SHARES. The Company will not be required to
issue fractional Shares upon exercise of the Warrants or distribute Share
certificates that evidence fractional Shares. In lieu of fractional Shares, if
the Company so elects, there shall be paid to the registered holders of Warrant
Certificates at the time Warrants evidenced thereby are exercised as herein
provided an amount in cash equal to the same fraction of the Current Market
Value, as defined in paragraph (o) of Section 5.1 of this Agreement, per Share
on the Business Day preceding the date the Warrant Certificates evidencing such
Warrants are surrendered for exercise. Such payments will be made by check or
by transfer to an account maintained by such registered holder with a bank in
The City of New York. If any holder surrenders for exercise more than one
Warrant Certificate, the number of Shares deliverable to such holder may, at the
option of the Company, be computed on the basis of the aggregate amount of all
the Warrants exercised by such holder.
SECTION 5.3. CERTAIN DISTRIBUTIONS. If at any time the Company
grants, issues or sells options, convertible securities, or rights to purchase
Capital Stock, warrants or other securities pro rata to the record holders of
the Common Stock (the "DISTRIBUTION RIGHTS") or, without duplication, makes any
dividend or otherwise makes any distribution ("DISTRIBUTION") on shares of
Common Stock (whether in cash, property, evidences of indebtedness or
otherwise), then the Company shall grant, issue, sell or make to each registered
holder of Warrants the aggregate Distribution Rights or Distribution, as the
case may be, which such holder would have acquired if such holder had held the
maximum number of Shares acquirable upon complete exercise of such holder's
Warrants (regardless of whether the Warrants are then exercisable and without
giving effect to the Cashless Exercise option) immediately before the record
date for the grant, issuance or sale of such Distribution Rights or
Distribution, as the case may be, or, if there is no such record date, the date
as of which the record holders of Common Stock are to be determined for the
grant, issue or sale of such Distribution Rights or Distribution, as the case
may be. If in connection with any Distribution the Company offers to the
holders of the Common Stock to include in a registration statement under the
Securities Act of 1933 any of the Distribution Rights or any securities issued
or issuable upon the exercise, conversion or exchange of Distribution Rights,
then the Company shall offer to all holders of Warrants the opportunity to have
their Distribution Rights or such other securities included in such registration
statement on a basis that is no less favorable than that offered to the holders
of Common Stock.
ARTICLE VI.
CONCERNING THE WARRANT AGENT
SECTION 6.1. WARRANT AGENT. The Company hereby appoints The Bank of
New York, as Warrant Agent of the Company in respect of the Warrants and the
Warrant Certificates upon
25
the terms and subject to the conditions herein and in the Warrant Certificates
set forth; and The Bank of New York hereby accepts such appointment. The
Warrant Agent shall have the powers and authority specifically granted to and
conferred upon it in the Warrant Certificates and hereby and such further
powers and authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it and it shall accept in writing. All of the
terms and provisions with respect to such powers and authority contained in the
Warrant Certificates are subject to and governed by the terms and provisions
hereof.
SECTION 6.2. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant Certificates, including the following, to all of which
the Company agrees and to all of which the rights hereunder of the holders from
time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be agreed
upon with the Company in writing for all services rendered by it and the Company
agrees promptly to pay such compensation and to reimburse the Warrant Agent for
its reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred without gross negligence or willful misconduct on its part in
connection with the services rendered by it hereunder. The Company also agrees
to indemnify the Warrant Agent and any predecessor Warrant Agent, their
directors, officers, affiliates, agents and employees for, and to hold them and
their directors, officers, affiliates, agents and employees harmless against,
any loss, liability or expense of any nature whatsoever (including, without
limitation, fees and expenses of counsel) incurred without gross negligence or
willful misconduct on the part of the Warrant Agent, arising out of or in
connection with its acting as such Warrant Agent hereunder and its exercise of
its rights and performance of its obligations hereunder. The obligations of the
Company under this Section 6.2 shall survive the exercise and the expiration of
the Warrant Certificates and the resignation and removal of the Warrant Agent.
(b) In acting under this Agreement and in connection with the Warrant
Certificates, the Warrant Agent is acting solely as agent of the Company and
does not assume any obligation or relationship of agency or trust for or with
any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel of its selection and
any advice or written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or
opinion.
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or thing
suffered by it in reliance upon any Warrant Certificate, notice, direction,
consent, certificate, affidavit, opinion of counsel, instruction, statement or
other paper or document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates and
employees ("WARRANT AGENT RELATED PARTIES"), may become the owners of, or
acquire any interest in,
26
Warrant Certificates, shares or other obligations of the Company with the same
rights that it or they would have it if were not the Warrant Agent hereunder
and, to the extent permitted by applicable law, it or they may engage or be
interested in any financial or other transaction with the Company and may act
on, or as depository, trustee or agent for, any committee or body of holders of
shares or other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Agreement shall be deemed to prevent
the Warrant Agent or such Warrant Agent Related Parties from acting in any other
capacity for the Company.
(f) The Warrant Agent shall not be under any liability for interest
on, and shall not be required to invest, any monies at any time received by it
pursuant to any of the provisions of this Agreement or of the Warrant
Certificates.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision hereof) or
the execution and delivery hereof (except the due execution and delivery hereof
by the Warrant Agent) or in respect of the validity or execution of any Warrant
Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication thereon)
shall be taken as the statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of the same. The Warrant Agent does not make
any representation as to the validity or sufficiency of this Agreement or the
Warrant Certificates, except for its due execution and delivery of this
Agreement; PROVIDED, HOWEVER, that the Warrant Agent shall not be relieved of
its duty to authenticate the Warrant Certificates as authorized by this
Agreement. The Warrant Agent shall not be accountable for the use or
application by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may require:
(i) an Officers' Certificate (as defined in the Indenture)
stating on behalf of the Company that, in the opinion of
the signers, all conditions precedent, if any, provided
for in this Warrant Agreement relating to the proposed
action have been complied with; and
(ii) if reasonably necessary in the sole judgment of the
Warrant Agent, an opinion of counsel for the Company
stating that, in the opinion of such counsel, all such
conditions precedent have been complied with provided
that such matter is one customarily opined on by counsel.
Each Officers' Certificate or, if requested, an opinion of counsel with
respect to compliance with a condition or covenant provided for in this Warrant
Agreement shall include:
27
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties as
are herein and in the Warrant Certificates specifically set forth and no
implied duties or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have
no duty or responsibility in case of any default by the Company in the
performance of its covenants or agreements contained in the Warrant Certificates
or in the case of the receipt of any written demand from a holder of a Warrant
Certificate with respect to such default, including, without limiting the
generality of the foregoing, any duty or responsibility to initiate or attempt
to initiate any proceedings at law or otherwise or, except as provided in
Section 7.2 hereof, to make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the Company
made or given under any provision of this Agreement shall be sufficient if
signed by its chairman of the Board of Directors, its president, its treasurer,
its controller or any vice president or its secretary or any assistant
secretary.
(l) The Warrant Agent shall have no responsibility in respect of any
adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties hereunder
from any one of the chairman of the Board of Directors, the president, the
treasurer, the controller, any vice president or the secretary of the Company or
any other officer or official of the Company reasonably believed to be
authorized to give such instructions and to apply to such officers or officials
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions with respect to any matter arising in
28
connection with the Warrant Agent's duties and obligations arising under this
Agreement. Such application by the Warrant Agent for written instructions from
the Company may, at the option of the Warrant Agent, set forth in writing any
action proposed to be taken or omitted by the Warrant Agent with respect to its
duties or obligations under this Agreement and the date on or after which such
action shall be taken and the Warrant Agent shall not be liable for any action
taken or omitted in accordance with a proposal included in any such application
on or after the date specified therein (which date shall be not less than 10
Business Days after the Company receives such application unless the Company
consents to a shorter period), provided that (i) such application includes a
statement to the effect that it is being made pursuant to this paragraph (m) and
that unless objected to prior to such date specified in the application, the
Warrant Agent will not be liable for any such action or omission to the extent
set forth in such paragraph (m) and (ii) prior to taking or omitting any such
action, the Warrant Agent has not received written instructions objecting to
such proposed action or omission.
(o) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed on behalf of the Company by any one of the
chairman of the Board of Directors, the president, the treasurer, the
controller, any vice president or the secretary of the Company or any other
officer or official of the Company reasonably believed to be authorized to give
such instructions and delivered to the Warrant Agent; and such certificate shall
be full authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(p) The Warrant Agent shall not be required to risk or expend its own
funds in the performance of its obligations and duties hereunder.
SECTION 6.3. RESIGNATION AND APPOINTMENT OF SUCCESSOR.
(a) The Company agrees, for the benefit of the holders from time to
time of the Warrant Certificates, that there shall at all times be a Warrant
Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; PROVIDED,
HOWEVER, that such date shall be at least 60 days after the date on which such
notice is given unless the Company agrees to accept less notice. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
Warrant Agent, qualified as provided in Section 6.3(d) hereof, by written
instrument in duplicate signed on behalf of the Company, one copy of which shall
be delivered to the resigning Warrant Agent and one copy to the successor
Warrant Agent. As provided in Section 6.3(d) hereof, such resignation shall
become effective upon the earlier of (x) the acceptance of the appointment by
the successor Warrant Agent or (y) 60 days after receipt by the Company of
notice of such resignation. The Company may, at any time and for any reason,
and shall, upon any event set forth in the next succeeding sentence, remove the
Warrant Agent and appoint a successor
29
Warrant Agent by written instrument in duplicate, specifying such removal and
the date on which it is intended to become effective, signed on behalf of the
Company, one copy of which shall be delivered to the Warrant Agent being removed
and one copy to the successor Warrant Agent. The Warrant Agent shall be removed
as aforesaid if it shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Warrant Agent or of its property
shall be appointed, or any public officer shall take charge or control of it or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation. Any removal of the Warrant Agent and any appointment of a
successor Warrant Agent shall become effective upon acceptance of appointment by
the successor Warrant Agent as provided in Section 6.3(d). As soon as
practicable after appointment of the successor Warrant Agent, the Company shall
cause written notice of the change in the Warrant Agent to be given to each of
the registered holders of the Warrants in the manner provided for in Section 7.4
hereof.
(c) Upon resignation or removal of the Warrant Agent, if the Company
shall fail to appoint a successor Warrant Agent within a period of 60 days after
receipt of such notice of resignation or removal, then the holder of any Warrant
Certificate or the retiring Warrant Agent may apply to a court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company.
(d) Any successor Warrant Agent, whether appointed by the Company or
by a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any State thereof and having,
at the time of its appointment, a combined capital surplus of at least $50
million. Such successor Warrant Agent shall execute and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Warrant Agent hereunder,
and such predecessor shall thereupon become obligated to (i) transfer and
deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.2(a) hereof, pay over, and such successor Warrant
Agent shall be entitled to receive, all monies deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder
may be merged or converted, or any corporation or bank with which the Warrant
Agent may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business, shall be the successor
to the Warrant Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
30
(f) No Warrant Agent under this Warrant Agreement shall be personally
liable for any action or omission of any successor Warrant Agent.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1. AMENDMENT. This Agreement and the terms of the Warrants
may be amended by the Company and the Warrant Agent, without the consent of the
holder of any Warrant Certificate, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective or inconsistent provision
contained herein or therein, or to effect any assumptions of the Company's
obligations hereunder and thereunder by a successor corporation under the
circumstances described in Section 5.1(e) hereof or in any other manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of the Warrant Certificates.
The Company and the Warrant Agent may modify this Agreement and the terms
of the Warrants with the consent of the 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, 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 no such modification
that decreases the Exercise Rate, increases the Exercise Price, reduces the
period of time during which the Warrants are exercisable hereunder, otherwise
materially and adversely affects the rights of the holders of the Warrants,
reduces the percentage required for modification, or effects any change to this
Section 7.1 may be made with respect to an outstanding Warrant without the
consent of the holder of such Warrant. Notwithstanding any other provision of
this Agreement, the Warrant Agent's consent must be obtained regarding any
supplement or amendment which alters the Warrant Agent's rights or duties (it
being expressly understood that the foregoing shall not be in derogation of the
right of the Company to remove the Warrant Agent in accordance with Section 6.3
hereof).
The Warrant Agent shall provide written notice, which notice shall first be
provided by the Company to the Warrant Agent, to the Warrant holders describing
any modification or amendment to this Agreement pursuant to this Section 7.1.
Any modification or amendment made in accordance with this Agreement will
be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
31
SECTION 7.2. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If
the Warrant Agent shall receive any notice or demand addressed to the Company by
the holder of a Warrant Certificate pursuant to the provisions hereof or of the
Warrant Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company.
SECTION 7.3. ADDRESSES FOR NOTICES TO PARTIES AND FOR TRANSMISSION OF
DOCUMENTS. All notices hereunder to the parties hereto shall be deemed to have
been given when sent by certified or registered mail, postage prepaid, or by
facsimile transmission, confirmed by first class mail, postage prepaid,
addressed to any party hereto as follows:
To the Company:
Coinstar, Inc.,
00000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
with a copy to:
Xxxx X. Xxxxxxx
Xxxxxx Godward LLP
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telecopier No.: 415/854-2691
and a copy to:
Xxxxxxxx Xxxxxxx
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telecopier No.: 415/493-6811
To the Warrant Agent:
The Bank of New York
Corporate Trust Division
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 212/815-5915
Attention: Xxxxxx Xxxxxxx
or at any other address of which either of the foregoing shall have notified the
other in writing.
32
SECTION 7.4. NOTICES TO HOLDERS. Notices to holders of Warrants shall
be mailed to such holders at the addresses of such holders as they appear in the
Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
SECTION 7.5. APPLICABLE LAWS; JURISDICTION. THE VALIDITY,
INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER AND OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
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 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.
SECTION 7.6. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in this
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent and the
holders of the Warrant Certificates any right, remedy or claim under or by
reason of this Agreement or of any covenant, condition, stipulation, promise or
agreement hereof; and all covenants, conditions, stipulations, promises and
agreements in this Agreement contained shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and their successors and of the
holders of the Warrant Certificates.
SECTION 7.7. HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 7.8. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.9. INSPECTION OF AGREEMENT. A copy of this Agreement shall
be available during regular business hours at the principal corporate trust
office of the Warrant Agent, for inspection by the holder of any Warrant
Certificate. The Warrant Agent may require such holder to submit his Warrant
Certificate for inspection by it.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
COINSTAR, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
--------------------------
Title: CEO and President
--------------------------
THE BANK OF NEW YORK,
as Warrant Agent
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxx
--------------------------
Title: Assistant Vice President
--------------------------
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
[Unless and until it is exchanged in whole or in part for Warrants
in certificated form, this Warrant may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or another nominee of the Depository
or by the Depository or any such nominee to a successor Depository or a
nominee of such successor Depository. Unless this certificate is
presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.](1)
"THIS SECURITY EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE
--------------------
(1) This paragraph is to be included only if the Warrant is in global
form.
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (1) ABOVE.
CUSIP# [ ]
NO. [ ] [ ] WARRANTS
WARRANT CERTIFICATE
This Warrant Certificate certifies that [ ], or
registered assigns, is the registered holder of [ ] Warrants (the
"WARRANTS") to purchase shares of Common Stock, $.001 par value (the
"COMMON STOCK"), of COINSTAR, INC., a Delaware corporation (the
"COMPANY"). Each Warrant entitles the holder to purchase from the
Company at any time from 9:00 a.m. until 5:00 p.m. New York City time
(i) on or after the occurrence of an Exercise Event, on the earlier to
occur of (a) 90 days after an Exercise Event and (b) October 1, 2006
(unless otherwise extended as provided for herein) (the "EXPIRATION
DATE"), seven fully paid and nonassessable shares of Common Stock (the
"SHARES," which may also include any other securities or property
purchasable upon exercise of a Warrant, such adjustment and inclusion
each as provided in the Warrant Agreement) and (ii) on and for 10 days
following a Co-Sale Event, the number of fully paid and non-assessable
Shares which shall be included in a sale pursuant to Section 3 or 5 of
the Co-Sale Agreement, in each case at the exercise price (the "EXERCISE
PRICE") of $.01 per share upon surrender of this Warrant Certificate and
payment of the Exercise Price at any office or agency maintained for
that purpose by the Company (the "WARRANT AGENT OFFICE"), subject to the
conditions set forth herein and in the Warrant Agreement.
Notwithstanding the foregoing, a Warrant may also be exercised solely by
the surrender of the Warrant, and without the payment of the Exercise
Price in cash, for such number of Shares equal to the product of (1) the
number of Shares for which such Warrant is exercisable with payment of
the Exercise Price as of the date of exercise and (2) the Cashless
Exercise Ratio. For purposes of this Warrant, the "CASHLESS EXERCISE
RATIO" shall equal a fraction, the numerator of which is the excess of
the Current Market Value of the Common Stock on the date of exercise
(calculated as set forth in Section 5.1(o) of the Warrant Agreement)
over the Exercise Price Per Share as of the date of exercise and the
denominator of which is the Current Market Value of the Common Stock on
the date of exercise (calculated as set forth in Section 5.1(o') of the
Warrant Agreement). An exercise of a Warrant in accordance with the
immediately preceding sentences is herein called a "CASHLESS EXERCISE."
Upon surrender of a Warrant Certificate representing more than one
Warrant in connection with the Holder's option to elect a Cashless
Exercise, the number of Shares deliverable upon a Cashless Exercise
shall be equal to the number of Warrants that the Holder specifies is to
be exercised pursuant to a Cashless Exercise multiplied by the Cashless
Exercise Ratio. All provisions of the Warrant Agreement shall be
applicable with respect to an exercise of a Warrant Certificate pursuant
to a Cashless Exercise for less than the full number of Warrants
represented hereby.
"CO-SALE AGREEMENT" means that certain Amended and Restated Co-Sale
Agreement dated as of December 15, 1995 by and among the Company and the
other persons party thereto, as amended or supplemented from time to
time.
"CO-SALE EVENT" means so long as an Exercise Event shall not have
previously occurred, the seventh day prior to any date on which a holder
of Warrants will sell all or a portion of the Warrants or Shares
pursuant to Sections 3 or 5 of the Amended and Restated Co-Sale
Agreement dated as of December 15, 1995 by and among the Company and the
other Persons party thereto, as amended or supplemented from time to
time (the "Co-Sale Agreement").
"EXERCISE EVENT" means, with respect to each Warrant, the date of
the earliest of: (1) the seventh day prior to the occurrence of a
Change of Control, (2) the consummation of a Public Equity Offering, (3)
a consolidation, merger or purchase of assets involving the Company or
any of its Subsidiaries that results in the Common stock of the Company
being subject to registration, (4) the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, or (5) the 90th day prior to October 1, 2006.
To the extent an exercise of a Warrant is not effected through the
Cashless Exercise, the Exercise Price shall be payable by certified
check or official bank check or by such other means as is acceptable to
the Company in the lawful currency of the United States of America which
as of the time of payment is legal tender for payment of public or
private debts. The Company has initially designated the principal
corporate trust office of the Warrant Agent in the Borough of Manhattan,
The City of New York, as the initial Warrant Agent Office. The number
of Shares issuable upon exercise of the Warrants ("EXERCISE RATE") is
subject to adjustment upon the occurrence of certain events set forth in
the Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on October 1, 2006 (unless otherwise extended as provided for in
the Warrant Agreement) shall thereafter be void.
Terms used and not otherwise defined in this Warrant Certificate
shall have the meanings given them in the Warrant Agreement.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Warrant Certificate shall not be valid unless authenticated by
the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
WITNESS the facsimile signatures of its duly authorized officers.
COINSTAR, INC.,
By: ________________________________
Name:______________________________
Title:_____________________________
Attest:
By: ___________________________
Name: _____________________
Title:_____________________
Dated: _____________________, 1996
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
THE BANK OF NEW YORK,
as Warrant Agent
By: _____________________________
Authorized Signatory
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
COINSTAR, INC.,
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring at 5:00 p.m., New York City
time, on the earlier to occur of (a) 90 days after an Exercise Event
which causes such Warrants to become exercisable and (b) October 1,
2006 (unless otherwise extended as provided for herein). The Warrants
are issued pursuant to a Warrant Agreement dated as of October 1, 1996
(the "WARRANT AGREEMENT"), duly executed and delivered by the Company to
The Bank of New York as Warrant Agent (the "WARRANT AGENT"), which
Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or holder" meaning the registered holders or registered
holder) of the Warrants, and the terms set forth in this Warrant
Certificate are qualified by reference to the terms of the Warrant
Agreement.
Warrants may be exercised by (i) surrendering at any Warrant Agent
Office this Warrant Certificate with the form of Election to Exercise
set forth hereon duly completed and executed and (ii) to the extent
such exercise is not being effected through a Cashless Exercise, paying
in full the Warrant Exercise Price for each such Warrant exercised and
any other amounts required to be paid pursuant to the Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to
11:00 a.m., New York City time, on a Business Day, the exercise of the
Warrant to which such items relate will be effective on such Business
Day. If any items referred to in the last sentence of the preceding
paragraph are received after 11:00 a.m., New York City time, on a
Business Day, the exercise of the Warrants to which such item relates
will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on
October 1, 2006, if all of the items referred to in the last sentence of
the preceding paragraph are received by the Warrant Agent at or prior to
5:00 p.m., New York City time, on such Expiration Date, the exercise of
the Warrants to which such items relate will be effective on the
Expiration Date.
As soon as practicable after the exercise of any Warrant or
Warrants, the Company shall issue or cause to be issued to or upon the
written order of the registered holder of this Warrant Certificate, a
certificate or certificates evidencing the Share or Shares to which such
holder is entitled, in fully registered form, registered in such name or
names as may be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of this Warrant Certificate, and
upon payment of any applicable transfer taxes required pursuant to the
Warrant Agreement. Such certificate or certificates evidencing the
Share or Shares shall be deemed to have been issued and any persons who
are designated to be named therein shall be deemed to have become the
holder of record of such Share or Shares as of the close of business on
the date upon which the exercise of this Warrant was deemed to be
effective as provided in the preceding paragraph.
The Company will not be required to issue fractional shares of
Common Stock upon exercise of the Warrants or distribute Share
certificates that evidence fractional shares of Common Stock. In lieu
of fractional shares of Common Stock, at the Company's election, there
shall be paid to the registered Holder of this Warrant Certificate at
the time such Warrant Certificate is exercised an amount in cash equal
to the same fraction of the Current Market Value (as defined in the
Warrant
Agreement) per share on the Business Day preceding the date this Warrant
Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder
thereof in person or by legal representative or attorney duly authorized
in writing, may be exchanged for a new Warrant Certificate or new
Warrant Certificates evidencing in the aggregate a like number of
Warrants, in the manner and subject to the limitations provided in the
Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that
purpose, a new Warrant Certificate evidencing in the aggregate a like
number of Warrants shall be issued to the transferee in exchange for
this Warrant Certificate, subject to the limitations provided in the
Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made
by anyone) for the purpose of any exercise hereof and for all other
purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
New York City, (ii) the principal national securities exchange or market
on which the Common Stock is listed or admitted to trading and (iii) the
principal national securities exchange or market on which the Warrants
are listed or admitted to trading are open for business.
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise [ ] of
the Warrants represented by this Warrant Certificate and purchase the
whole number of Shares issuable upon the exercise of such Warrants and
herewith tenders payment for such Shares in the amount of $[ ] in
cash or by certified or official bank check, in accordance with the
terms hereof. In lieu of payment of the cash exercise price, the holder
hereof is electing to exercise [ ] Warrants pursuant to a Cashless
Exercise (as defined in the Warrant Agreement) for [ ] shares of
Common Stock at the current Cashless Exercise Ratio. The undersigned
requests that a certificate representing such Shares be registered in
the name of _____________________ whose address is ___________________
____________________________ and that such certificate be delivered to
_________________________ whose address is _________________________.
Any cash payments to be paid in lieu of a fractional Share should be
made to __________________ whose address is _______________________ and
the check representing payment thereof should be delivered to
____________________ whose address is ______________________.
Dated __________________, 19__
Name of holder of
Warrant Certificate: _______________________________
(Please Print)
Tax Identification or
Social Security Number: ____________________________
Address: ___________________________________________
___________________________________________
Signature: _________________________________________
Note: The above signature must correspond with the name
as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change whatever
and if the certificate representing the Shares or
any Warrant Certificate representing Warrants not
exercised is to be registered in a name other than
that in which this Warrant Certificate is
registered, or if any cash payment to be paid in
lieu of a fractional share is to be made to a
person other than the registered holder of this
Warrant Certificate, the signature of the holder
hereof must be guaranteed as provided in the
Warrant Agreement.
Dated ____________________, 19__
Signature: __________________________________________________
Note: The above signature must correspond with
the name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed:_________________________________________
FORM OF ASSIGNMENT
For value received _____________________ hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint __________________________ attorney,
to transfer said Warrant Certificate on the books of the within-named
Company, with full power of substitution in the premises.
Dated ____________________, _____
Signature: _________________________________________________
Note: The above signature must correspond with
the name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed: _____________________________________
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(2)
The following exchanges of a part of this Global Warrant for
certificated Warrants have been made:
NUMBER OF
AMOUNT OF AMOUNT OF WARRANTS OF THIS
DECREASE IN INCREASE IN GLOBAL WARRANT SIGNATURE OF
NUMBER OF NUMBER OF FOLLOWING SUCH AUTHORIZED
DATE OF WARRANTS OF THIS WARRANTS OF THIS DECREASE (OR SIGNATORY OF
EXCHANGE GLOBAL WARRANT GLOBAL WARRANT INCREASE) WARRANT AGENT
--------------------------------------------------------------------------------
--------------------
(2) This is to be included only if the Warrant is in global form.
EXHIBIT B
[FORM OF WARRANT CERTIFICATE]
[FACE]
[Unless and until it is exchanged in whole or in part for Warrants
in certificated form, this Warrant may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or another nominee of the Depository
or by the Depository or any such nominee to a successor Depository or a
nominee of such successor Depository. Unless this certificate is
presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.](3)
"THIS SECURITY EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE
--------------------
(3) This paragraph is to be included only if the Warrant is in global
form.
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (1) ABOVE.
CUSIP# [ ]
NO. [ ] [ ] WARRANTS
WARRANT CERTIFICATE
This Warrant Certificate certifies that [ ], or
registered assigns, is the registered holder of [ ] Warrants (the
"WARRANTS") to purchase shares of Common Stock, $.001 par value (the
"COMMON STOCK"), of COINSTAR, INC., a Delaware corporation (the
"COMPANY"). This Warrant shall not be issued unless the Company has not
consummated an offering of Equity Interests (as defined in the Warrant
Agreement) (other than Disqualified Capital Stock (as defined in the
Warrant Agreement)) by the Company to the public pursuant to a
registration statement filed with the Securities and Exchange Commission
by October 1, 1998, the gross proceeds of which exceed $25 million, and
an Exercise Event (as defined below) has not otherwise occurred. Each
Warrant entitles the holder to purchase from the Company at any time
from 9:00 a.m. until 5:00 p.m. New York City time (i) on or after the
occurrence of an Exercise Event, on the earlier to occur of (a) 90 days
after an Exercise Event and (b) October 1, 2006 (unless otherwise
extended as provided for herein) (the "EXPIRATION DATE"), three fully
paid and nonassessable shares of Common Stock (the "SHARES," which may
also include any other securities or property purchasable upon exercise
of a Warrant, such adjustment and inclusion each as provided in the
Warrant Agreement) and (ii) on and for 10 days following a Co-Sale
Event, the number of fully paid and non-assessable Shares which shall be
included in a sale pursuant to Section 3 or 5 of the Co-Sale Agreement,
in each case at the exercise price (the "EXERCISE PRICE") of $.01 per
share upon surrender of this Warrant Certificate and payment of the
Exercise Price at any office or agency maintained for that purpose by
the Company (the "WARRANT AGENT OFFICE"), subject to the conditions set
forth herein and in the Warrant Agreement. Notwithstanding the
foregoing, a Warrant may also be exercised solely by the surrender of
the Warrant, and without the payment of the Exercise Price in cash, for
such number of Shares equal to the product of (1) the number of Shares
for which such Warrant is exercisable with payment of the Exercise Price
as of the date of exercise and (2) the Cashless Exercise Ratio. For
purposes of this Warrant, the "CASHLESS EXERCISE RATIO" shall equal a
fraction, the numerator of which is the excess of the Current Market
Value of the Common Stock on the date of exercise (calculated as set
forth in Section 5.1(o) of the Warrant Agreement) over the Exercise
Price Per Share as of the date of exercise and the denominator of which
is the Current Market Value of the Common Stock on the date of exercise
(calculated as set forth in Section 5.1(o`) of the Warrant Agreement).
An exercise of a Warrant in accordance with the immediately preceding
sentences is herein called a "CASHLESS EXERCISE." Upon surrender of a
Warrant Certificate representing more than one Warrant in connection
with the Holder's option to elect a Cashless Exercise, the number of
Shares deliverable upon a Cashless Exercise shall be equal to the number
of Warrants that the Holder specifies is to be exercised pursuant to a
Cashless Exercise multiplied by the Cashless Exercise Ratio. All
provisions of the Warrant Agreement shall be applicable with respect to
an exercise of a Warrant Certificate pursuant to a Cashless Exercise for
less than the full number of Warrants represented hereby.
"CO-SALE AGREEMENT" means that certain Amended and Restated Co-Sale
Agreement dated as of December 15, 1995 by and among the Company and the
other persons party thereto, as amended or supplemented from time to
time.
"CO-SALE EVENT" means so long as an Exercise Event shall not have
previously occurred, the seventh day prior to any date on which a holder
of Warrants will sell all or a portion of the Warrants or Shares
pursuant to Sections 3 or 5 of the Amended and Restated Co-Sale
Agreement dated as of
December 15, 1995 by and among the Company and the other Persons party
thereto, as amended or supplemented from time to time (the "Co-Sale
Agreement").
"EXERCISE EVENT" means, with respect to each Warrant, the date of
the earliest of: (1) the seventh day prior to the occurrence of a
Change of Control, (2) the consummation of a Public Equity Offering, (3)
a consolidation, merger or purchase of assets involving the Company or
any of its Subsidiaries that results in the Common stock of the Company
being subject to registration, (4) the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, or
(5) the 90th day prior to October 1, 2006.
To the extent an exercise of a Warrant is not effected through the
Cashless Exercise, the Exercise Price shall be payable by certified
check or official bank check or by such other means as is acceptable to
the Company in the lawful currency of the United States of America which
as of the time of payment is legal tender for payment of public or
private debts. The Company has initially designated the principal
corporate trust office of the Warrant Agent in the Borough of Manhattan,
The City of New York, as the initial Warrant Agent Office. The number
of Shares issuable upon exercise of the Warrants ("EXERCISE RATE") is
subject to adjustment upon the occurrence of certain events set forth in
the Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on October 1, 2006 (unless otherwise extended as provided for in
the Warrant Agreement) shall thereafter be void.
Terms used and not otherwise defined in this Warrant Certificate
shall have the meanings given them in the Warrant Agreement.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Warrant Certificate shall not be valid unless authenticated by
the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
WITNESS the facsimile signatures of its duly authorized officers.
COINSTAR, INC.,
By: ________________________________
Name: _____________________________
Title: ____________________________
Attest:
By: ___________________________
Name: _____________________
Title: ____________________
Dated: _______________________, 1996
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
THE BANK OF NEW YORK,
as Warrant Agent
By: _____________________________
Authorized Signatory
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
COINSTAR, INC.,
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring at 5:00 p.m., New York City
time, on the earlier to occur of (a) 90 days after an Exercise Event
which causes such Warrants to become exercisable and (b) October 1,
2006 (unless otherwise extended as provided for herein), each of which
represents the right to purchase at any time on or after an
Exercisability Date (as defined in the Warrant Agreement) and on or
prior to such date [three] shares of Common Stock of the Company,
subject to adjustment as set forth in the Warrant Agreement. The
Warrants are issued pursuant to a Warrant Agreement dated as of October
22, 1996 (the "WARRANT AGREEMENT"), duly executed and delivered by the
Company to The Bank of New York as Warrant Agent (the "WARRANT AGENT"),
which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or holder" meaning the registered holders or registered
holder) of the Warrants, and the terms set forth in this Warrant
Certificate are qualified by reference to the terms of the Warrant
Agreement.
Warrants may be exercised by (i) surrendering at any Warrant Agent
Office this Warrant Certificate with the form of Election to Exercise
set forth hereon duly completed and executed and (ii) to the extent
such exercise is not being effected through a Cashless Exercise, paying
in full the Warrant Exercise Price for each such Warrant exercised and
any other amounts required to be paid pursuant to the Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to
11:00 a.m., New York City time, on a Business Day, the exercise of the
Warrant to which such items relate will be effective on such Business
Day. If any items referred to in the last sentence of the preceding
paragraph are received after 11:00 a.m., New York City time, on a
Business Day, the exercise of the Warrants to which such item relates
will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on
October 1, 2006, if all of the items referred to in the last sentence of
the preceding paragraph are received by the Warrant Agent at or prior to
5:00 p.m., New York City time, on such Expiration Date, the exercise of
the Warrants to which such items relate will be effective on the
Expiration Date.
As soon as practicable after the exercise of any Warrant or
Warrants, the Company shall issue or cause to be issued to or upon the
written order of the registered holder of this Warrant Certificate, a
certificate or certificates evidencing the Share or Shares to which such
holder is entitled, in fully registered form, registered in such name or
names as may be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of this Warrant Certificate, and
upon payment of any applicable transfer taxes required pursuant to the
Warrant Agreement. Such certificate or certificates evidencing the
Share or Shares shall be deemed to have been issued and any persons who
are designated to be named therein shall be deemed to have become the
holder of record of such Share or Shares as of the close of business on
the date upon which the exercise of this Warrant was deemed to be
effective as provided in the preceding paragraph.
The Company will not be required to issue fractional shares of
Common Stock upon exercise of the Warrants or distribute Share
certificates that evidence fractional shares of Common Stock. In
lieu of fractional shares of Common Stock, at the Company's election,
there shall be paid to the registered Holder of this Warrant Certificate
at the time such Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value (as defined in
the Warrant Agreement) per share on the Business Day preceding the date
this Warrant Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder
thereof in person or by legal representative or attorney duly authorized
in writing, may be exchanged for a new Warrant Certificate or new
Warrant Certificates evidencing in the aggregate a like number of
Warrants, in the manner and subject to the limitations provided in the
Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that
purpose, a new Warrant Certificate evidencing in the aggregate a like
number of Warrants shall be issued to the transferee in exchange for
this Warrant Certificate, subject to the limitations provided in the
Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made
by anyone) for the purpose of any exercise hereof and for all other
purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
New York City, (ii) the principal national securities exchange or market
on which the Common Stock is listed or admitted to trading and (iii) the
principal national securities exchange or market on which the Warrants
are listed or admitted to trading are open for business.
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise [ ] of
the Warrants represented by this Warrant Certificate and purchase the
whole number of Shares issuable upon the exercise of such Warrants and
herewith tenders payment for such Shares in the amount of $[ ] in
cash or by certified or official bank check, in accordance with the
terms hereof. In lieu of payment of the cash exercise price, the holder
hereof is electing to exercise [ ] Warrants pursuant to a Cashless
Exercise (as defined in the Warrant Agreement) for [ ] shares of
Common Stock at the current Cashless Exercise Ratio. The undersigned
requests that a certificate representing such Shares be registered in
the name of _____________________ whose address is ___________________
____________________________ and that such certificate be delivered to
_________________________ whose address is _________________________.
Any cash payments to be paid in lieu of a fractional Share should be
made to __________________ whose address is _______________________ and
the check representing payment thereof should be delivered to
____________________ whose address is ______________________.
Dated __________________, 19__
Name of holder of
Warrant Certificate: _______________________________
(Please Print)
Tax Identification or
Social Security Number: ____________________________
Address: ___________________________________________
___________________________________________
Signature: _________________________________________
Note: The above signature must correspond with
the name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever and if the certificate
representing the Shares or any Warrant
Certificate representing Warrants not
exercised is to be registered in a name
other than that in which this Warrant
Certificate is registered, or if any cash
payment to be paid in lieu of a fractional
share is to be made to a person other than
the registered holder of this Warrant
Certificate, the signature of the holder
hereof must be guaranteed as provided in
the Warrant Agreement.
Dated ____________________, 19__
Signature: _______________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change
whatever.
Signature Guaranteed:_________________________________________
FORM OF ASSIGNMENT
For value received _____________________ hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint __________________________ attorney,
to transfer said Warrant Certificate on the books of the within-named
Company, with full power of substitution in the premises.
Dated ____________________, _____
Signature: ______________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change
whatever.
Signature Guaranteed: _____________________________________
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(4)
The following exchanges of a part of this Global Warrant for
certificated Warrants have been made:
NUMBER OF
AMOUNT OF AMOUNT OF WARRANTS OF THIS
DECREASE IN INCREASE IN GLOBAL WARRANT SIGNATURE OF
NUMBER OF NUMBER OF FOLLOWING SUCH AUTHORIZED
DATE OF WARRANTS OF THIS WARRANTS OF THIS DECREASE (OR SIGNATORY OF
EXCHANGE GLOBAL WARRANT GLOBAL WARRANT INCREASE) WARRANT AGENT
--------------------------------------------------------------------------------
--------------------
(4) This is to be included only if the Warrant is in global form.
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "WARRANTS") of COINSTAR,
INC.,
This Certificate relates to ____ Warrants held in* ___ book-entry
or* _______ certificated form by ______ (the "TRANSFEROR").
The Transferor:*
/ / has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depository a Warrant or Warrants in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Warrant (or the portion thereof indicated
above); or
/ / has requested the Warrant Agent by written order to exchange
or register the transfer of a Warrant or Warrants.
/ / In connection with such request and in respect of each such
Warrant, the Transferor does hereby certify that Transferor is familiar
with the Warrant Agreement relating to the above captioned Warrants and
the restrictions on transfers thereof as provided in Section 1.7 of such
Warrant Agreement, and that the transfer of this Warrant does not
require registration under the Securities Act of 1933, as amended (the
"ACT") because[*]:
/ / Such Warrant is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 1.7(a)(y)(A) or
Section 1.7(d)(i)(A) of the Warrant Agreement).
/ / Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Warrant is being transferred in accordance with Rule 144
under the Act.
/ / Such Warrant is being transferred in accordance with Rule 904
under the Act..
/ / Such Warrant is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Act, other than Rule 144A, Rule 144 or Rule 904 under the Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Act accompanies this Certificate.
______________________________
[INSERT NAME OF TRANSFEROR]
By: _________________________
Date: _____________
*Check applicable box.
EXHIBIT D
TRANSFEREE LETTER OF REPRESENTATION
COINSTAR, INC.,
00000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
Re: _______________________________________________
In connection with [our] [my] proposed purchase of warrants to
purchase Common Stock, par value $.001 per share, (the "SECURITIES") of
Coinstar, Inc., (the "COMPANY") [we] [I] confirm that:
1. [We] [I] understand that the Securities have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT") and, unless so registered, may not be sold except as permitted in
the following sentence. [We] [I] agree on [our] [my] own behalf and on
behalf of any investor account for which [we are] [I am] purchasing
Securities to offer, sell or otherwise transfer such Securities prior to
the date which is three years after the later of the date of original
issue and the last date on which the Company or any affiliate of the
Company was the owner of such Securities, or any predecessor thereto
(the "RESALE RESTRICTION TERMINATION DATE") only (a) to the Company, (b)
pursuant to a registration statement which has been declared effective
under the Securities Act, (c) so long as the Securities are eligible for
resale pursuant to Rule 144A, under the Securities Act, to a person [we]
[I] reasonably believe is a qualified institutional buyer under Rule
144A (a "QIB") that purchases for its own account or for the account of
a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that
is purchasing for his own account or for the account of such another
"accredited investor," or (e) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or
accounts be at all times within our or their control and to compliance
with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is
proposed to be made pursuant to clause (d) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the warrant
agent under the Warrant Agreement pursuant to which the Securities were
issued (the "WARRANT AGENT") which shall provide, among other things,
that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and
that it is acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. The Warrant Agent and
the Company reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Securities
pursuant to clauses (c), (d), or (e) above to require the delivery of a
written opinion of counsel, certifications, and or other information
satisfactory to the Company and the Warrant Agent.
2. [We are] [I am] an "accredited investor" (as defined in Rule
501(a) of Regulation D under the Securities Act) purchasing for [our]
[my] own account or for the account of another
"accredited investor," and [we are] [I am] acquiring the Securities for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act and
[we] [I] have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of [our]
[my] investment in the Securities, and [we] [I] and any accounts for
which [we are] [I am] acting are each able to bear the economic risk of
our or its investment for an indefinite period.
3. [We are] [I am] acquiring the Securities purchased by [us]
[me] for [our] [my] own account or for one or more accounts as to each
of which [we] [I] exercise sole investment discretion.
4. You and your counsel are entitled to rely upon this letter and
you are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
(Name of Purchaser)
By: ______________________
Date: _____________________
Upon transfer the Securities would be registered in the name of the
new beneficial owner as follows:
Name:_______________________________
Address:____________________________
Taxpayer ID Number:_________________
