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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): FEBRUARY 19, 1999
COINSTAR, INC.
(Exact name of registrant as specified in charter)
DELAWARE 000-22555 91-3156448
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
COINSTAR, INC.
1800 - 114th Avenue SE
Bellevue, Washington 98004
(Address of principal executive offices) (Zip Code)
(425)943-8000
(Registrant's telephone number, including area code)
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ITEM 5. FINANCING
On February 19, 1999, Coinstar, Inc., a Delaware corporation ("Coinstar"),
entered into a Credit Agreement with Imperial Bank, for itself and as agent of
Bank Austria Creditanstalt Corporate Finance, Inc. ("Bank Austria" and, together
with Imperial Bank, the "Lenders"). The Credit Agreement provides Coinstar with
a credit facility of up to $25 million, consisting of revolving loans of
$5 million from each of the Lenders, and term loans of $5 million from each of
the Lenders. The amounts available under the term loans will increase to
$7.5 million per Lender after CoinStar has satisfied certain debt ratios.
In connection with the Credit Agreement, Coinstar issued to each of the
Lenders a warrant to purchase 51,326 shares of its common stock. The exercise
price for the warrants, which will expire on February 19, 2009, is $12.177 per
share. Coinstar has agreed, pursuant to Registration Rights Agreements with the
Lenders, to file a registration statement on Form S-3 to register the shares
issuable upon exercise of the warrants within 60 days following the date on
which Coinstar has satisfied all of its obligations under the Credit Agreement
and the Lenders have no further obligation to make loans under the Credit
Agreement (the "Termination Date"). Coinstar must use reasonable efforts to
cause the registration statement to be declared effective no later than 120 days
following the Termination Date and must keep the registration open for at least
45 days following the date the registration statement is declared effective.
The Registration Rights Agreements also obligate Coinstar to include the common
stock issuable upon exercise of the warrants in certain registration statements
it may file.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
COINSTAR, INC.
By: /s/ Kirk Collamer
-----------------------------------
Kirk Collamer
Vice President and Chief Financial
Officer
Dated: March 2, 1999
-2-
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
4.1 Credit Agreement, dated February 19, 1999, between Coinstar,
Inc. and Imperial Bank, for itself and as agent for Bank Austria
Creditanstalt Corporate Finance, Inc.
4.2 Form of Warrant, dated February 19, 1999, issued to Imperial
Bank
4.3 Form of Warrant, dated February 19, 1999, issued to Bank Austria
Creditanstalt Corporate Finance, Inc.
4.4 Registration Rights Agreement, dated February 19, 1999, between
Coinstar, Inc. and Imperial Bank.
4.5 Registration Rights Agreement, dated February 19, 1999, between
Coinstar, Inc. and Bank Austria Creditanstalt Corporate Finance,
Inc.
99.1 Press Release, dated February 26, 1999.
</TABLE>
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EXHIBIT 4.1
CREDIT AGREEMENT
AMONG
COINSTAR, INC.,
AS THE BORROWER
IMPERIAL BANK,
AS AGENT,
AND THE LENDERS PARTY HERETO
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CREDIT AGREEMENT
This Credit Agreement dated as of February 19, 1999 is entered into among
Coinstar, Inc., a Delaware corporation (the "BORROWER"), the financial
institutions named on the signature pages hereof (each, a "LENDER" and
collectively the "LENDERS"), and Imperial Bank, as Agent for the Lenders (the
"AGENT"). The parties hereto agree as follows:
RECITALS
WHEREAS, the Borrower desires that the Lenders extend certain credit
facilities to the Borrower for working capital and other general corporate
purposes;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrower, the Lenders, and the
Agent agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms have the
following meanings:
"ACQUISITION": As defined in Section 6.2((k)).
"AFFILIATE": As applied to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, that Person.
For the purposes of this definition, "control" (including with the correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by contract
or otherwise.
"AGENT": As defined in the introductory paragraph of this Agreement.
"AGREEMENT": This Credit Agreement, as amended, supplemented or
modified from time to time.
"APPLICABLE MARGIN": As defined in EXHIBIT G hereto.
"BASE RATE": The higher of (i) the rate of interest announced from
time to time by Imperial Bank as its Prime Commercial Lending Rate and (ii) the
sum of 1/2 of 1% plus the Federal Funds Rate on the day prior to the date on
which the Base Rate is to be determined. The Base Rate is a reference rate; the
Agent and the Lenders may make loans at, above or below the Base Rate.
"BASE RATE LOANS": Loans hereunder at such time as they accrue
interest at a rate based upon the Base Rate.
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"BORROWER": As defined in the introductory paragraph of this
Agreement.
"BORROWING": As defined in Section 2.1(a).
"BORROWING BASE": At any time, an amount equal to fifty-five percent
(55%) of the Direct Contribution Margin, as determined by the Agent with
reference to the most recent Compliance Certificate and financial statements
submitted by Borrower pursuant to Section 6.1(a).
"BORROWING BASE CERTIFICATE": A certificate, substantially in the form
of EXHIBIT H hereto, delivered by the Borrower pursuant to Section 6.1(a).
"BUSINESS DAY": A day other than a Saturday, Sunday or day on which
commercial banks in San Francisco, California or Bellevue, Washington are
authorized or required by law to close.
"CAPITAL LEASE": As applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of that Person.
"CASH-IN-TRANSIT": All cash or coins (or funds in deposit accounts
traceable to or resulting from such cash or coins) that are (a) located inside a
Coinstar Unit, (b) in transit between a Coinstar Unit and a coin processing
center, or (c) located at a coin processing center of Borrower.
"CHANGE OF CONTROL": 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 Borrower 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
Borrower's capital stock as of the date of this Agreement, and (z) the Principal
or any Related Party, (ii) the adoption of a plan relating to the liquidation or
dissolution of the Borrower 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 Borrower's
capital stock as of the date of this Agreement, and (z) the Principal and any
Related Party, becomes the "beneficial owner" (as such term is defined in Rules
13(d)-3 and 13(d)-5 of the Exchange Act) directly or indirectly, of more than
50% of the Voting Stock of the Borrower or (iv) during any consecutive two-year
period, individuals who at the beginning of such period constituted the board of
directors of the Borrower (together with any new directors whose election to
such board of directors or whose nomination for election by the stockholders of
the Borrower was approved by a vote of a majority of the directors of the
Borrower 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
Borrower then in office.
"CODE": The California Uniform Commercial Code.
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"COINSTAR PROCESSING REVENUE": At any date of determination, revenue
from coin processing fees of the Borrower and its consolidated Subsidiaries
(excluding Foreign Subsidiaries) for the three months ending on such date
multiplied by four.
"COINSTAR UNITS": Borrower's automated, self-service coin counting and
processing machines that are operational and installed in retail locations.
"COMMITMENT": The obligation of each Lender to make Loans to the
Borrower and to reimburse the Issuing Bank for the unreimbursed portion of
Letters of Credit, each pursuant to Article II in the amount or amounts referred
to therein. The term "COMMITMENTS" means all such obligations of the Lenders.
"COMPLIANCE CERTIFICATE": A certificate, substantially in the form of
EXHIBIT F hereto, delivered by the Borrower pursuant to Section 6.1(a).
"CONSOLIDATED DEBT SERVICE COVERAGE RATIO": As defined in EXHIBIT G.
"CONSOLIDATED EBITDA": For any date of determination, the net income
of Borrower and its consolidated Subsidiaries (excluding Foreign Subsidiaries)
PLUS, (a) interest expense (excluding capitalized interest), (b) income tax
expense, (c) depreciation expense, and (d) amortization expense, determined on a
consolidated basis in accordance with GAAP, for the three months ending on such
date multiplied by four.
"CONSOLIDATED PROFORMA DEBT SERVICE": For any date of determination,
the sum, determined on a consolidated basis, of all interest expense of the
Borrower and its consolidated Subsidiaries (excluding Foreign Subsidiaries) with
respect to all Debt (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its consolidated Subsidiaries (excluding Foreign
Subsidiaries), excluding capitalized interest, for the three months ending on
such date multiplied by four, PLUS the lesser of (x) 25% of the amount of the
Borrowing Base, or (y) 25% of Consolidated Senior Debt.
"CONSOLIDATED SENIOR DEBT": At any date of determination, an amount
equal to the sum of all Debt of the Borrower and its consolidated Subsidiaries
(excluding Foreign Subsidiaries), determined on a consolidated basis in
accordance with GAAP, pursuant to any agreement or instrument to which the
Borrower or any of its consolidated Subsidiaries (excluding Foreign
Subsidiaries) is party relating (without duplication) to the borrowing of money
or the obtaining of credit, excluding Debt issued under the Indenture and Debt
that is subordinated to the Debt under this Agreement pursuant to the terms of a
written agreement executed on behalf of and acceptable to all Lenders; PROVIDED,
HOWEVER, that Consolidated Senior Debt includes all Debt of the Borrower and its
Domestic Subsidiaries under Capital Leases and all Debt and the Letter of Credit
Usage under this Agreement.
"CONSOLIDATED SENIOR DEBT SERVICE": For any date of determination, the
sum, determined on a consolidated basis, of (i) all interest expense of the
Borrower and its consolidated Subsidiaries (excluding Foreign Subsidiaries) with
respect to Consolidated Senior Debt (including that attributable to Capital
Leases in accordance with GAAP), excluding capitalized interest, for
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the three months ending on such date multiplied by four, PLUS (ii) scheduled
reductions of principal of all Consolidated Senior Debt for the twelve (12)
months following such date (including that portion of rental payments with
respect to Capital Leases which is or should be applied as a reduction to the
principal of such Capital Leases in accordance with GAAP), PLUS (iii) fees and
charges for Letter of Credit Usage as set forth in Section 2.5(f) of this
Agreement for the three months ending on such date multiplied by four, PLUS,
without duplication, reductions in the Revolving Commitments pursuant to Section
2.1(f)(i) for the twelve (12) months following such date.
"CONSOLIDATED TOTAL DEBT": At any date of determination, the sum,
determined on a consolidated basis, of all interest-bearing Debt of the Borrower
and its consolidated Subsidiaries (excluding Foreign Subsidiaries).
"CONSOLIDATED TOTAL DEBT SERVICE": For any date of determination, the
sum, determined on a consolidated basis, of (i) all interest expense of the
Borrower and its consolidated Subsidiaries (excluding Foreign Subsidiaries) with
respect to all Debt (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its consolidated Subsidiaries (excluding Foreign
Subsidiaries), excluding capitalized interest, for the three months ending on
such date multiplied by four, PLUS (ii) scheduled reductions of principal of all
Debt of the Borrower and its consolidated Subsidiaries (excluding Foreign
Subsidiaries) for the twelve (12) months following such date (including that
portion of rental payments with respect to Capital Leases which is or should be
applied as a reduction to the principal of such Capital Leases in accordance
with GAAP), PLUS (iii) fees and charges for Letter of Credit Usage as set forth
in Section 2.5(f) of this Agreement for the three months ending on such date
multiplied by four, PLUS, without duplication, reductions in the Revolving
Commitments pursuant to Section 2.1(f)(i) for the twelve (12) months following
such date.
"CONSOLIDATED TOTAL DIRECT OPERATING EXPENSES": For any period, the
total expenses incurred by Borrower or any of its consolidated Subsidiaries
(excluding Foreign Subsidiaries) for the operation of the Coinstar Units,
including, but not limited to, armored car pickup expenses, coin processing
expenses, field service operations expenses, retail marketing operations
expenses, retailer revenue sharing expenses, telecommunications expenses and
local taxes.
"CONTINGENT OBLIGATION": As applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Debt, lease, dividend or other obligation of another if the primary purpose
or intent thereof by the Person incurring the Contingent Obligation is to
provide assurance that such obligation of another will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such obligation will be protected (in whole or in part) against loss in
respect thereof, (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings, or (iii) with respect to any Interest Rate Agreement
or Currency Agreement. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payment if required
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regardless of non-performance by any other party or parties to an agreement, and
(c) any liability of that Person for the obligation of another through any
agreement (contingent or otherwise) (x) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (y) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (x) or (y)
of this sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically limited.
"CURRENCY AGREEMENT": As applied to any Person, any foreign exchange
contract, currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency values.
"DEBT": As applied to any Person, (i) all indebtedness for borrowed
money, (ii) that portion of obligations with respect to Capital Leases which is
properly classified as a liability on a balance sheet in accordance with GAAP,
(iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof, or (b) evidenced by a note or similar
written instrument and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that person. Obligations not yet due and payable under Interest Rate
Agreements and Currency Agreements constitute Contingent Obligations and not
Debt.
"DIRECT CONTRIBUTION MARGIN": At any date of determination, the
difference of (i) Coinstar Processing Revenue MINUS (ii) Consolidated Total
Direct Operating Expenses for the three months ending on such date multiplied by
four.
"DOLLARS" AND "$": Dollars in lawful currency of the United States of
America.
"DOMESTIC SUBSIDIARY": Any Subsidiary that is not a Foreign
Subsidiary.
"EMPLOYEE BENEFIT PLAN": Any Pension Plan, any employee welfare
benefit plan, or any other employee benefit plan which is described in Section
3(3) of ERISA and which is maintained for employees of the Borrower or any ERISA
Affiliate of the Borrower.
"EQUITY ISSUANCE": As applied to any Person, the sale or issuance by
such Person of (i) any capital stock of such Person, (ii) any options, warrants
or other similar rights exercisable in respect of such capital stock, or (iii)
any other security or instrument representing an equity interest (or the right
to obtain an equity interest) in such Person.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
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"ERISA AFFILIATE": As applied to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
and the Borrower are members and which is under common control within the
meaning of Section 414(b) and (c) of the Internal Revenue Code.
"EVENT OF DEFAULT": As defined in Section 7.1.
"EXCHANGE ACT": The Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"FEDERAL FUNDS RATE": On any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.
"FOREIGN PERSON": Any Person with a principal place of business or
domicile located outside the United States of America.
"FOREIGN SUBSIDIARY": (i) Coinstar International, Inc., and (ii) any
Subsidiary whose principal place of business is located outside of the United
States or whose assets and business are located primarily outside of the United
States.
"GAAP": Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession.
"GUARANTOR": My Shoppinglist.com, Inc., and each other Person which
joins the Guaranty as a Guarantor.
"GUARANTY": That certain Subsidiary Guaranty dated as of the date
hereof, executed by each of the Guarantors to the Agent for the benefit of the
Lenders.
"INDENTURE": As defined in Section 5.1(v).
"INTELLECTUAL PROPERTY SECURITY AGREEMENT": That certain Intellectual
Property Security Agreement dated as of the date hereof by and between Borrower
and Agent.
"INTEREST PAYMENT DATE": As to any Base Rate Loan until payment in
full, the last day of each March, June, September and December, commencing on
the first of such days to occur after such Base Rate Loan is made. As to any
LIBO Rate Loan with an Interest Period of three months or less until payment in
full, the last day of such Interest Period and the Maturity Date, and as to any
LIBO Rate Loan with an Interest Period in excess of three months until
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payment in full, (i) the same day of each three months following the beginning
of such Interest Period, (ii) the last day of such Interest Period and (iii) the
Maturity Date.
"INTEREST PERIOD": With respect to any LIBO Rate Loan:
(i) initially, the period commencing on, as the case may be, the
Borrowing or conversion date with respect to such LIBO Rate Loan and ending one,
two, three or six months thereafter as selected by the Borrower in its notice of
Borrowing as provided in Section 2.1((b)) or its notice of conversion as
provided in Section 2.4; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBO Rate Loan and ending one, two,
three or six months thereafter as selected by the Borrower in its notice of
continuation as provided in Section 2.4;
PROVIDED, that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(a) if any Interest Period for a LIBO Rate Loan would otherwise
end on a day which is not a LIBO Business Day, that Interest Period shall be
extended to the next succeeding LIBO Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding LIBO
Business Day;
(b) the Borrower may not select an Interest Period with respect
to any portion of principal of a LIBO Rate Loan which extends beyond a date on
which the Borrower is required to make a scheduled payment of that portion of
principal; and
(c) there shall be no more than five Interest Periods with
respect to LIBO Rate Loans outstanding at any time.
"INTEREST RATE AGREEMENT": As applied to any Person, an interest rate
swap, cap or collar agreement or similar arrangement designed to protect that
Person against fluctuations in interest rates.
"INTERNAL REVENUE CODE": The Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"INVESTMENT": Means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries (excluding Foreign
Subsidiaries) of, or of a beneficial interest in, any securities of any other
Person (including any Subsidiary of Borrower), (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Borrower (excluding Foreign Subsidiaries) from any Person other
than Borrower or any of its Domestic Subsidiaries, of any equity securities of
such Subsidiary, or (iii) any direct or indirect loan, advance (other than
advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or capital
contribution by Borrower or any of its Domestic Subsidiaries to any other Person
(other than a wholly-owned Domestic Subsidiary of Borrower), including all
indebtedness and accounts
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receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"ISSUING BANK": Imperial Bank, as issuer of the Letters of Credit.
"LENDER": As defined in the introductory paragraph of this Agreement.
"LETTER OF CREDIT" or "LETTERS OF CREDIT": Any letter of credit or
similar instrument issued or to be issued by the Issuing Bank for the account of
the Borrower pursuant to Section 2.5 for the purpose of (i) providing the
primary payment mechanism in connection with the purchase of any materials,
goods or services by the Borrower in its ordinary course of business or (ii)
supporting the obligations of the Borrower permitted under this Agreement.
"LETTER OF CREDIT USAGE": At any date of determination, the sum of (i)
the maximum aggregate amount that is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding and (ii) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Bank and not theretofore reimbursed by the Borrower.
"LIBO BUSINESS DAY": A day which is a Business Day and a day on which
dealings in Dollar deposits may be carried out in the London interbank market.
"LIBO RATE": For each Interest Period (i) the rate of interest
determined by the Agent at which U.S. dollar deposits for the relevant Interest
Period and in the approximate amount of the relevant LIBO Rate Loan would be
offered by the Agent to prime banks in the London interbank market as of 11:00
A.M. (London time) on the day which is two (2) LIBO Business Days prior to the
first day of such Interest Period, divided by (ii) a number equal to 1.00 minus
the aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day which is two (2) LIBO
Business Days prior to the beginning of such Interest Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as in effect at the time the Agent
quotes the rate to the Borrower) for Eurocurrency funding of domestic assets
(currently referred to as "Eurocurrency liabilities" in Regulation D of such
Board) which are required to be maintained by a member bank of such System (such
rate to be adjusted to the next higher 1/16 of 1%).
"LIBO RATE LOANS": Loans hereunder at such time as they accrue
interest at a rate based upon the LIBO Rate.
"LIEN": Any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
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"LOANS": The Revolving Loans, the Term Loans and any combination
thereof, made to the Borrower pursuant to Section 2.1 and 2.6(a), respectively.
"LOAN DOCUMENTS": This Agreement, the Notes, the Letters of Credit and
each letter of credit application, the Security Agreement, Financing Statements
(Forms UCC-1), the Intellectual Property Security Agreement, the Warrants, the
Guaranty, the Subsidiary Security Agreement, the Subsidiary Intellectual
Property Security Agreement and all other documents required by the Agent, the
Issuing Bank or any Lender in connection with this Agreement and/or the credit
extended hereunder.
"MAJORITY LENDERS": As of any date of determination, Lenders owed not
less than 66.667% of the then aggregate unpaid principal amount of the Notes,
or, if no principal amount of the Notes is outstanding, then Lenders having not
less than 66.667% of the Commitments.
"MANDATORY OUTSTANDING REVOLVING LOANS": As defined in Section 2.2(e).
"MATERIAL ADVERSE EFFECT": A material adverse effect on (i) the
business, operations, properties, assets or condition (financial or otherwise)
of Borrower, or (ii) the ability of Borrower to perform, or of any Lender to
enforce, the obligations of Borrower under this Agreement or any of the other
Loan Documents.
"MATURITY DATE": The date immediately preceding the sixth anniversary
of the date of this Agreement.
"MULTIEMPLOYER PLAN": A "multiemployer plan" as defined in Section
4001(a) (3) of ERISA which is maintained for employees of the Borrower or any
ERISA Affiliate of the Borrower.
"NET PROCEEDS": With respect to any Equity Issuance, the gross cash
proceeds received by the issuer from the issuance less all legal and accounting
expenses, commissions and other fees and expenses incurred or to be incurred and
all federal, state, local and foreign taxes assessed in connection therewith.
"NOTE" and "NOTES": The Revolving Notes, the Term Notes and any
combination thereof.
"PENSION PLAN": Any employee plan which is subject to Section 412 of
the Internal Revenue Code and which is maintained for employees of the Borrower
or any ERISA Affiliate of the Borrower, other than a Multiemployer Plan.
"PERMITTED LIENS": The following types of Liens:
(i) Liens in favor of the Lenders;
(ii) Liens for taxes, assessments or governmental charges or
claims (other than any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal
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Revenue Code or by ERISA) to the extent not yet delinquent or being contested in
good faith and for which appropriate reserves have been made in accordance with
GAAP;
(iii) statutory Liens of landlords and statutory Liens of
carriers, warehousemen, mechanics and materialmen and other Liens imposed by law
incurred in the ordinary course of business securing obligations that are not
yet delinquent or are being contested in good faith and for which appropriate
reserves have been made in accordance with GAAP;
(iv) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(v) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the use or
value of such property;
(vi) any attachment or judgment Lien not constituting an Event of
Default under Section 7.1((h)); and
(vii) Leases or subleases and licenses or sublicenses granted to
others in the ordinary course of Borrower's business not interfering in any
material respect with the business of Borrower and its Subsidiaries taken as a
whole, and any interest or title of a lessor, licensor or under any lease or
license, provided that such leases, subleases, licenses and sublicenses do not
prohibit the grant of the security interest granted hereunder;
(viii) Liens not prior to the Lien of the Lenders which
constitute rights of set-off of a customary nature or bankers' Lien with respect
to amounts on deposit, arising by operation of law.
"PERSON": Means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"POTENTIAL EVENT OF DEFAULT": A condition or event which, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"PRICING CERTIFICATE": A certificate, substantially in the form of
EXHIBIT I hereto, delivered by the Borrower pursuant to Section 6.1(a).
"PRINCIPAL": Mr. Jens H. Molbak.
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"REGISTRATION RIGHTS AGREEMENT": A Registration Rights Agreement in
favor of Imperial Bank or Bank Austria Creditanstalt Corporate Finance, Inc. in
substantially the form attached hereto as EXHIBIT K.
"REGULATIONS T, U AND X": Regulations T, U and X, respectively,
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time, and any successors thereto.
"RELATED PARTY": 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 Persons referred
to in the immediately preceding clause (i).
"REVOLVING COMMITMENT": As to each of Imperial Bank and Bank Austria
Creditanstalt Corporate Finance, Inc., the lesser of (a) Five Million Dollars
($5,000,000) and (b) such Lender's pro rata share of the Borrowing Base. The
term "REVOLVING COMMITMENTS" shall mean the aggregate Revolving Commitments of
all of the Lenders, as such amounts are reduced pursuant to Section 2.1(f) or
2.2(b).
"REVOLVING COMMITMENT FEE": As defined in Section 2.1(d).
"REVOLVING LOANS": As defined in Section 2.1((a)).
"REVOLVING NOTE": As defined in Section 2.1((c)).
"S.E.C.": The United States Securities and Exchange Commission and any
successor institution or body which performs the functions or substantially all
of the functions thereof.
"SECURITY AGREEMENT": The Security Agreement dated as of even date
herewith, between the Borrower and the Agent.
"SOLVENT": As to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section 101(32) of the
United States Bankruptcy Code and, in the alternative, for purposes of the
California Uniform Fraudulent Transfer Act; (b) the present fair salable value
of the property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and mature; (c) such Person is able to pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in a business or a transaction for which such Person's
property would constitute unreasonably small capital.
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"SUBSIDIARY": A corporation, partnership, association, joint venture
or other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof are at the time owned, directly, or indirectly through one
or more intermediaries, or both, by the Borrower or one or more of the other
Subsidiaries of the Borrower or both.
"SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT": That certain
Subsidiary Intellectual Property Security Agreement dated as of the date hereof,
executed and delivered by the Guarantor to the Agent for the benefit of the
Lenders.
"SUBSIDIARY SECURITY AGREEMENT": That certain Subsidiary Security
Agreement dated as of the date hereof, executed and delivered by the Guarantor
to the Agent for the benefit of the Lenders.
"TERM COMMITMENT": As to each of Imperial Bank and Bank Austria
Creditanstalt Corporate Finance, Inc., the lesser of (a) Five Million Dollars
($5,000,000) and (b) such Lender's pro rata share of the Borrowing Base;
PROVIDED, that effective five (5) Business Days after Borrower demonstrates
achievement of a ratio of Consolidated EBITDA to Consolidated Total Debt Service
of not less than 1.50 to 1.0 for any six consecutive calendar months after the
date hereof, as determined by the Agent with reference to the financial
statements and Compliance Certificates of the Borrower delivered pursuant to
Section 6.1, the term "Term Commitment" shall mean, as to each of Imperial Bank
and Bank Austria Creditanstalt Corporate Finance, Inc., the lesser of (a) Seven
Million Five Hundred Thousand Dollars ($7,500,000) and (b) such Lender's pro
rata share of the Borrowing Base. The term "Term Commitments" shall mean the
aggregate Term Commitments of all of the Lenders, as such amount may be reduced
pursuant to the terms of this Agreement.
"TERM COMMITMENT TERMINATION DATE": The date immediately preceding the
second anniversary of the date of this Agreement.
"TERM LOAN": As defined in Section 2.6(a).
"TERM NOTES": As defined in Section 2.6(c).
"TERMINATION EVENT": (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder (other than a "Reportable
Event" not subject to the provision for 30 day notice to the Pension Benefit
Guaranty Corporation), or (ii) the withdrawal of the Borrower or any of its
ERISA Affiliates from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(l) (2) or 4068(f) of ERISA, or
(iii) the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings to terminate a Pension Plan by the
Pension Benefit Guaranty Corporation, or (v) the imposition of a lien pursuant
to Section 412(n) of the Internal Revenue Code; provided, that none of the
events
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described in clauses (i) through (v) above, inclusive, shall constitute a
Termination Event unless such event would reasonably be expected to cause a
Material Adverse Effect.
"VOTING STOCK": 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.
"WARRANT": A warrant to purchase stock in favor of Imperial Bank or
Bank Austria Creditanstalt Corporate Finance, Inc. in substantially the form
attached hereto as EXHIBIT J.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
Section 1.1, and accounting terms partly defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under GAAP. In the
event that GAAP changes during the term of this Agreement such that the
financial covenants contained in Sections 6.2((a)) through (g) would then be
calculated in a different manner or with different components, (i) the Borrower
and the Lenders agree to negotiate to amend this Agreement in such respects as
are necessary to conform those covenants as criteria for evaluating the
Borrower's financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (ii) the Borrower shall be deemed to
be in compliance with the financial covenants contained in such Sections,
pending reaching agreement on such amendment, following any such change in GAAP
if and to the extent that the Borrower would have been in compliance therewith
under GAAP as in effect immediately prior to such change.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(d) So long as the Borrower does not have any Subsidiaries, references
to a Subsidiary or Subsidiaries in this Agreement shall be deemed to be deleted.
(e) The terms defined in Section 1.1 include the plural as well as the
singular. Pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms. The terms "includes" and "including" shall not be construed
to imply any limitation.
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ARTICLE II
THE LOANS
2.1 THE REVOLVING LOANS.
(a) THE REVOLVING COMMITMENTS. Each Lender agrees, severally and not
jointly, on the terms and conditions hereinafter set forth, to make loans
("REVOLVING LOANS") to the Borrower from time to time during the period from the
date hereof to and including the Maturity Date in an aggregate amount not to
exceed such Lender's Revolving Commitment; PROVIDED, HOWEVER, that no Lender
shall be obligated on any date to make a Loan which, when added to the aggregate
outstanding Loans and the Letter of Credit Usage, would exceed the Borrowing
Base. Each borrowing under this Section (a "BORROWING") shall be in a minimum
amount of $500,000; PROVIDED that a Revolving Loan consisting of a LIBO Rate
Loan shall be in a minimum amount of $2,000,000. Each Borrowing shall be made on
the same day by the Lenders ratably according to their respective Commitments.
Within the limits of the Revolving Commitments and prior to the Maturity Date,
the Borrower may borrow, repay pursuant to Section 2.2((c)) and reborrow under
this Section, PROVIDED, HOWEVER, that at no time shall the aggregate principal
amount of outstanding Revolving Loans plus the Letter of Credit Usage then in
effect exceed the lesser of (x) the Revolving Commitments then in effect or (y)
the Borrowing Base.
(b) MAKING THE REVOLVING LOANS.
(i) The Borrower may borrow under the Revolving Commitments on
any Business Day if the Borrowing is to consist of a Base Rate Loan and on any
LIBO Business Day if the Borrowing is to consist of a LIBO Rate Loan, PROVIDED
that the Borrower shall give the Agent irrevocable notice (which notice must be
received by the Agent prior to 10:00 A.M., San Francisco time) (i) three (3)
LIBO Business Days prior to the requested Borrowing date in the case of a LIBO
Rate Loan, and (ii) one (1) Business Day prior to the requested Borrowing date
in the case of a Base Rate Loan, specifying (A) the amount of the proposed
Borrowing, (B) the requested date of the Borrowing, (C) whether the Borrowing is
to consist of a LIBO Rate Loan or a Base Rate Loan, and (D) if the Loan is to be
a LIBO Rate Loan, the length of the Interest Period therefor. Promptly following
receipt of such notice, the Agent shall notify each Lender of the date of the
Loan, whether the Loan will be a Base Rate Loan or a LIBO Rate Loan, the amount
of that Lender's pro rata share of the Loan and, if the Loan is a LIBO Rate
Loan, of the applicable Interest Period. Not later than 1:00 P.M., San Francisco
time, on the date specified for any Loan, each Lender shall deposit immediately
available funds in the amount of its pro rata share of the Loan to the account
of the Agent set forth on the signature pages hereof. Upon satisfaction of the
applicable conditions set forth in Article IV, the Agent will make available the
proceeds of all such Loans to the Borrower by crediting the account of the
Borrower on the books of the Agent, or as otherwise directed by the Borrower.
(ii) The notice of Borrowing may be given orally (including
telephonically) or in writing (including telex or facsimile transmission);
PROVIDED that any oral notice shall be confirmed in writing on the same Business
Day and all written notices and
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confirmation shall be in the form of the Notice of Revolving Loan attached
hereto as EXHIBIT C. Any conflict regarding a notice or between an oral notice
and a written notice applicable to the same Borrowing shall be conclusively
determined by the Agent's books and records. The Agent's failure to receive any
written notice of a particular Borrowing shall not relieve the Borrower of its
obligations to repay the Borrowing made and to pay interest thereon. The Agent
shall not incur any liability to the Borrower in acting upon, and shall be
entitled to rely upon, any notice of Borrowing, or any notice of interest rate
conversion or extension or regarding any Letter of Credit, which the Agent
believes in good faith to have been given by a Person duly authorized to borrow
on behalf of the Borrower.
(iii) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such Borrowing in accordance with subsection (1) of this Section 2.1((b)) and
the Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Agent, such Lender and
the Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's pro
rata share of such Borrowing for purposes of this Agreement. The failure of any
Lender to make available its pro rata share of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder, to make available its pro
rata share of such Borrowing on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make available its pro
rata share of any Borrowing on the date of any Borrowing.
(c) REVOLVING NOTES. The Revolving Loans made by the Lenders pursuant
hereto shall be evidenced by promissory notes of the Borrower, substantially in
the form of EXHIBITS A-1 AND A-2 hereto (the "REVOLVING NOTES"), payable to the
order of each Lender and representing the obligation of the Borrower to pay the
aggregate unpaid principal amount of all Revolving Loans made by that Lender,
with interest thereon as prescribed in Section 2.3. Each Lender is hereby
authorized to record in its books and records and on any schedule annexed to its
Revolving Note, the date and amount of each Revolving Loan made by that Lender,
and the date and amount of each payment of principal thereof, and in the case of
LIBO Rate Loans, the Interest Period and interest rate with respect thereto and
any such recordation shall constitute PRIMA FACIE evidence of the accuracy of
the information so recorded; PROVIDED that failure by any Lender to effect such
recordation shall not affect the Borrower's obligations hereunder. Prior to the
transfer of a Revolving Note, the transferring Lender shall record such
information on any schedule annexed to and forming a part of such Revolving
Note.
(d) REVOLVING COMMITMENT FEE. The Borrower agrees to pay to the Agent
for the ratable benefit of the Lenders a commitment fee on the average daily
unused portion of the Revolving Commitments, from the execution date of this
Agreement until the Maturity Date at
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the rate of one half of one percent (0.50%) per annum (the "Revolving Commitment
Fee"), payable in arrears on the last day of each calendar quarter commencing on
the first such date occurring after the date of this Agreement. The Revolving
Commitment Fee shall be calculated on the basis of a 360-day year for the actual
days elapsed, and shall be non-refundable. For the purposes of calculating the
Revolving Commitment Fee, the Letter of Credit Usage shall be deemed a usage of
the Revolving Commitments.
(e) FACILITY FEE. On the day this Agreement is executed, the Borrower
shall pay to the Agent, for the ratable account of the Lenders, a non-refundable
fee for the Revolving Commitments in the amount of $375,000. Lenders acknowledge
receipt of a deposit of $187,500 which shall be applied to such fee on the day
this Agreement is executed.
(f) REDUCTION OF REVOLVING COMMITMENTS.
(i) AUTOMATIC REDUCTION OF REVOLVING COMMITMENTS. The Revolving
Commitments shall be automatically and permanently reduced pro rata on the last
day of each March, June, September and December, commencing on June 30, 2001, by
an amount equal to $625,000 on each such day; PROVIDED that in no event shall
the Revolving Commitments be reduced to an amount less than the Mandatory
Outstanding Revolving Loans.
(ii) OPTIONAL REDUCTION OF REVOLVING COMMITMENTS. The Borrower
shall have the right, upon at least two (2) Business Days' notice to the Agent,
to terminate in whole or reduce in part the unused portion of the Revolving
Commitments, without premium or penalty; PROVIDED that each partial reduction
shall be in the aggregate amount of $500,000 or any whole multiple of $500,000
in excess thereof and that such reduction shall not reduce the Revolving
Commitments to an amount less than the greater of (x) the amount of the
outstanding Revolving Loans on the effective date of the reduction or (y) the
Mandatory Outstanding Revolving Loans.
2.2 REPAYMENT.
(a) MANDATORY REPAYMENTS.
(i) REVOLVING LOANS. The aggregate principal amount of the
Revolving Loans outstanding on the Maturity Date, together with accrued interest
thereon, shall be due and payable on the Maturity Date.
(ii) TERM LOANS. The aggregate principal amount of the Term Loans
outstanding on the Term Commitment Termination Date shall be payable in sixteen
(16) equal quarterly installments payable on the last day of each March, June,
September and December, commencing on June 30, 2001 and ending on the Maturity
Date, on which date the remaining outstanding principal amount of the Term
Loans, together with accrued interest thereon and any other amounts owing under
this Agreement shall be due and payable.
(ii) OVERADVANCES. If at any time the sum of the aggregate
principal amount of outstanding Loans plus the Letter of Credit Usage exceeds
the lesser of (x) the Commitments then in effect or (y) the Borrowing Base, the
Borrower shall immediately repay the
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Loans in an amount equal to the excess. If at any time the sum of the aggregate
principal amount of outstanding Revolving Loans plus the Letter of Credit Usage
exceeds the lesser of (x) the Revolving Commitments then in effect or (y) the
Borrowing Base, the Borrower shall immediately repay the Revolving Loans in an
amount equal to the excess.
(b) MANDATORY PREPAYMENTS.
(i) Upon any Equity Issuance by Borrower or any Domestic
Subsidiaries during the term of this Agreement, Borrower shall be required to
apply one hundred percent (100%) of the Net Proceeds from such Equity Issuance,
immediately upon receipt, as a mandatory prepayment of the Loans.
(ii) Within five (5) Business Days of receipt by Borrower or any
Domestic Subsidiaries of any cash proceeds in excess of $500,000 (including any
cash received by way of deferred payment pursuant to a note receivable or
otherwise) remaining after deducting all costs of such sale, transfer or
dispositions from the sale, transfer or other disposition of any assets of
Borrower (other than sales of inventory in the ordinary course of business, or
transfers of worn-out or obsolete equipment), Borrower shall be required to
apply one hundred percent (100%) of such proceeds as a mandatory prepayment of
the Loans.
(iii) Within 60 days of receipt by Borrower or any Domestic
Subsidiaries of any cash proceeds in an aggregate amount of less than $500,000
in any one (1) calendar year (including any cash received by way of deferred
payment pursuant to a note receivable or otherwise) remaining after deducting
all costs of such sale, transfer or dispositions from the sale, transfer or
other disposition of any assets of Borrower (other than sales of inventory in
the ordinary course of business, or transfers of worn-out or obsolete
equipment), Borrower shall be required to (A) use such proceeds to purchase
assets useful in the business of Borrower or the applicable Subsidiary, or (B)
apply one hundred percent (100%) of any such proceeds not used to purchase such
assets as a mandatory prepayment of the Loans.
(iv) Upon the incurrence, issuance or sale by Borrower or any
Domestic Subsidiaries of any Debt (other than Debt permitted under Section
6.2(i)) during the term of this Agreement, Borrower shall be required to apply
one hundred percent (100%) of the net proceeds received by Borrower or any
Subsidiary from such incurrence, issuance or sale, immediately upon receipt, as
a mandatory prepayment of the Loans.
(v) Any mandatory prepayments required to be made pursuant to
this Section 2.2(b) prior to the Maturity Date shall reduce the Revolving
Commitments and/or the Term Commitments (as selected by Borrower, subject to the
terms and conditions of this Agreement) in the total amount of such mandatory
prepayments; PROVIDED that in no event shall the Revolving Commitment be reduced
to an amount less than the Mandatory Outstanding Revolving Loans.
(c) OPTIONAL PREPAYMENT. Subject to Sections 2.2(e) and 3.7((b)), the
Borrower may at its option prepay the Loans, in whole or in part, at any time
and from time to time, PROVIDED that the Agent shall have received from the
Borrower notice of any such
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prepayment at least one (1) Business Day prior to the date of the proposed
prepayment if such date is not the last day of the then current Interest Period
for each Loan being prepaid, in each case specifying the date and the amount of
prepayment. Partial prepayments hereunder shall be in an aggregate principal
amount of the lesser of (a) $500,000 or any whole multiple of $500,000 in excess
thereof and (b) the outstanding balance of the Loan being prepaid.
(d) PARTIAL PREPAYMENTS. Payments which are partial prepayments of the
Term Loans shall be applied to the principal installments of the Term Loans of
latest maturity.
(e) MANDATORY OUTSTANDING REVOLVING LOANS. Notwithstanding any other
provision of this Agreement, Borrower shall be required at all times from the
date of the initial Loan until the Maturity Date or such earlier date on which
all outstanding Term Loans have been fully repaid and no Lender has any
Commitment to make any Term Loans, to maintain a balance of outstanding
Revolving Loans in an aggregate principal amount of not less than $500,000 (such
Revolving Loans being the "MANDATORY OUTSTANDING REVOLVING LOANS").
Notwithstanding any other provision of this Agreement, Borrower shall not repay,
and no payment shall be applied to, the Mandatory Outstanding Revolving Loans
until all Term Loans have been fully repaid and no Lender has any Commitment to
make any Term Loans.
2.3 INTEREST RATE AND PAYMENT DATES.
(a) PAYMENT OF INTEREST. Interest with respect to each Loan shall be
payable in arrears on each Interest Payment Date for such Loan, on the Maturity
Date and on the date of any prepayment.
(b) BASE RATE LOANS. Except as otherwise provided in Section 3.2,
Loans which are Base Rate Loans shall bear interest on the unpaid principal
amount thereof at a rate per annum equal to the Base Rate plus the Applicable
Margin.
(c) LIBO RATE LOANS. Except as otherwise provided in Section 3.2,
Loans which are LIBO Rate Loans shall bear interest for each Interest Period
with respect thereto on the unpaid principal amount thereof at a rate per annum
equal to the LIBO Rate determined for such Interest Period in accordance with
the terms hereof plus the Applicable Margin.
2.4 CONTINUATION AND CONVERSION OPTIONS. The Borrower may elect from time
to time to convert its outstanding Loans from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis by giving the Agent irrevocable
notice (i) at least one (1) Business Day prior to an election to convert Loans
to Base Rate Loans and (ii) at least three (3) LIBO Business Days' prior
irrevocable notice of an election to convert Loans to LIBO Rate Loans, PROVIDED
that any conversion of Loans other than Base Rate Loans shall only be made on
the last day of an Interest Period with respect thereto, PROVIDED, FURTHER that
no Loan may be converted to a Loan other than a Base Rate Loan so long as an
Event of Default or Potential Event of Default has occurred and is continuing.
The Borrower may elect from time to time to continue its outstanding Loans other
than Base Rate Loans upon the expiration of the Interest Period(s) applicable
thereto by giving to the Agent at least three (3) LIBO Business Days' prior
irrevocable notice of
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continuation of a LIBO Rate Loan and the succeeding Interest Period(s) of such
continued Loan or Loans will commence on the last day of the Interest Period of
the Loan to be continued, PROVIDED that no Loan may be continued as a Loan other
than a Base Rate Loan so long as an Event of Default or Potential Event of
Default has occurred and is continuing. Each notice electing to convert or
continue a Loan shall be in the form of EXHIBIT E hereto, and shall specify: (i)
the proposed conversion/continuation date; (ii) the amount of the Loan to be
converted/continued; (iii) the nature of the proposed continuation/conversion;
and (iv) in the case of a conversion to, or continuation of, a Loan other than a
Base Rate Loan, the requested Interest Period, and shall certify that no Event
of Default or Potential Event of Default has occurred and is continuing. On the
date on which such conversion or continuation is being made each Lender shall
take such action as is necessary to effect such conversion or continuation. In
the event that no notice of continuation or conversion is received by the Agent
with respect to outstanding Loans other than Base Rate Loans, upon expiration of
the Interest Period(s) applicable thereto, such Loans shall convert to Base Rate
Loans. Subject to the limitations set forth in this Section and in the
definition of Interest Period, all or any part of outstanding Loans may be
converted or continued as provided herein, PROVIDED that partial conversions or
continuations with respect to Loans other than Base Rate Loans shall be in an
aggregate minimum amount of $1,000,000.
2.5 LETTERS OF CREDIT.
(a) LETTERS OF CREDIT. The Borrower may request from time to time
during the term of this Agreement that the Issuing Bank issue Letters of Credit
for the account of the Borrower, PROVIDED that (i) Borrower shall not request
that the Issuing Bank issue any Letter of Credit, if after giving effect to such
issuance, the sum of the aggregate principal amount of outstanding Revolving
Loans plus the Letter of Credit Usage exceeds the lesser of (x) the Revolving
Commitments then in effect or (y) the Borrowing Base, (ii) in no event shall the
Issuing Bank issue any Letter of Credit having an expiration date (a) later than
the Maturity Date or (b) more than one year from the date of issuance, and (iii)
Borrower shall not request any Letter of Credit, if after giving effect to such
issuance, the Letter of Credit Usage exceeds Five Million Dollars ($5,000,000)
or any regulatory, legal or internal limit on the Issuing Bank's ability to
issue the requested Letter of Credit.
(b) REQUEST FOR ISSUANCE; PAYMENTS UNDER LETTERS OF CREDIT. Whenever
the Borrower requests that the Issuing Bank issue a Letter of Credit, it shall
deliver to the Issuing Bank an executed application for such Letter of Credit in
the form customarily required by the Issuing Bank and the form of the Letter of
Credit requested, together with such other information or materials as the
Issuing Bank may request with respect to such Letter of Credit no later than
10:00 A.M., San Francisco time, at least three (3) Business Days in advance of
the proposed date of issuance. IN DETERMINING WHETHER TO PAY UNDER ANY LETTER OF
CREDIT, THE ISSUING BANK SHALL BE RESPONSIBLE ONLY TO DETERMINE THAT THE
DOCUMENTS AND CERTIFICATES REQUIRED TO BE DELIVERED UNDER THAT LETTER OF CREDIT
HAVE BEEN DELIVERED AND THAT THEY COMPLY ON THEIR FACE WITH THE REQUIREMENTS OF
THAT LETTER OF CREDIT.
(c) ISSUANCE OF LETTERS OF CREDIT. Upon the satisfaction of all
relevant conditions set forth in Section 4.3, and provided that the issuance of
such Letter of Credit would
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not violate any law, regulatory restriction or internal policy of the Issuing
Bank at the time such issuance is requested, the Issuing Bank shall issue a
Letter of Credit by delivering the Letter of Credit to the beneficiary, and
shall promptly notify the Agent and each Lender of the amount and terms thereof.
If the Issuing Bank declines to issue the requested Letter of Credit, it shall
promptly so notify the Borrower and the Borrower shall withdraw its application
therefor.
(d) PARTICIPATION BY LENDERS IN LETTERS OF CREDIT. Upon the issuance
of a Letter of Credit, each Lender shall be deemed to have irrevocably purchased
from the Issuing Bank, without recourse to or warranty from the Issuing Bank, a
pro rata undivided participation in the Letter of Credit, in an amount equal to
the face amount of the Letter of Credit multiplied by that Lender's ratable
share of the Revolving Commitments.
(e) REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTER OF CREDIT. The Issuing
Bank shall notify the Borrower and the Agent of each request for a drawing under
a Letter of Credit, and the Borrower shall reimburse the Issuing Bank for such
amount in immediately available funds prior to 11:00 A.M., San Francisco time,
on the date of the drawing. In the event that the Borrower shall fail to so
reimburse the Issuing Bank, the Issuing Bank shall promptly notify the Agent who
shall promptly notify each Lender. Prior to 1:00 P.M., San Francisco time, on
the date of such notice, each Lender shall make a payment under its
participation in such Letter of Credit (which, except as provided in Section
2.5((f))((iii)), shall constitute a Revolving Loan to the Borrower) in an amount
equal to that Lender's ratable share of the unreimbursed amount of such drawing,
by depositing immediately available funds in such amount to the account of the
Agent set forth on the signature pages hereof. The Agent shall promptly pay to
the Issuing Bank the proceeds of such Revolving Loans, which shall be used by
the Issuing Bank to repay the unreimbursed amount. Such Revolving Loans shall be
evidenced by the Revolving Notes and shall initially be Base Rate Loans. The
obligation of each Lender to reimburse the Issuing Bank is absolute and
unconditional and shall not be affected by the occurrence of an Event of Default
or any other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower to reimburse the Issuing Bank
for the amount of any payment made by the Issuing Bank under any Letter of
Credit as set forth herein. If any Lender fails to make available to the Agent
the amount of such Lender's participation in such Letter of Credit as provided
above, the Issuing Bank shall be entitled to recover such amount on demand from
such Lender together with interest thereon, for each day from the date of notice
to such Lender to the date such amount is paid to the Issuing Bank at rate which
is at all times equal to three percent (3%) per annum in excess of the Base Rate
in effect from time to time; PROVIDED that if the failure to pay is solely the
result of an administrative error (which determination shall be made by the
Agent in its sole discretion), or is solely the result of the Lender receiving
notice too late in the day to make payment to the Agent on that day, then the
interest rate for the first day of such delay shall be the Federal Funds Rate.
(f) COMPENSATION. The Borrower agrees to pay the following amounts to
the Agent with respect to Letters of Credit:
(i) with respect to each Letter of Credit, payable on the date of
issuance of such Letter of Credit, a non-refundable Letter of Credit fee for the
account of the
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Issuing Bank equal to one percent (1.0%) per annum of the stated amount of such
Letter of Credit;
(ii) with respect to each Letter of Credit, a Letter of Credit
fee for the period from and including the date of issuance of the Letter of
Credit to and including the date such Letter of Credit is drawn in full, expires
or is terminated for the ratable benefit of the Lenders at a rate per annum
equal to the Applicable Margin for LIBO Rate Loans multiplied by the stated
amount of the Letter of Credit, payable on the date of issuance of the Letter of
Credit for the period from the date of issuance to the last day of the next
occurring March, June, September and December, and thereafter payable quarterly
in arrears on the last day of each March, June, September and December;
(iii) with respect to drawings made under any Letter of Credit,
to the extent a Revolving Loan is not made to reimburse the Issuing Bank for
each such drawing, or the Issuing Bank is not otherwise reimbursed for any
reason, interest, for the ratable benefit of the Lenders, payable on demand, on
the amount paid by the Issuing Bank in respect of each such drawing from the
date of the drawing through the date such amount is reimbursed the Borrower at a
rate which is at all times equal to three percent (3%) per annum in excess of
the Base Rate in effect from time to time;
(iv) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, for the account of the
Issuing Bank, such issuance, documentary and processing charges in accordance
with the Issuing Bank's standard schedule for such charges in effect at the time
of issuance, amendment, transfer or drawing, as the case may be.
(g) OBLIGATIONS ABSOLUTE. The obligations of the Borrower to reimburse
the Issuing Bank for drawings made under each Letter of Credit and the
obligation of the Lenders under Section 2.5((e)) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against the beneficiary or any
transferee of the Letter of Credit (or any persons or entities for whom any such
transferee may be acting), the Agent or any Lender or any other person or
entity, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying transaction
between the Borrower and the beneficiary for which the Letter of Credit was
procured);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
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(iv) payment against any draft, document or other demand for
payment that does not comply with the terms of the Letter of Credit, provided
that such payment does not constitute gross negligence or willful misconduct on
the part of the Issuing Bank; or
(v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
(h) PAYMENTS AVOIDED. If any payment received on account of any
reimbursement obligation in respect of a Letter of Credit and distributed to a
Lender as a participant under this Section 2.5 is thereafter set aside, avoided
or recovered from the Issuing Bank in connection with any receivership,
liquidation, reorganization or bankruptcy proceeding relating to the Borrower,
each Lender that received a distribution in respect of such payment shall, upon
demand by the Agent, pay to the Issuing Bank the amount of such distribution
received by such Lender.
2.6 THE TERM LOANS.
(a) THE TERM COMMITMENT. Each Lender agrees, severally and not
jointly, on the terms and conditions hereinafter set forth, to make Loans (each,
a "TERM LOAN") to the Borrower from time to time during the period from the date
hereof to and including the Term Commitment Termination Date in an aggregate
amount not to exceed such Lender's Term Commitment; PROVIDED, HOWEVER, that no
Lender shall be obligated on any date to make a Loan which, when added to the
outstanding Loans and the Letter of Credit Usage, would exceed the Borrowing
Base. Each Term Loan shall consist of a LIBO Rate Loan or a Base Rate Loan, as
determined by the Borrower and notified to the Agent in accordance with Section
2.6(b) and shall be in a minimum amount of $500,000; provided that a Term Loan
consisting of a LIBO Rate Loan shall be in a minimum amount of $2,000,000. Each
Term Loan shall be made on the same day by the Lenders ratably according to
their respective Term Commitments. Term Loans, once repaid, may not be
reborrowed.
(b) MAKING THE TERM LOANS.
(i) The Borrower may borrow under the Term Commitments on any
Business Day if the Borrowing is to consist of a Base Rate Loan and on any LIBO
Business Day if the Borrowing is to consist of a LIBO Rate Loan, PROVIDED that
the Borrower shall give the Agent irrevocable notice (which notice must be
received by the Agent prior to 10:00 A.M., San Francisco time) (i) three (3)
LIBO Business Days prior to the requested Borrowing date in the case of a LIBO
Rate Loan, and (ii) one (1) Business Day prior to the requested Borrowing date
in the case of a Base Rate Loan, specifying (A) the amount of the proposed
Borrowing, (B) the requested date of the Borrowing, (C) whether the Borrowing is
to consist of a LIBO Rate Loan or a Base Rate Loan, and (D) if the Loan is to be
a LIBO Rate Loan, the length of the Interest Period therefor. Promptly following
receipt of such notice, the Agent shall notify each Lender of the date of the
Loan, whether the Loan will be a Base Rate Loan or a LIBO Rate Loan, the amount
of that Lender's pro rata share of the Loan and, if the Loan is a LIBO Rate
Loan, of the applicable Interest Period. Not later than 1:00 P.M., San Francisco
time, on the date specified for any Loan, each Lender shall deposit immediately
available funds in the amount of its pro rata
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share of the Loan to the account of the Agent set forth on the signature pages
hereof. Upon satisfaction of the applicable conditions set forth in Article IV,
the Agent will make available the proceeds of all such Loans to the Borrower by
crediting the account of the Borrower on the books of the Agent, or as otherwise
directed by the Borrower.
(ii) The notice of Borrowing may be given orally (including
telephonically) or in writing (including telex or facsimile transmission);
PROVIDED that any oral notice shall be confirmed in writing on the same Business
Day and all written notices and confirmation shall be in the form of the Notice
of Term Loan attached hereto as EXHIBIT D. Any conflict regarding a notice or
between an oral notice and a written notice applicable to the same Borrowing
shall be conclusively determined by the Agent's books and records. The Agent's
failure to receive any written notice of a particular Borrowing shall not
relieve the Borrower of its obligations to repay the Borrowing made and to pay
interest thereon. The Agent shall not incur any liability to the Borrower in
acting upon, and shall be entitled to rely upon, any notice of Borrowing, or any
notice of interest rate conversion or extension or regarding any Letter of
Credit, which the Agent believes in good faith to have been given by a Person
duly authorized to borrow on behalf of the Borrower.
(iii) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such Borrowing in accordance with subsection (1) of this Section 2.6((b)) and
the Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Agent, such Lender and
the Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's pro
rata share of such Borrowing for purposes of this Agreement. The failure of any
Lender to make available its pro rata share of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder, to make available its pro
rata share of such Borrowing on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make available its pro
rata share of any Borrowing on the date of any Borrowing.
(c) TERM NOTES. The Term Loans made by the Lenders pursuant hereto
shall be evidenced by promissory notes of the Borrower, substantially in the
form of EXHIBITS B-1 AND B-2 (the "TERM NOTES"), payable to the order of each
Lender and representing the obligation of the Borrower to pay the unpaid
principal amount of the Term Loans made by that Lender, with interest thereon as
prescribed in Section 2.3. Each Lender is hereby authorized to record in its
books and records and on any schedule annexed to its Term Note, the date and
amount of the Term Loans made by that Lender and the date and amount of each
payment of principal thereof, and in the case of LIBO Rate Loans, the Interest
Period and interest rate with respect thereto, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
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recorded; provided that failure by any Lender to effect such recordation shall
not affect the Borrower's obligations hereunder. Prior to the transfer of a Term
Note, the transferring Lender shall record such information on any schedule
annexed to and forming a part of such Term Note.
(d) TERM COMMITMENT FEE. The Borrower agrees to pay to the Agent for
the ratable benefit of the Lenders a commitment fee on the average daily unused
portion of the Term Commitments, from the execution date of this Agreement until
the Term Commitment Termination Date at the rate of one half of one percent
(0.50%) per annum (the "Term Commitment Fee"), payable in arrears on the last
day of each calendar quarter commencing on the first such date occurring after
the date of this Agreement. The Term Commitment Fee shall be calculated on the
basis of a 360-day year for the actual days elapsed, and shall be
non-refundable.
2.7 SECURITY FOR LOANS. As security for the payment and performance of its
obligations hereunder, the Borrower hereby grants to the Agent as collateral
agent for the Lenders a security interest in all of the Borrower's right, title
and interest in and to the collateral described in the Security Agreement and
Intellectual Property Security Agreement executed by the Borrower in favor of
the Agent as collateral agent for the Lenders.
ARTICLE III
GENERAL PROVISIONS CONCERNING THE LOANS
3.1 USE OF PROCEEDS. The proceeds of the Revolving Loans shall be used by
the Borrower for working capital purposes. The proceeds of the Term Loans shall
be used by the Borrower for the purchase of equipment, and other general
corporate purposes.
3.2 POST MATURITY INTEREST. Notwithstanding anything to the contrary
contained in Section 2.3, if all or a portion of the principal amount of any of
the Loans made hereunder or any interest accrued thereon, or any fees or other
amounts owing hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), any such overdue amount shall bear
interest at a rate per annum which is equal to five percent (5%) above the
highest rate which would otherwise be applicable pursuant to Section 2.3, from
the date of such nonpayment until paid in full (after as well as before
judgment), payable on demand. In addition, such Loan, if a Loan other than a
Base Rate Loan, shall be converted to a Base Rate Loan at the end of the then
current Interest Period therefor. Payment or acceptance of increased rates of
interest provided for in this Section 3.2 is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or any Lender.
3.3 COMPUTATION OF INTEREST AND FEES.
(a) CALCULATIONS. Interest in respect of all Loans and fees hereunder
shall be calculated on the basis of a 360 day year for the actual days elapsed.
Interest payable pursuant to Section 2.5 shall be calculated on the basis of a
360 day year for the actual days elapsed. Any change in the interest rate on a
Base Rate Loan resulting from a change in the Base Rate shall become effective
as of the opening of business on the day on which such change in the Base Rate
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shall become effective. In computing interest on any Loan, the date of the
making of the Loan shall be included and the date of payment shall be excluded;
PROVIDED that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
(b) DETERMINATION BY AGENT. Each determination of an interest rate or
fee by the Agent pursuant to any provision of this Agreement shall be conclusive
and binding on the Borrower in the absence of manifest error.
3.4 PAYMENTS. The Borrower shall make each payment of principal, interest
and fees hereunder and under the Notes, without setoff or counterclaim, not
later than 10:00 A.M., San Francisco time, on the day when due in lawful money
of the United States of America to the Agent at the office of the Agent
designated from time to time in immediately available funds. The Borrower hereby
authorizes the Agent (i) to charge its accounts with the Agent in order to cause
payment to be made to the Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts for
that purpose), and (ii) to make Revolving Loans in order to cause payment to be
made to Agent of all interest, fees and expenses due hereunder. The Agent shall
promptly pay to each Lender its pro rata share of each payment received by the
Agent.
3.5 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made hereunder
or under the Notes shall be stated to be due on a day which is not a Business
Day, such payment may be made on the next succeeding Business Day, and with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
3.6 REDUCED RETURN. If any Lender or the Issuing Bank shall have determined
that, after the date hereof, the adoption, phase-in, effectiveness or
applicability of any applicable law, regulation, rule, treaty, order or
regulatory requirement ("REQUIREMENT") regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or the
Issuing Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on any Lender's or the Issuing Bank's capital as a consequence of its undrawn
Commitments and obligations hereunder, the Letters of Credit issued hereunder or
its obligation to purchase a participation in the Letters of Credit to a level
below that which would have been achieved but for such Requirement, change or
compliance (taking into consideration that Lender's or the Issuing Bank's, as
the case may be, policies with respect to capital adequacy) by an amount deemed
by that Lender or the Issuing Bank, as the case may be, to be material, then
from time to time, within five (5) Business Days after demand by such Lender or
the Issuing Bank, as the case may be, the Borrower shall pay to that Lender or
the Issuing Bank, as the case may be, such additional amount or amounts as will
compensate that Lender or the Issuing Bank, as the case may be, for such
reduction.
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3.7 INDEMNITIES.
(a) GENERAL. Whether or not the transactions contemplated hereby shall
be consummated, the Borrower agrees to indemnify, pay and hold the Agent, the
Issuing Bank and each Lender, and the shareholders, officers, directors,
employees and agents of the Agent, the Issuing Bank and each Lender (each, an
"INDEMNIFIED PERSON"), harmless from and against any and all claims,
liabilities, losses, damages, costs and expenses, including reasonable
attorneys' fees and costs (including the reasonable estimate of the allocated
cost of in-house legal counsel and staff) and including costs of investigation,
document production, attendance at a deposition, or other discovery, with
respect to or arising out of (i) any proposed acquisition by the Borrower or any
of its Subsidiaries of any Person or any securities (including a self-tender),
(ii) this Agreement or any use of proceeds hereunder, (iii) the issuance of any
Letter of Credit or the failure by the Issuing Bank to honor a drawing under a
Letter of Credit as a result of any act or omission of any government or
governmental authority, or (iv) any claim, demand, action or cause of action
being asserted against the Agent, any Lender, the Borrower or any of its
Subsidiaries, whether or not any Indemnified Person is a party thereto,
including, without limitation, any claim under any environmental law, rule or
regulation, or any dispute between or among any parties to the Loan Documents
(collectively, the "INDEMNIFIED LIABILITIES"), except to the extent such
Indemnified Liabilities result from the gross negligence or willful misconduct
of the Agent, the Issuing Bank or any Lender. If any claim is made, or any
action, suit or proceeding is brought, against any Indemnified Person pursuant
to this Section, the Indemnified Person shall notify the Borrower of such claim
or of the commencement of such action, suit or proceeding, and the Borrower at
its option may, or at the request of the Indemnified Person will, control and
direct the defense of such action, suit or proceeding, employing counsel
selected by the Borrower and reasonably satisfactory to the Indemnified Person,
and pay the fees and expenses of such counsel; PROVIDED, HOWEVER, that any
Indemnified Person may at its own expense retain separate counsel to participate
in such defense. Notwithstanding the foregoing, such Indemnified Person shall
have the right to employ separate counsel at the Borrower's expense and to
control and direct its own defense of such action, suit or proceeding if, in the
reasonable opinion of counsel to such Indemnified Person, (i) there are or may
be legal defenses available to such Indemnified Person or to other Indemnified
Persons that are different from or additional to those available to the Borrower
that the Borrower cannot assert, or (ii) a conflict or potential conflict exists
between the Borrower and such Indemnified Person that would make such separate
representation advisable. The Borrower agrees that it will not, without the
prior written consent of the Agent, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
with respect to which the indemnification provided for in this Section is
available (whether or not any Indemnified Person is a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the Agent
and each other Indemnified Person from all liability arising or that may arise
out of such claim, action, suit or proceeding. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section 3.7
may be unenforceable because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by any Indemnified Person. This covenant shall survive
termination of this Agreement and payment of the outstanding Notes.
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(b) FUNDING LOSSES. The Borrower agrees to indemnify each Lender and
to hold each Lender harmless from any loss or expense including, but not limited
to, any such loss or expense arising from interest or fees payable by such
Lender to lenders of funds obtained by it in order to maintain its LIBO Rate
Loans hereunder, which such Lender may sustain or incur as a consequence of (i)
default by the Borrower in payment of the principal amount of or interest on the
LIBO Rate Loans of that Lender, (ii) default by the Borrower in making a
conversion or continuation after the Borrower has given a notice thereof, (iii)
default by the Borrower in making any payment after the Borrower has given a
notice of payment or (iv) the Borrower making any payment of a LIBO Rate Loan on
a day other than the last day of the Interest Period for such Loan. For purposes
of this Section and Section 3.12, it shall be assumed that the affected Lender
had funded or would have funded 100%, as the case may be, of a LIBO Rate Loan in
the London interbank market for an amount and term. The determination of such
amount by such Lender shall be presumed correct in the absence of manifest
error. This covenant shall survive termination of this Agreement and payment of
the outstanding Notes.
(c) LETTERS OF CREDIT. As between the Borrower and the Issuing Bank,
the Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of the Letters of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Bank shall not
be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Letter of Credit to comply fully with conditions required in
order to draw upon such Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for
errors in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Issuing Bank, including any act or
omission by any government or governmental authority. None of the above shall
affect, impair, or prevent the vesting of any of the Issuing Bank's rights or
powers hereunder. In furtherance and extension and not in limitation of the
specific provisions set forth herein, any action taken or omitted by the Issuing
Bank, under or in connection with the Letters of Credit or the related
certificates, if taken or omitted in good faith, shall not put the Issuing Bank
under any resulting liability to the Borrower.
3.8 FUNDING SOURCES. Nothing in this Agreement shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner or
to constitute a representation by any Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.
3.9 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of
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the Loans owing to it in excess of its ratable share of payments on account of
the Loans obtained by all the Lenders, then such Lender shall forthwith purchase
from the other Lenders such participations in the Loans owing to them as shall
be necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 3.9 or any other provision of this Agreement may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right to set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
3.10 INABILITY TO DETERMINE INTEREST RATE. In the event that the Agent
or any Lender shall have determined (which determination shall be conclusive and
binding upon the Borrower) that by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the LIBO Rate applicable pursuant to Section 2.3 for any Interest Period with
respect to a LIBO Rate Loan that will result from a requested LIBO Rate Loan or
that such rate of interest does not adequately cover the cost of funding such
Loan, the Agent or such Lender shall forthwith give notice of such determination
to the Borrower not later than 1:00 P.M., San Francisco time, on the requested
Borrowing date, the requested conversion date or the last day of an Interest
Period of a Loan which was to have been continued as a LIBO Rate Loan. If such
notice is given and has not been withdrawn (i) any requested LIBO Rate Loan
shall be made as a Base Rate Loan, or, at the Borrower's option, such Loan shall
not be made, (ii) any Loan that was to have been converted to a LIBO Rate Loan
shall be continued as, or converted into, a Base Rate Loan and (iii) any
outstanding LIBO Rate Loan shall be converted, on the last day of the then
current Interest Period with respect thereto, to a Base Rate Loan. Until such
notice has been withdrawn by the Agent, no further LIBO Rate Loans shall be made
and the Borrower shall not have the right to convert a Loan to a LIBO Rate Loan.
The Agent will review the circumstances affecting the London interbank market
from time to time and the Agent will withdraw such notice at such time as it
shall determine that the circumstances giving rise to said notice no longer
exist.
3.11 REQUIREMENTS OF LAW. In the event that any law, regulation or
directive or any change therein or in the interpretation or application thereof
or compliance by any Lender or the Issuing Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority, agency or instrumentality:
(a) does or shall subject any Lender or the Issuing Bank to any tax of
any kind whatsoever with respect to this Agreement, any Note or any Loan made
hereunder, or any Letter of Credit issued hereunder, or change the basis of
taxation of payments to any Lender or the Issuing Bank of principal, fee,
commission, interest or any other amount payable hereunder
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(except for changes in the rate of tax on the overall net income of such Lender
or the Issuing Bank);
(b) does or shall impose, modify or hold applicable any reserve,
assessment rate, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, Letters of Credit issued by, or other credit extended by,
or any other acquisition of funds by, any office of any Lender or the Issuing
Bank;
(c) does or shall impose on any Lender or the Issuing Bank any other
condition;
and the result of any of the foregoing is to increase the cost to any Lender or
the Issuing Bank of maintaining its Revolving Commitment or the LIBO Rate Loans,
or of issuing, renewing or maintaining the Letters of Credit or purchasing a
participation therein, or to reduce any amount receivable thereunder (which
increase or reduction shall be determined by such Lender's or the Issuing
Bank's, as the case may be, reasonable allocation of the aggregate of such cost
increases or reduced amounts receivable resulting from such events), then, in
any such case, the Borrower shall pay to such Lender or the Issuing Bank, as the
case may be, within three (3) Business Days of its demand, any additional
amounts necessary to compensate such Lender or the Issuing Bank, as the case may
be, for such additional cost or reduced amount receivable as determined by such
Lender or the Issuing Bank, as the case may be, with respect to this Agreement.
If any Lender or the Issuing Bank becomes entitled to claim any additional
amounts pursuant to this Section, it shall notify the Borrower of the event by
reason of which it has become so entitled. A statement incorporating the
calculation as to any additional amounts payable pursuant to the foregoing
sentence submitted by the affected Lender or the Issuing Bank, as the case may
be, to the Borrower shall be conclusive in the absence of manifest error.
3.12 ILLEGALITY. Notwithstanding any other provisions herein, if any
law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful, impossible, or
impracticable for any Lender to make or maintain LIBO Rate Loans as contemplated
by this Agreement, (a) the commitment of such Lender hereunder to make LIBO Rate
Loans or convert Base Rate Loans to LIBO Rate Loans shall forthwith be canceled
and (b) such Lender's Loans then outstanding as LIBO Rate Loans, if any, shall
be converted automatically to Base Rate Loans on the next succeeding Interest
Payment Date or within such earlier period as allowed by law. The Borrower
hereby agrees to pay each Lender, within three (3) Business Days of its demand,
any additional amounts necessary to compensate such Lender for any costs
incurred by such Lender in making any conversion in accordance with this
Section, including, but not limited to, any interest or fees payable by such
Lender to lenders of funds obtained by it in order to make or maintain its LIBO
Rate Loans hereunder (such Lender's notice of such costs, as certified to the
Borrower and the Agent to be conclusive absent manifest error).
3.13 OBLIGATION OF LENDERS AND ISSUING BANK TO MITIGATE. Each Lender
and Issuing Bank agrees that, as promptly as practicable after the officer of
such Lender or Issuing Bank responsible for administering the Loans or Letters
of Credit of such Lender or Issuing Bank, as the case may be, becomes aware of
the occurrence of an event or the existence of a condition that
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would entitle such Lender or Issuing Bank to receive payments under Section 3.6,
it will, to the extent not inconsistent with the internal policies of such
Lender or Issuing Bank and any applicable legal or regulatory restrictions, use
reasonable efforts (i) to make, issue, fund or maintain the Commitments of such
Lender or the affected Loans or Letters of Credit of such Lender or Issuing Bank
through another lending or letter of credit office of such Lender or Issuing
Bank, or (ii) take such other measures as such Lender or Issuing Bank may deem
reasonable, if as a result thereof the circumstances which would cause the
additional amounts which would otherwise be required to be paid to such Lender
or Issuing Bank pursuant to Section 3.6 would be materially reduced and if, as
determined by such Lender or Issuing Bank in its sole discretion, the making,
issuing, funding or maintaining of such Commitments or Loans or Letters of
Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or Letters of Credit or the interests
of such Lender or Issuing Bank; PROVIDED that such Lender or Issuing Bank will
not be obligated to utilize such other lending or letter of credit office
pursuant to this Section 3.13 unless Borrower agrees to pay all incremental
expenses incurred by such Lender or Issuing Bank as a result of utilizing such
other lending or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by Borrower pursuant
to this Section (setting forth in reasonable detail the basis for requesting
such amount) submitted by such Lender or Issuing Bank to Borrower (with a copy
to Agent) shall be conclusive absent manifest error.
ARTICLE IV
CONDITIONS OF LENDING 4.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The
obligation of each Lender to make its initial Loan is subject to the conditions
precedent that:
(a) The Agent shall have received on or before the day of the initial
Borrowing the following, each dated such day (except for the document referred
to in clause ((ii))), in form and substance satisfactory to the Agent and
(except for the Notes) in sufficient copies for each Lender:
(i) The Notes issued by the Borrower to the order of each Lender;
(ii) Copies of the Articles or Certificate of Incorporation, or other
organizational document of the Borrower and each Guarantor, certified as of a
recent date by the Secretary of State of its state of formation or
incorporation;
(iii) Copies of the Bylaws, if any, of the Borrower and each
Guarantor, certified by the Secretary or an Assistant Secretary of such party;
(iv) Copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower and each Guarantor, approving the Loan
Documents and the Borrowings and the reimbursement obligations under the Letters
of Credit issued hereunder;
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(v) An incumbency certificate executed by the Secretary or an
Assistant Secretary of the Borrower and each Guarantor or equivalent document,
certifying the names and signatures of the officers of the Borrower or other
Persons authorized to sign the Loan Documents and the other documents to be
delivered hereunder;
(vi) A good standing certificate for Borrower and each Guarantor,
issued as of a recent date by the Secretary of State of (A) the state in which
Borrower and each Guarantor is incorporated and (B) each state in which it owns
material assets and conducts material operations;
(vii) Executed copies of all Loan Documents;
(viii) A Notice of Revolving Loan, executed by the chief financial
officer of Borrower;
(ix) The Guaranty, the Subsidiary Security Agreement, and the
Subsidiary Intellectual Property Security Agreement, each duly executed by each
Guarantor together with evidence satisfactory to the Agent that all other
actions necessary or advisable to perfect and protect the security interest
created by the Subsidiary Security Agreement and Subsidiary Intellectual
Property Security Agreement have been taken, including delivery to the Agent of
financing statements duly executed by each Guarantor in form sufficient for
filing in all offices in which the Agent may consider filing to be appropriate
in order to perfect the Lenders' security interest;
(x) Certificates representing the Pledged Shares referred to in
Schedule III to the Security Agreement, accompanied by undated stock powers
executed in blank;
(xi) Certificates as to coverage under the insurance policies required
by the Security Agreement, endorsed or otherwise amended to include lender's
loss payable endorsement and to name the Agent as additional insured and loss
payee; and
(xii) Such other matters as the Agent acting on behalf of the Lenders
may reasonably request.
(b) The Borrower shall have paid to the Agent, for distribution (as
appropriate) to the Agent and the Lenders, the fees payable as required in
Section 2.1.
(c) The Borrower shall have executed and delivered to each Lender a
Warrant and Registration Rights Agreement;
(d) The Borrower shall have executed and delivered all financing
statements, notices, and other documents necessary or appropriate to perfect the
security interest of Agent on behalf of itself and the Lenders in the assets of
Borrower, and such financing statements, notices and other documents shall have
been filed or recorded with or delivered to the appropriate Person;
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(e) The Borrower shall have delivered to Lenders one or more legal
opinions from its counsel, which opinions shall be acceptable to Lenders;
(f) The Borrower shall have delivered to Lenders a Borrowing Base
Certificate prepared as of a recent date prior to the date of the initial Loan;
(g) The Borrower shall have delivered to the Trustee under the
Indenture an officer's certificate certifying to the Trustee that it has
designated the Debt under Section 2.1 hereof as "Designated Senior Debt" for
purposes of the Indenture, and shall have delivered a copy of such certificate
to the Lenders; and
(h) All corporate and legal proceedings and all instruments and
documents in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in content, form and substance to the Agent and
its counsel, and each Lender, and the Agent and the Agent's counsel shall have
received any and all further information and documents which the Agent or such
counsel may reasonably have requested in connection therewith, such documents
where appropriate to be certified by proper corporate or governmental
authorities.
4.2 CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of each
Lender to make a Loan on the occasion of each Borrowing (including the initial
Borrowing) shall be subject to the further conditions precedent that on the date
of such Borrowing:
(a) the following statements shall be true and the Agent shall have
received the notice required by Section 2.1((b)), which notice shall be deemed
to be a certification by the Borrower that:
(i) the representations and warranties contained in Section 5.1 are
correct on and as of the date of such Borrowing as though made on and as of such
date (except to the extent they relate specifically to any earlier date, in
which case such representations and warranties shall continue to have been
correct as of such date),
(ii) no event has occurred and is continuing, or would result from
such Borrowing, which constitutes an Event of Default or Potential Event of
Default, and
(iii) all Loan Documents are in full force and effect,
(iv) after giving effect to such requested Loan, the aggregate
outstanding principal amount of the Loans plus the Letter of Credit Usage shall
not exceed the Commitments then in effect, and
(b) each Lender shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
4.3 CONDITIONS PRECEDENT TO EACH LETTER OF CREDIT. The issuance of any
Letter of Credit hereunder is subject to the prior or concurrent satisfaction of
all of the following conditions:
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(a) On or before three (3) Business Days prior to the date of issuance
of the initial Letter of Credit, each of the conditions set forth in Section 4.1
shall have been satisfied or waived and the initial Loan shall have been made
hereunder.
(b) On or before the date of issuance, the Issuing Bank shall have
received the executed application for such Letter of Credit in the form
customarily required by the Issuing Bank and all other information specified in
Section 2.5((b)) and such other documents as the Issuing Bank may reasonably
require in connection with the issuance of such Letter of Credit.
(c) On the date of issuance, all conditions precedent described in
Section 4.2 shall be satisfied to the same extent as though the issuance of such
Letter of Credit were the making of a Loan and the date of issuance of such
Letter of Credit were the date of a Borrowing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants as
follows:
(a) ORGANIZATION. The Borrower and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the state of
its formation. The Borrower and each of its Subsidiaries is also duly
authorized, qualified and licensed in all applicable jurisdictions, and under
all applicable laws, regulations, ordinances or orders of public authorities, to
carry on its business in the locations and in the manner presently conducted,
except where the failure to be so authorized, qualified or licensed could not
reasonably be expected to have a Material Adverse Effect.
(b) AUTHORIZATION, EXECUTION AND DELIVERY. The execution, delivery and
performance by the Borrower of the Loan Documents, and the making of Borrowings
hereunder, are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Borrower's
charter, by-laws or other organizational document or (ii) except to the extent
not resulting in a Material Adverse Effect, any law or regulation (including
Regulations T, U and X) or any contractual restriction binding on or affecting
the Borrower. Each of the Loan Documents have been duly executed and delivered
by Borrower.
(c) GOVERNMENTAL CONSENTS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body (except routine reports required pursuant to the Securities
Exchange Act of 1934, as amended (if such act is applicable to the Borrower),
which reports will be made in the ordinary course of business) is required for
the due execution, delivery and performance by the Borrower of the Loan
Documents.
(d) EXECUTIVE OFFICES; FEIN. As of the date of this Agreement, the
current location of Borrower's chief executive office and principal place of
business, together with each location at which any Inventory is located, are set
forth on SCHEDULE 5.1((d)), and none of such
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locations have changed within the twelve (12) months preceding the execution
date of this Agreement. In addition, SCHEDULE 5.1((D)) lists the federal
employer identification number of Borrower.
(e) VALIDITY. The Loan Documents are the binding obligations of the
Borrower or other executing Person, if any, enforceable in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
(f) FINANCIAL CONDITION. The balance sheets of the Borrower and its
consolidated Domestic Subsidiaries as at December 31, 1997 and September 30,
1998 and the related statements of income and retained earnings of the Borrower
and its consolidated Domestic Subsidiaries for the fiscal year and fiscal month
then ended, copies of which have been furnished to each Lender, fairly present
the financial condition of the Borrower and its consolidated Domestic
Subsidiaries as at such dates and the results of the operations of the Borrower
and its consolidated Domestic Subsidiaries for the respective periods ended on
such dates, all in accordance with GAAP, consistently applied, and since
September 30, 1998 there has been no material adverse change in the business,
operations, properties, assets, or condition (financial or otherwise) of the
Borrower and its Domestic Subsidiaries, taken as a whole.
(g) LITIGATION. Except as set forth on SCHEDULE 5.1((g)), there is no
pending or threatened action or proceeding affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator, which may
materially adversely affect the consolidated financial condition or operations
of the Borrower or which may have a material adverse effect on the Borrower's
ability to perform its obligations under the Loan Documents, having regard for
its other financial obligations.
(h) EMPLOYEE BENEFIT PLANS. The Borrower and each of its ERISA
Affiliates is in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Employee Benefit Plans, other than any such non-compliance
that would not reasonably be expected to cause a Material Adverse Effect. No
Termination Event has occurred or is reasonably expected to occur with respect
to any Pension Plan. The excess of the actuarial present value of all benefit
liabilities under all Pension Plans over the fair market value of the assets
allocable to such benefit liabilities are not greater than five percent (5%) of
Consolidated Tangible Net Worth. For purposes of the preceding sentence, the
terms "actuarial present value" and "benefit liabilities" shall have the
meanings specified in Section 4001 of ERISA, using the actuarial methods and
assumptions adopted by the Pension Plans in satisfying the funding obligations
of Section 412 of the Internal Revenue Code.
(i) DISCLOSURE. No representation or warranty of the Borrower
contained in this Agreement or any other document, certificate or written
statement furnished to the Agent or any Lender by or on behalf of the Borrower
for use in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact (known to the Borrower in the case of any document not furnished by it)
necessary
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in order to make the statements contained herein or therein not misleading.
There is no fact known to the Borrower (other than matters of a general economic
nature) which materially adversely affects the business, operations, properties,
assets, or condition (financial or otherwise) of the Borrower and its Domestic
Subsidiaries, taken as a whole, which has not been disclosed herein or in such
other documents, certificates and statements furnished to the Agent or any
Lender for use in connection with the transactions contemplated hereby.
(j) MARGIN STOCK. The aggregate value of all margin stock (as defined
in Regulation U) directly or indirectly owned by the Borrower and its Domestic
Subsidiaries is less than 25% of the aggregate value of the Borrower's assets.
No proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
(k) ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 5.1((k)),
neither the Borrower nor any Subsidiary, nor any of their respective officers,
employees, representatives or agents, nor, to the best of their knowledge, any
other Person, has treated, stored, processed, discharged, spilled, or otherwise
disposed of any substance defined as hazardous or toxic by any applicable
federal, state or local law, rule, regulation, order or directive, or any waste
or by-product thereof, at any real property or any other facility owned, leased
or used by the Borrower or any Subsidiary, in violation of any applicable
statutes, regulations, ordinances or directives of any governmental authority or
court, which violations may result in liability to the Borrower or any Domestic
Subsidiary or any of their respective officers, employees, representatives,
agents or shareholders in an amount exceeding $500,000 for all such violations;
and the unresolved violations set forth in said Schedule will not result in
liability to the Borrower or any Domestic Subsidiary or any of their respective
officers, employees, representatives, agents or shareholders in an amount
exceeding $500,000 for all such unresolved violations. Except as set forth in
said Schedule, no employee or other Person has ever made a claim or demand
against the Borrower or any Subsidiary based on alleged damage to health caused
by any such hazardous or toxic substance or by any waste or by-product thereof;
and the unsatisfied claims or demands against the Borrower or any Subsidiary set
forth in said Schedule will not result in uninsured liability to the Borrower or
any Domestic Subsidiary or any of their respective officers, employees,
representatives, agents or shareholders in an amount exceeding $500,000 for all
such unsatisfied claims or demands. Except as set forth in said Schedule,
neither the Borrower nor any Subsidiary has been charged by any governmental
authority with improperly using, handling, storing, discharging or disposing of
any such hazardous or toxic substance or waste or by-product thereof or with
causing or permitting any pollution of any body of water; and the outstanding
charges set forth in said Schedule will not result in liability to the Borrower
or any Domestic Subsidiary or any of their respective officers, employees,
representatives, agents or shareholders in an amount exceeding $500,000 for all
such outstanding charges.
(l) PROJECTIONS. As of the date hereof, to the best knowledge of the
Borrower, the assumptions set forth and/or utilized in the projections attached
hereto as SCHEDULE 5.1((l)) are reasonable and consistent with each other and
with all facts known to the Borrower and the projections are based on such
assumptions. Nothing in this Section 5.1((l)) shall be construed as a
representation or covenant that the projections in fact will be achieved.
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(m) EMPLOYEE MATTERS. There is no strike or work stoppage in existence
or threatened involving the Borrower or its Domestic Subsidiaries that may
materially adversely affect the consolidated financial condition or operations
of the Borrower or that may have a material adverse effect on the Borrower's
ability to perform its obligations under the Loan Documents, having regard for
its other financial obligations.
(n) VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS. Except as set forth in SCHEDULE 5.1((n)), Borrower has no
Subsidiaries, is not engaged in any joint venture or partnership with any other
Person, or is an Affiliate of any other Person. All of the issued and
outstanding capital stock of Borrower and each Subsidiary is owned by each of
the stockholders and in the amounts set forth on SCHEDULE 5.1((n)). Except as
set forth in SCHEDULE 5.1((n)), there are no outstanding rights to purchase,
options, warrants or similar rights or agreements pursuant to which Borrower may
be required to issue, sell, repurchase or redeem any of its capital stock or
other equity securities or any capital stock or other equity securities of its
Subsidiaries. Each Subsidiary set forth in SCHEDULE 5.1(n) is designated on such
Schedule as either a Domestic Subsidiary or a Foreign Subsidiary, and SCHEDULE
5.1(N) sets forth the total value of assets transferred to each Subsidiary by
the Borrower through the date of this Agreement.
(o) GOVERNMENT REGULATION. Borrower is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, and
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended. Borrower is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal or
state statute that restricts or limits its ability to incur indebtedness or to
perform its obligations hereunder. The making of the Revolving Loans by Lenders
to Borrower, the issuance of Letters of Credit on behalf of Borrower, the
application of the proceeds of Collateral and repayment of the Revolving Loans
will not violate any provision of any such statute or any rule, regulation or
order issued by the S.E.C.
(p) TAXES. Except where failure to do so is not reasonably likely to
result in any potential liability of the Borrower equal to or greater than
$500,000, all tax returns, reports and statements, including information
returns, required by any governmental authority to be filed by Borrower have
been filed with the appropriate governmental authority and all claims asserted
by any such authority have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
any such claims being contested in good faith and for appropriate reserves have
been established on Borrower's financial statements. Proper and accurate amounts
have been withheld by Borrower from its employees for all periods in full and
complete compliance with all applicable federal, state, local and foreign law
and such withholdings have been timely paid to the respective governmental
authorities. SCHEDULE 5.1((p)) sets forth as of the execution date of this
Agreement those taxable years for which Borrower's tax returns are currently
being audited by the IRS or any other applicable governmental authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding.
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(q) BROKERS. No broker or finder acting on behalf of Borrower brought
about the obtaining, making or closing of the Revolving Loans, and Borrower has
no obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
(r) INTELLECTUAL PROPERTY. As of the execution date of this Agreement,
Borrower owns or has rights to use all intellectual property (including all
patents, trademarks, copyrights, licenses to use any of the foregoing, trade
secrets, and know-how) necessary to continue to conduct its business as now or
heretofore conducted by it or proposed to be conducted by it, and each patent,
trademark, copyright and license held by Borrower is listed, together with
application or registration numbers, as applicable, on SCHEDULE 5.1((r)) hereto,
and on EXHIBIT A, B, and C to the Intellectual Property Security Agreement.
Borrower conducts its business and affairs without infringement of or
interference with any intellectual property of any other Person.
(s) INSURANCE. SCHEDULE 5.1((s)) lists all insurance policies of any
nature maintained, as of the execution date of this Agreement, for current
occurrences by Borrower, as well as a summary of the terms of each such policy.
(t) CUSTOMER AND TRADE RELATIONS. As of the execution date of this
Agreement, there exists no actual or, to the knowledge of Borrower, threatened
termination or cancellation of, or any material adverse modification or change
in: (i) the business relationship of Borrower with any material customer or
group of customers; or (ii) the business relationship of Borrower with any
supplier material to its operations.
(u) SENIOR DEBT STATUS. All Debt and other obligations of Borrower
under this Agreement, the Notes, and each of the other Loan Documents to which
it is a party do rank and will rank senior in priority of payment to all other
Debt of Borrower, except Debt of Borrower to the extent secured by Permitted
Liens.
(v) DESIGNATED SENIOR DEBT UNDER INDENTURE. All Debt of the Borrower
under this Agreement and the other Loan Documents constitutes "Senior Debt" for
purposes of the Indenture (the "Indenture") dated as of October 1, 1996, between
the Borrower and The Bank of New York, as Trustee, relating to the Borrower's
13% Senior Subordinated Discount Notes due 2006, and the incurrence of such Debt
does not violate the provisions thereof, or result in a "Default" or "Event of
Default", as such terms are defined in the Indenture. Borrower hereby agrees
that, at all times during the term of this Agreement, the maximum permitted
amount of all Debt of the Borrower under Section 2.1 of this Agreement shall be
and is hereby designated by the Borrower as "Designated Senior Debt" for
purposes of the Indenture. Borrower has not designated, and agrees that it shall
not designate, any other Debt as "Designated Senior Debt" as such term is
defined in the Indenture.
(w) YEAR 2000. Borrower and its Subsidiaries have reviewed the areas
within their operations and business which could be adversely affected by, and
have developed or are developing a program to address on a timely basis, the
Year 2000 Problem and have made related appropriate inquiry of material
suppliers and vendors, and based on such review and program, the Year 2000
Problem will not have a material adverse effect upon the financial condition,
operations
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or business of the Borrower and its Domestic Subsidiaries as now conducted.
"Year 2000 Problem" means the possibility that any computer applications or
equipment used by Borrower and its Subsidiaries may be unable to recognize and
properly perform date sensitive functions involving certain dates prior to and
any dates on or after December 31, 1999.
(x) SOLVENCY. Both before and after giving effect to (i) the Revolving
Loans and Letters of Credit to be made or issued on the date of this Agreement
or such other date as Revolving Loans and Letters of Credit requested hereunder
are made or issued, (ii) the disbursement of the proceeds of such Revolving
Loans pursuant to the instructions of Borrower, and (c) the payment and accrual
of all transactions costs in connection with the foregoing, Borrower and each
Domestic Subsidiary are Solvent.
ARTICLE VI
COVENANTS
6.1 AFFIRMATIVE COVENANTS. So long as any Note shall remain unpaid,
any Letter of Credit shall remain outstanding or unreimbursed or any Lender
shall have any Commitment hereunder, the Borrower will, unless the Majority
Lenders shall otherwise consent in writing:
(a) FINANCIAL INFORMATION. Furnish to each Lender and the Agent:
(i) as soon as available, but in any event within five (5) days of the
required date of filing of Form 10-K with the Securities and Exchange
Commission, a copy of the consolidated and consolidating balance sheet of the
Borrower and its consolidated Domestic Subsidiaries as at the end of each fiscal
year and the related consolidated and consolidating statements of income and
retained earnings (or comparable statement) and changes in financial position
and cash flow for such year, setting forth in each case in comparative form the
figures as at the end of the previous year as to the balance sheet and the
figures for the previous corresponding period as to the other statements,
accompanied by an unqualified report and opinion thereon of independent
certified public accountants acceptable to the Agent, all such financial
statements to be complete and correct in all material respects and in accordance
with GAAP applied consistently throughout the fiscal year (except as approved by
such accountants and disclosed therein), all reports on Forms 10-K filed with
the Securities and Exchange Commission, and a letter from such accountants
certifying as to whether Borrower is in compliance with the restrictions
contained in Sections 6.2 (z) as at the end of each fiscal year;
(ii) as soon as available, but in any event within five (5) days of
the required date of filing of Form 10-Q with the Securities and Exchange
Commission, a copy of the consolidated and consolidating balance sheet of the
Borrower and its consolidated Domestic Subsidiaries as at the end of each
quarter and the related consolidated and consolidating statements of income and
retained earnings (or comparable statement) and changes in financial position
and cash flow for such quarter and year to date, setting forth in each case in
comparative form the figures as at the end of the previous quarter as to the
balance sheet and the figures for the previous corresponding period as to the
other statements, all such financial statements to be complete and correct in
all material respects and in accordance with GAAP applied consistently
throughout the fiscal year (except as approved by independent certified public
accountants
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acceptable to the Agent), and all reports on Forms 10-Q filed with the
Securities and Exchange Commission;
(iii) as soon as available, but in any event within twenty (20) days
after the end of each calendar month (except for those months which contain a
required date of filing of Form 10-Q or 10-K with the Securities and Exchange
Commission), a copy of the unaudited consolidated and consolidating balance
sheet of the Borrower and its consolidated Domestic Subsidiaries as at the end
of such period and the related unaudited consolidated and consolidating
statements of income and retained earnings (or comparable statement) and changes
in financial position and cash flow for such period and year to date, setting
forth in each case in comparative form the figures as at the end of the previous
fiscal year as to the balance sheet and the figures for the previous
corresponding period as to the other statements, certified by a duly authorized
officer of the Borrower as being fairly stated in all material respects subject
to year end and audit adjustments, all such financial statements to be complete
and correct in all material respects and in accordance with GAAP subject to
normal year end and audit adjustments and the absence of footnotes, applied
consistently throughout the period reflected therein (except as approved by such
accountants and disclosed therein);
(iv) together with each delivery of financial statements of the
Borrower and its Domestic Subsidiaries pursuant to subdivisions ((i)), (ii) and
((ii)i) above, (A) an officers' certificate stating that the signers have
reviewed the terms of the Loan Documents and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions and
condition of the Borrower and its Domestic Subsidiaries during the accounting
period covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period, and that
the signers do not have knowledge of the existence as at the date of the
officers' certificate, of any condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof and
what action the Borrower has taken, is taking and proposes to take with respect
thereto; (B) a Compliance Certificate in the form of EXHIBIT F hereto
demonstrating in reasonable detail compliance during and at the end of such
accounting periods with the restrictions contained in Sections 6.2((a)), ((b)),
(c), (d), (e), (f), (g) and (z) as of the end of the fiscal period covered
thereby; and (C) a Borrowing Base Certificate in the form of EXHIBIT H hereto
and (D) a Pricing Certificate in the form of EXHIBIT I hereto;
(v) within thirty (30) days after the end of each fiscal year of the
Borrower, the operating budgets, annual budgets, and sales projections of the
Borrower and its Subsidiaries, each on a consolidated and consolidating basis;
(vi) substantially concurrent with the sending or filing thereof,
copies of all reports which the Borrower sends to a majority of its security
holders, and copies of all reports and registration statements which the
Borrower or any of its Domestic Subsidiaries files with the S.E.C. or any
national securities exchange;
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(b) NOTICES AND INFORMATION. Deliver to the Agent and each Lender:
(i) promptly upon any officer of the Borrower obtaining knowledge (A)
of any condition or event which constitutes an Event of Default or Potential
Event of Default, (B) that any Person has given any notice to the Borrower or
any Subsidiary of the Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section
7.1((f)), (C) of the institution of any litigation involving an alleged
liability (including possible forfeiture of property) of the Borrower or any of
its Domestic Subsidiaries equal to or greater than $500,000 or any adverse
determination in any litigation involving a potential liability of the Borrower
or any of its Domestic Subsidiaries equal to or greater than $500,000, or (D) of
a material adverse change in the business, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its Domestic
Subsidiaries, taken as a whole, an officers' certificate specifying the nature
and period of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or condition, and
what action the Borrower has taken, is taking and proposes to take with respect
thereto;
(ii) promptly, but in any event within five (5) Business Days after
receipt thereof, copies of all management letters, exception reports or similar
letters or reports received by Borrower from its independent certified public
accountants;
(iii) promptly upon becoming aware of the occurrence of or forthcoming
occurrence of any (A) Termination Event, or (B) "prohibited transaction," as
such term is defined in Section 4975 of the Internal Revenue Code or Section 406
of ERISA, in connection with any Employee Benefit Plan or any trust created
thereunder, a written notice specifying the nature thereof, what action the
Borrower has taken, is taking or proposes to take with respect thereto, and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor, or the Pension Benefit Guaranty Corporation with respect
thereto;
(iv) with reasonable promptness copies of (A) all notices received by
the Borrower or any of its ERISA Affiliates of the Pension Benefit Guaranty
Corporation's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (B) upon a request from the Agent or a
Lender, each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by the Borrower or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan, and (C) all notices received
by the Borrower or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA under circumstances that would reasonably be expected to cause a
Material Adverse Effect;
(v) immediately upon any officer of the Borrower obtaining knowledge
that the payment of notes under the Indenture has been accelerated because of an
event of default thereunder, a written notice of such acceleration;
(vi) promptly, but in any event within thirty (30) days after receipt
thereof, a copy of any notice, summons, citation, directive, letter or other
form of communication
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from any governmental authority or court in any way concerning any action or
omission on the part of the Borrower or any of its Subsidiaries in connection
with any substance defined as toxic or hazardous by any applicable federal,
state or local law, rule, regulation, order or directive or any waste or by
product thereof, or concerning the filing of a lien upon, against or in
connection with the Borrower, its Subsidiaries, or any of their leased or owned
real or personal property, in connection with a Hazardous Substance Superfund or
a Post-Closure Liability Fund as maintained pursuant to Section 9507 of the
Internal Revenue Code if such act or omission may result in liability in an
amount exceeding $500,000 for all such acts or omissions or if any such Lien,
together with all other such Liens, is filed upon or against property the fair
market value of which exceeds $500,000 in the aggregate; and
(vii) promptly, but in any event within ten (10) days after request,
such other information and data with respect to the Borrower or any of its
Domestic Subsidiaries as from time to time may be reasonably requested by the
Agent or any Lender.
(c) CORPORATE EXISTENCE, ETC. At all times preserve and keep in full
force and effect its and its Domestic Subsidiaries' corporate existence and
rights and franchises material to its business and those of each of its Domestic
Subsidiaries; PROVIDED, HOWEVER, that the corporate existence of any such
Domestic Subsidiary may be terminated if such termination is in the best
interest of the Borrower and is not materially disadvantageous to the holder of
any Note.
(d) BOOKS AND RECORDS. Borrower shall keep adequate books and records
with respect to its business activities in which proper entries, reflecting all
financial transactions, are made in accordance with GAAP and on a basis
consistent with the financial statements previously delivered to Lenders.
(e) PAYMENT OF TAXES AND CLAIMS. Pay, and cause each of its Domestic
Subsidiaries to pay, all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a lien upon any of its properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; PROVIDED that no
such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
accordance with GAAP shall have been made therefor.
(f) MAINTENANCE OF PROPERTIES; INSURANCE. Maintain or cause to be
maintained in good repair, working order and condition all material properties
used or useful in the business of the Borrower and its Domestic Subsidiaries and
from time to time make or cause to be made all appropriate repairs, renewals and
replacements thereof. The Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of its Domestic
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations. The
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Borrower will comply with any other insurance requirement set forth in any other
Loan Document.
(g) INSPECTION. Permit, upon reasonable notice and during normal
business hours, any authorized representatives designated by the Agent or any
Lender to visit and inspect any of the properties of the Borrower or any of its
Domestic Subsidiaries, including its and their financial and accounting records,
and to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all at such reasonable times during normal business hours
and as often as may be reasonably requested.
(h) COMPLIANCE WITH LAWS, ETC. Exercise, and cause each of its
Subsidiaries to exercise, all due diligence in order to comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including all environmental laws, rules, regulations and
orders, noncompliance with which would materially adversely affect the business,
properties, assets, operations, or condition (financial or otherwise) of the
Borrower and its Domestic Subsidiaries, taken as a whole.
(i) REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
(i) Borrower and Guarantor shall register or cause to be registered on
an expedited basis (to the extent not already registered) with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, those intellectual property rights listed on Exhibits A, B and C to
the Intellectual Property Security Agreement and Subsidiary Intellectual
Property Security Agreement delivered in connection with this Agreement within
thirty (30) days of the date of this Agreement, and shall promptly deliver to
the Agent copies of such registrations. Borrower and Guarantor shall, within
sixty (60) days of the date of this Agreement, deliver to the Agent revised
Exhibits A, B and C to the Intellectual Property Security Agreement and
Subsidiary Intellectual Property Security Agreement setting forth the titles,
registration numbers, and registration dates of the intellectual property rights
required to be registered pursuant to this Section. Borrower and each Guarantor
shall register or cause to be registered with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, those
additional intellectual property rights developed or acquired by Borrower and
each Guarantor from time to time, prior to the sale or licensing of such product
to any third party, including without limitation revisions or additions to the
intellectual property rights listed on such Exhibits A, B and C. Borrower and
each Guarantor shall promptly notify the Agent of each such registration and
promptly deliver to Agent copies thereof, together with updated Exhibits A, B
and C to the Intellectual Property Security Agreement or Subsidiary Intellectual
Property Security Agreement, as applicable, setting forth the titles,
registration numbers, and registration dates of the intellectual property rights
required to be registered pursuant to this Section.
(ii) Borrower and each Guarantor shall execute and deliver such
additional instruments and documents from time to time as the Agent shall
reasonably request to perfect the Agent's and the Lenders' security interest in
the Intellectual Property Collateral (as defined in the Intellectual Property
Security Agreement).
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(iii) Borrower and each Guarantor shall (i) protect, defend and
maintain the validity and enforceability of the Trademarks, Patents, and
Copyrights (as such terms are defined in the Intellectual Property Security
Agreement), (ii) use its best efforts to detect infringements of the Trademarks,
Patents, and Copyrights and promptly advise the Agent in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, or
Copyrights to be abandoned, forfeited or dedicated to the public without the
written consent of the Majority Lenders, which shall not be unreasonably
withheld.
(iv) the Agent shall have the right, but not the obligation, to take,
at Borrower's sole expense, any actions that Borrower or each Guarantor is
required under this Section to take but which Borrower or such Guarantor fails
to take, after fifteen (15) days' notice to Borrower. Borrower shall reimburse
and indemnify the Agent for all reasonable costs and expenses incurred in the
exercise of its rights under this Section.
(j) PRINCIPAL DEPOSITORY. Prior to or promptly after the closing of
this Agreement, Borrower shall conduct a review of Agent's banking and other
investment services, and promptly thereafter shall use its best efforts to
establish its primary depository, operating and investment accounts with Agent.
(k) INTELLECTUAL PROPERTY. Borrower will conduct its business and
affairs without infringement of or interference with any intellectual property
of any other Person.
(l) ENVIRONMENTAL MATTERS. Borrower shall: (i) conduct its operations
and keep and maintain its real property in compliance with all environmental
laws and environmental permits; (ii) implement any and all investigation,
remediation, removal and response actions which are appropriate or necessary to
comply with environmental laws and environmental permits pertaining to the
presence, generation, treatment, storage, use, disposal, transportation or
release of any hazardous material on, at, in, under, above, to, from or about
any of its real property; (iii) notify Agent promptly after Borrower becomes
aware of any violation of environmental laws or environmental permits or any
release on, at, in, under, above, to, from or about any real property which is
reasonably likely to result in Environmental Liabilities in excess of $500,000;
and (iv) promptly forward to Agent a copy of any order, notice, request for
information or any communication or report received by Borrower in connection
with any such violation or release or any other matter relating to any
environmental laws or environmental permits that could reasonably be expected to
result in liabilities in excess of $500,000.
(m) LANDLORDS' AGREEMENTS, MORTGAGE AGREEMENTS AND BAILEE LETTERS.
Borrower shall use its best efforts to obtain a landlord's agreement, mortgage
agreement or bailee letter, as applicable, from the lessor of each leased
property or mortgagee of owned property or with respect to any warehouse,
processor or converter facility or other location where collateral is located
(except for temporary storage facilities containing an aggregate amount of
collateral not exceeding $500,000 in value at any time), within thirty (30) days
of the date of this Agreement, which agreement or letter shall contain a waiver
or subordination of all Liens or claims that the landlord, mortgagee or bailee
may assert against the Inventory or collateral at that location, and shall
otherwise be satisfactory in form and substance to Agent. Borrower shall timely
and fully
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pay and perform its obligations under all leases and other agreements with
respect to each leased location or public warehouse where any collateral is or
may be located.
(n) YEAR 2000 COMPLIANCE. Borrower shall perform all acts reasonably
necessary to ensure that (a) Borrower and any business in which Borrower holds a
substantial interest, and (b) all customers, suppliers and vendors that are
material to Borrower's business, become Year 2000 Compliant in a timely manner.
Such acts shall include, without limitation, performing a comprehensive review
and assessment of all Borrower's systems and adopting a detailed plan, with
itemized budget, for the remediation, monitoring and testing of such systems. As
used in this paragraph, "Year 2000 Compliant" shall mean, in regard to any
entity, that all software, hardware, firmware, equipment, goods or systems
utilized by or material to the business operations or financial condition of
such entity, will properly perform date sensitive functions before, during and
after the year 2000. Borrower shall immediately upon request, provide to the
Agent such certifications or other evidence of Borrower's compliance with the
terms of this paragraph as the Agent may from time to time require.
(o) NEW SUBSIDIARIES. Promptly upon any Person becoming a Subsidiary
of Borrower, Borrower shall deliver to the Agent a written notice setting forth
with respect to such Person (i) the date on which such Person became a
Subsidiary of the Borrower and (ii) all of the data required to be set forth in
SCHEDULE 5.1(n) with respect to all Subsidiaries of the Borrower (it being
understood that such written notice shall be deemed to supplement SCHEDULE
5.1(n) for all purposes of this Agreement).
(p) NATIONSBANK ACCOUNTS. Within ten (10) business days of the date on
which the letter of credit issued by NationsBank, N.A. for the account of the
Borrower referred to on SCHEDULE 6.2(h) expires or terminates and is no longer
required by the beneficiary thereof, Borrower shall transfer all monies and
other property contained in the accounts securing Borrower's obligations
thereunder, together with any other accounts maintained at NationsBank, N.A.,
either to Imperial Bank in accordance with the provisions of Section 6.1(j), or
to such other account or accounts in which the Agent, for the benefit of the
Lenders, has a first priority perfected security interest.
(q) FURTHER ASSURANCES. Borrower shall, at its expense and upon
request of Agent, duly execute and deliver, or cause to be duly executed and
delivered, to Agent such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of Agent to
carry out more effectually the provisions and purposes of this Agreement or any
other Loan Document.
6.2 NEGATIVE COVENANTS. So long as any Note shall remain unpaid, any
Letter of Credit shall remain outstanding or unreimbursed or any Lender shall
have any Commitment hereunder, the Borrower will not, without the written
consent of the Majority Lenders:
(a) DIRECT CONTRIBUTION MARGIN TO COINSTAR PROCESSING REVENUE. Permit
the ratio of Direct Contribution Margin to Coinstar Processing Revenue to be
less than: (i) 0.40 to 1.0 as of the last day of any calendar month during the
period from January 1, 1999 through June 30, 1999; (ii) 0.425 to 1.0 as of the
last day of any calendar month during the period from
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July 1, 1999 through September 30, 1999; or (iii) 0.45 to 1.0 as of the last day
of any calendar month during the period from October 1, 1999 through December
31, 1999.
(b) DIRECT CONTRIBUTION MARGIN LESS BASE LINE OVERHEAD TO CONSOLIDATED
PROFORMA DEBT SERVICE. Permit the ratio of Direct Contribution Margin MINUS
$10,000,000 to Consolidated Proforma Debt Service to be less than: (i) 1.50 to
1.0 as of the last day of any calendar month during the period from January 1,
1999 through June 30, 1999; or (ii) 1.75 to 1.0 as of the last day of any
calendar month during the period from July 1, 1999 through December 31, 1999.
(c) CONSOLIDATED SENIOR DEBT TO COINSTAR UNITS. Permit the ratio of
Consolidated Senior Debt to the number of installed Coinstar Units to be greater
than: (i) $3,000 to 1 as of the last day of any calendar month during the period
from January 1, 1999 through December 31, 1999; or (ii) $4,000 to 1 as of the
last day of any fiscal quarter of the Borrower from and after January 1, 2000,
PROVIDED that any failure to comply with such restrictions shall be excused if
Borrower delivers a supplemental Compliance Certificate to Lender within twenty
(20) days of the last day of such month or such quarter, as the case may be,
demonstrating in reasonable detail compliance with the restrictions contained
herein.
(d) CONSOLIDATED EBITDA TO CONSOLIDATED SENIOR DEBT SERVICE. Permit
the ratio of Consolidated EBITDA to Consolidated Senior Debt Service to be less
than: (i) 1.75 to 1.0 as of the last day of any fiscal quarter of the Borrower
during the period from January 1, 2000 through December 31, 2000; or (ii) 2.0 to
1.0 as of the last day of any fiscal quarter of the Borrower from and after
January 1, 2001.
(e) CONSOLIDATED EBITDA TO CONSOLIDATED TOTAL DEBT SERVICE. Permit the
ratio of Consolidated EBITDA to Consolidated Total Debt Service to be less than:
(i) 1.25 to 1.0 as of the last day of any fiscal quarter of the Borrower during
the period from January 1, 2000 through December 31, 2000; (ii) 1.50 to 1.0 as
of the last day of any fiscal quarter of the Borrower during the period from
January 1, 2001 through December 31, 2001; or (iii) 1.75 to 1.0 as of the last
day of any fiscal quarter of the Borrower from and after January 1, 2002.
(f) CONSOLIDATED SENIOR DEBT TO CONSOLIDATED EBITDA. Permit the ratio
of Consolidated Senior Debt to Consolidated EBITDA to be greater than: (i) 2.0
to 1.0 as of the last day of any fiscal quarter of the Borrower during the
period from January 1, 2000 through December 31, 2000; or (ii) 1.50 to 1.0 as of
the last day of any fiscal quarter of the Borrower from and after from January
1, 2001.
(g) CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA. Permit the ratio
of Consolidated Total Debt to Consolidated EBITDA to be greater than: (i) 6.50
to 1.0 as of the last day of either of the fiscal quarters ending March 31, 2000
or June 30, 2000; (ii) 5.0 to 1.0 as of the last day of either of the fiscal
quarters ending September 30, 2000 or December 31, 2000; (iii) 4.0 to 1.0 as of
the last day of either of the fiscal quarters ending March 31, 2001 or June 30,
2001; (iv) 3.50 to 1.0 as of the last day of either of the fiscal quarters
ending September 30, 2001 or December 31, 2001; or (v) 2.50 to 1.0 as of the
last day of any fiscal quarter of the Borrower from and after January 1, 2002.
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(h) LIENS, ETC. Create or suffer to exist, or permit any of its
Domestic Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its properties, whether now owned or hereafter acquired, other
than:
(i) Liens existing on the date hereof and set forth in SCHEDULE
6.2((h)); provided, that Liens securing Borrower's obligations under the letter
of credit issued by NationsBank, N.A. referred to on SCHEDULE 6.2(h) shall be
released within ten (10) business days after such letter of credit expires or
terminates and is no longer required by the beneficiary thereof;
(ii) Permitted Liens;
(iii) purchase money Liens upon or in any property acquired or held by
the Borrower or any Domestic Subsidiary in the ordinary course of business to
secure the purchase price of such property or to secure indebtedness incurred
solely for the purpose of financing the acquisition of such property, excluding
Capital Leases; and
(iv) all renewals, refundings, refinancings and extensions of any such
Liens described in clause (i) above; PROVIDED that the principal amount secured
is not increased and that such Lien is not extended to other property.
(I) DEBT. Create or suffer to exist, or permit any of its Domestic
Subsidiaries to create or suffer to exist, any Debt, other than:
(i) Debt existing on the date hereof and set forth on SCHEDULE
6.2((i));
(ii) Debt owed to the Lenders hereunder;
(iii) Debt relating to Liens permitted under Section 6.2((h))((iii));
PROVIDED that the aggregate principal amount of such Debt of the Borrower and
its consolidated Domestic Subsidiaries incurred pursuant to this clause (iii)
shall not exceed $500,000 at any time;
(iv) Contingent Obligations permitted under Section 6.2((m));
(v) Debt owing to trade creditors incurred in the ordinary course of
business;
(vi) Debt not otherwise permitted by clauses (i) through (v) above,
not in excess of $500,000 in the aggregate at any one time outstanding; and
(vii) all renewals, refundings, refinancings or extensions of any such
Debt described in clauses (i) and (iii) above, PROVIDED that the terms thereof
are substantially similar to those set forth in the documents evidencing such
Debt as in effect on the date hereof in the case of Debt described in clause
(i), and PROVIDED FURTHER that no additional assets are pledged to secure any
renewals, refundings, refinancings or extensions of Debt described in clause
(iii).
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(j) DIVIDENDS, ETC. Declare or pay any dividends, purchase or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such, or
permit any of its Domestic Subsidiaries to purchase or otherwise acquire for
value any stock of the Borrower, except that the Borrower may declare and
deliver dividends and distributions payable in capital stock of the Borrower.
(k) CONSOLIDATION, MERGER. Consolidate or merge with any other Person,
liquidate, wind-up or dissolve itself or acquire by purchase or otherwise all or
substantially all of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, or permit any of its
Domestic Subsidiaries to do any of the foregoing, except that:
(i) subject to Section 6.2(z), any Domestic Subsidiary of the Borrower
may be merged or consolidated with or into the Borrower or any wholly-owned
Domestic Subsidiary of the Borrower, or be liquidated, wound up or dissolved, or
all or any substantial part of its business, property or assets may be conveyed,
sold, leased, transferred or otherwise disposed of, in one transaction or a
series of transactions, to the Borrower or any wholly-owned Domestic Subsidiary
of the Borrower; PROVIDED that, in the case of such a merger or consolidation,
the Borrower or such wholly-owned Domestic Subsidiary shall be the continuing or
surviving corporation, and provided that this exception shall not apply to any
such merger or consolidation involving a Foreign Subsidiary; and
(ii) Borrower may acquire the business, property, fixed assets or
stock of Persons in a related business, (each, an "ACQUISITION"), PROVIDED that
(i) prior to and immediately following the consummation of any such Acquisition
there shall exist no condition or event that constitutes an Event of Default or
a Potential Event of Default, (ii) such Acquisition would not result in a Change
of Control, (iii) the Borrower shall be the continuing or surviving corporation
in any such Acquisition, and (iv) any Acquisition from any Foreign Person or
from any Domestic Subsidiary shall be subject to Section 6.2(z).
(l) INVESTMENTS. Make or permit to remain outstanding, or permit any
Domestic Subsidiary to make or permit to remain outstanding, any Investment,
except that the Borrower and its Domestic Subsidiaries may:
(i) subject to Sections 6.1(j) and 6.1(p), continue to own Investments
in the principal amounts existing on the date hereof and set forth on SCHEDULE
6.2((L));
(ii) own, purchase or acquire certificates of deposit issued by any
Lender, commercial paper rated Moody's P-I, municipal bonds rated Moody's AA or
better, direct obligations of the United States of America or its agencies, and
obligations guaranteed by the United States of America;
(iii) acquire and own stock, obligations or securities received from
customers in connection with debts created in the ordinary course of business
owing to the Borrower or a Subsidiary;
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(iv) continue to own the existing capital stock of the Borrower's
Subsidiaries;
(v) make loans to, Investments in, or guaranties of the obligations of
any Foreign Subsidiaries or Domestic Subsidiaries, in each case subject to
Section 6.2(z);
(vi) make any Acquisition permitted by Section 6.2((k)).
(m) CONTINGENT OBLIGATIONS. Create or become or remain liable, or
permit any of its Domestic Subsidiaries to create or become or remain liable,
with respect to any Contingent Obligation, except that the Borrower and its
Domestic Subsidiaries may:
(i) remain liable with respect to Contingent Obligations existing on
the date hereof and set forth on SCHEDULE 6.2((m));
(ii) endorse negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and
(iii) become or remain liable with respect to reimbursement
obligations under those Letters of Credit issued hereunder in accordance with
Section 2.5.
(iv) become or remain liable with respect to Contingent Obligations in
favor of Foreign Subsidiaries or Domestic Subsidiaries, in each case subject to
Section 6.2(z).
(n) ASSET SALES. Convey, sell, lease, transfer or otherwise dispose
of, or permit any Domestic Subsidiary to convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, (i) all or
any part of its or its Domestic Subsidiary's business, property (including
intellectual property) or fixed assets outside of the ordinary course of
business, whether now owned or hereafter acquired, or (ii) any capital stock or
debt of any of its wholly-owned Domestic Subsidiaries, except:
(i) the Borrower and its Domestic Subsidiaries may convey, sell,
lease, transfer of otherwise dispose of obsolete or worn out assets; and
(ii) any Domestic Subsidiary of the Borrower may sell, lease or
transfer assets to the Borrower or to any wholly-owned Domestic Subsidiary of
the Borrower.
(iii) Borrower or any Domestic Subsidiaries may sell, lease, or
transfer assets to Foreign Subsidiaries or Domestic Subsidiaries, in each case
subject to Section 6.2(z).
(o) TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Enter into, or
permit any of its Domestic Subsidiaries to enter into, any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of any class of equity
securities of the Borrower, or with any Affiliate of the Borrower or any such
holder, on terms that (when taken in the light of any related or series of
transactions of which such transaction is a part (if any)) are less favorable to
the Borrower or any such Subsidiary than those which might be obtained at the
time from Persons who are not such a holder or Affiliate.
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(p) AGREEMENTS RESTRICTING PAYMENT OF DIVIDENDS. Permit any of its
Domestic Subsidiaries to enter into any agreement restricting the ability of
such Subsidiary to declare, order, pay or make or set apart any sum for any
dividends or other distributions on account of any shares of any class of its
stock.
(q) RESTRICTIVE AGREEMENTS. Agree with any Person, or permit any of
its Domestic Subsidiaries to agree with any Person, that the Borrower or such
Subsidiary will not create, incur or suffer to exist any Liens on its
properties.
(r) PAYMENTS ON SUBORDINATED DEBT. Declare, order or pay, or permit
any of its Domestic Subsidiaries to declare, order or pay, any amount of
principal of, premium, if any, or interest on, or redeem, purchase, retire or
decease or make any sinking fund or similar payment, or permit any of its
Domestic Subsidiaries to do any of the foregoing, with respect to any Debt of
the Borrower which is subordinated in right of payment to the obligations
hereunder; PROVIDED, that for so long as no Event of Default exists, Borrower
may make regularly scheduled payments of interest under the terms of the
Indenture only as such payments shall become due and payable thereunder.
(s) FISCAL YEAR. Change its fiscal year-end from December 31.
(t) CAPITAL STRUCTURE AND BUSINESS. (i) Make any changes in any of its
business objectives, purposes or operations which could in any way materially
adversely affect the repayment of the Loans or any of the other obligations,
(ii) make any change in its capital structure as described on SCHEDULE 5.1((N)),
including the issuance of any shares of capital stock, warrants or other
securities convertible into capital stock or any revision of the terms of its
outstanding capital stock, which could in any way materially adversely affect
the repayment of the Loans or any of the other obligations, (iii) amend its
charter or bylaws in a manner which would materially adversely affect Agent or
Lenders or Borrower's duty or ability to repay its obligations to Lenders, or
(iv) engage in any business other than the businesses currently engaged in by
it, and any similar or related businesses.
(u) ERISA. Cause or permit to occur an event which would reasonably be
expected to result in the imposition of a lien under Section 41.2 of the
Internal Revenue Code or Section 302 or 4068 of ERISA that would cause a
Material Adverse Effect.
(v) SALE-LEASEBACKS. Engage in any sale-leaseback, synthetic lease or
similar transaction involving any of its assets.
(w) CANCELLATION OF INDEBTEDNESS. Cancel any claim or debt owing to
it, except for reasonable consideration negotiated on an arm's-length basis and
in the ordinary course of its business consistent with past practices.
(x) CHANGE OF CORPORATE NAME OR LOCATION. (i) Change its corporate
name, or (ii) change its chief executive office, principal place of business,
corporate offices or warehouses, or the location of its records concerning the
collateral, in any case without at least thirty (30) days prior written notice
to Agent and after Agent's written acknowledgment that any reasonable
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action requested by Agent in connection therewith, including to continue the
perfection of any security interests in favor of Agent, on behalf of Lenders, in
any collateral, has been completed or taken, and PROVIDED that any such new
location shall be in the United States. Borrower shall not change the locations
at which Collateral is held or stored without Agent's written acknowledgment
that any reasonable action requested by Agent in connection therewith, including
to continue the perfection of any security interests in favor of Agent, on
behalf of Lenders, in any collateral, has been completed or taken, and PROVIDED
that any such new location shall be in the continental United States. Without
limiting the foregoing, Borrower shall not change its name, identity or
corporate structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the meaning
of Section 9-402(7) of the Code or any other then applicable provision of the
Code except upon prior written notice to Agent and Lenders and after Agent's
written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any security
interests in favor of Agent, on behalf of Lenders, in any collateral, has been
completed or taken.
(y) NEW SUBSIDIARIES. Create or acquire any new Domestic Subsidiaries
unless any such Subsidiary executes and delivers to Agent, for the benefit of
the Lenders, a guaranty of the Debt and obligations under Section 2.6 of this
Agreement, a security agreement with respect to all of its assets, an
intellectual property security agreement, and such financing statements,
resolutions, legal opinions or other such documents as Agent or any Lender shall
reasonably request in connection therewith, each in form and substance
satisfactory to Agent.
(z) RESTRICTIONS ON TRANSFERS TO SUBSIDIARIES.
(i) FOREIGN SUBSIDIARIES. Notwithstanding any other provisions of this
Agreement to the contrary, allow the total aggregate amounts of any (a)
consideration given in any Acquisition from a Foreign Person pursuant to Section
6.2(k)(ii)(iv), (b) loans to, Investments in, or guaranties of the obligations
of any Foreign Subsidiaries pursuant to Section 6.2(l)(v), (c) Contingent
Liabilities in favor of any Foreign Subsidiaries pursuant to Section 6.2(m)(iv),
(d) sales, leases, or transfers of assets to Foreign Subsidiaries pursuant to
Section 6.2(n)(iii), and (e) amounts transferred to any Foreign Subsidiaries
prior to the date of this Agreement as set forth on Schedule 5.1(n), in each
case individually or in the aggregate, to exceed $5,000,000 at any time.
(ii) DOMESTIC SUBSIDIARIES. Notwithstanding any other provisions of
this Agreement to the contrary, allow the total aggregate amounts of any (a)
consideration given in any Acquisition from a Domestic Subsidiary pursuant to
Section 6.2(k)(ii)(iv), (b) loans to, Investments in, or guaranties of the
obligations of any Domestic Subsidiaries pursuant to Section 6.2(l)(v), (c)
Contingent Liabilities in favor of any Domestic Subsidiaries pursuant to Section
6.2(m)(iv), (d) sales, leases, or transfers of assets to Domestic Subsidiaries
pursuant to Section 6.2(n)(iii), and (e) amounts transferred to any Domestic
Subsidiaries prior to the date of this Agreement as set forth on Schedule
5.1(n), in each case individually or in the aggregate, to exceed (i) $10,000,000
at any time prior to the date on which the Term Commitments are increased to
$15,000,000 pursuant to the definition of "Term Commitment" in Section 1.1, or
(ii) $15,000,000 at any time thereafter.
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ARTICLE VII
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. If any of the following events ("EVENTS OF DEFAULT")
shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any installment of principal
when due hereunder, or (ii) any installment of interest hereunder or other
amount payable hereunder within three (3) Business Days of the date when due; or
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement, shall
prove to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe any term, covenant
or agreement contained in Section 3.1, 6.1 or 6.2 on its part to be performed or
observed; or
(d) The Borrower shall fail to perform or observe any term, covenant
or agreement contained in this Agreement or any other Loan Document other than
those referred to in Sections 7.1((a)), ((b)), and ((c)) above on its part to be
performed or observed and any such failure shall remain unremedied or uncured
for thirty (30) days after the Borrower knows of such failure; or
(e) The Borrower shall default in the performance of or compliance
with any term contained in any Loan Document other than this Agreement and such
default shall not have been remedied or waived within any applicable grace
period; or
(f) The Borrower or any of its Domestic Subsidiaries shall (A) fail to
pay any principal of, or premium or interest on, any Debt, the aggregate
outstanding principal amount of which is at least $500,000 (excluding Debt
evidenced by the Notes), when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt, or (B) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt, when required to be performed
or observed, and such failure shall continue after the applicable grace period,
if any, specified in such agreement or instrument; or
(g) (i) The Borrower or any of its Domestic Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any of its Domestic Subsidiaries shall make a general assignment for
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the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Domestic Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of thirty (30) days;
or (iii) there shall be commenced against the Borrower or any of its Domestic
Subsidiaries any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within thirty (30) days from the entry thereof; or (iv) the
Borrower or any of its Domestic Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii) and (iii) above; or (v) the
Borrower or any of its Domestic Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Domestic Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) equal to or greater than
$500,000 and all such judgments or decrees shall not have been vacated,
discharged, or stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or
(i) (i) The Borrower or any of its ERISA Affiliates shall fail to make
full payment when due of all amounts which, under the provisions of any Pension
Plan or Section 412 of the Internal Revenue Code, the Borrower or any of its
ERISA Affiliates is required to pay as contributions thereto;
(ii) Any accumulated funding deficiency shall occur or exist, whether
or not waived, with respect to any Pension Plan;
(iii) The excess of the actuarial present value of all benefit
liabilities under all Pension Plans over the fair market value of the assets of
such Pension Plans (excluding in such computation Pension Plans with assets
greater than benefit liabilities) allocable to such benefit liabilities shall be
greater than five percent (5%) of Consolidated Tangible Net Worth;
(iv) The Borrower or any of its ERISA Affiliates shall enter into any
transaction which has as its principal purpose the evasion of liability under
Subtitle D of Title IV of ERISA;
(v) (A) Any Pension Plan maintained by the Borrower or any of its
ERISA Affiliates shall be terminated within the meaning of Title IV of ERISA, or
(B) a trustee shall be appointed by an appropriate United States district court
to administer any Pension Plan, or (C) the Pension Benefit Guaranty Corporation
(or any successor thereto) shall institute proceedings to terminate any Pension
Plan or to appoint a trustee to administer any Pension Plan, or (D) the Borrower
or any of its ERISA Affiliates shall withdraw (under Section 4063 of ERISA) from
a Pension Plan, if as of the date of the event listed in subclauses (A)-(D)
above or any subsequent date, either the Borrower or its ERISA Affiliates has
any liability (such liability to include any liability to the Pension Benefit
Guaranty Corporation, or any successor thereto, or to
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any other party under Sections 4062, 4063 or 4064 of ERISA or any other
provision of law) resulting from or otherwise associated with the events listed
in subclauses (A)-(D) above;
(vi) As used in this Section 7.1(i) the term "accumulated funding
deficiency" has the meaning specified in Section 412 of the Internal Revenue
Code, and the terms "actuarial present value" and "benefit liabilities" have the
meanings specified in Section 4001 of ERISA, using the actuarial methods and
assumptions adopted by the Pension Plans in satisfying the funding obligations
of Section 412 of the Internal Revenue Code;
(vii) Provided, that none of the events described in clauses (i)-(vi)
above, inclusive, shall constitute an Event of Default unless such event would
cause a Material Adverse Effect; or
(j) There shall be instituted against the Borrower or any of its
Domestic Subsidiaries any proceeding for which forfeiture of any property
(including without limitation any intellectual property) is a potential penalty
and which forfeiture would have a Material Adverse Effect; or
(k) A Change of Control (as such term is defined in Section 1.1 of
this Agreement) shall occur; or
(l) A Change of Control (as such term is defined in the Indenture) or
any other event or occurrence requiring mandatory redemption of Notes (as such
term is defined in the Indenture) shall occur; or
(m) (i) any material provision of any security agreement or guaranty
given in connection herewith shall for any reason cease to be valid and binding
on or enforceable against the Borrower or Guarantor party thereto or any
Borrower or Guarantor shall so state in writing or bring an action to limit its
obligations or liabilities thereunder; (ii) any such guaranty shall for any
reason be partially (including with respect to future advances) or wholly
revoked; or (iii) any such security agreement shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in the
collateral purported to be covered thereby or such security interest shall for
any reason cease to be a perfected and first priority security interest (subject
to Permitted Liens and other Liens permitted hereunder); or
(n) Any event or series of events occurs that creates or results in a
material adverse effect on (i) the business, assets, operations, or financial or
other condition of Borrower, (ii) Borrower's ability to pay any of the
obligations to Lenders in accordance with the terms thereof, or (iii) the
collateral or Lenders' security interests therein or the priority of such
security interests, or (iv) Lenders' rights and remedies under this Agreement
and the other Loan Documents;
THEN (i) upon the occurrence of any Event of Default described in
clause (g) above, the Commitments and any obligation of the Issuing Bank to
issue any Letter of Credit shall immediately terminate and all Loans hereunder
together with accrued interest thereon, an amount equal to the Letter of Credit
Usage and all other amounts owing under this Agreement, the Notes,
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the Letters of Credit and the other Loan Documents shall automatically become
due and payable and shall bear interest (without duplication of amounts
specified in Section 3.2) at a rate per annum which is equal to five percent
(5%) above the highest rate which would otherwise be applicable pursuant to
Section 2.3, from the date of such occurrence until paid in full (after as well
as before judgment); (ii) upon the occurrence of any other Event of Default, the
Agent shall at the request, or may with the consent, of the Majority Lenders, by
notice to the Borrower, declare the Commitments and any obligation of the
Issuing Bank to issue any Letter of Credit to be terminated forthwith, whereupon
the Commitments and any obligation of the Issuing Bank to issue any Letter of
Credit shall immediately terminate, and/or, by notice to the Borrower, declare
the Loans hereunder, with accrued interest thereon, an amount equal to the
Letter of Credit Usage and all other amounts owing under this Agreement, the
Notes, the Letters of Credit and the other Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable and shall
bear interest (without duplication of amounts specified in Section 3.2) at a
rate per annum which is equal to five percent (5%) above the highest rate which
would otherwise be applicable pursuant to Section 2.3, from the date of such
occurrence until paid in full (after as well as before judgment); and (iii)
Agent may exercise any and all rights and remedies provided to Agent or the
Lenders under the Loan Documents. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived. So long as any Letter of Credit shall remain
outstanding, any amounts received by the Issuing Bank may be held as cash
collateral for the obligation of the Borrower to reimburse the Issuing Bank in
event of any drawing under any Letter of Credit. In the event any Letter of
Credit in respect of which the Borrower has deposited cash collateral with the
Issuing Bank is canceled or expires, the cash collateral shall be applied FIRST
to the reimbursement of the Issuing Bank for any drawings thereunder, and SECOND
to the payment of any outstanding obligations of the Borrower hereunder or under
any other Loan Document. Payment or acceptance of increased rates of interest
provided for in this Section is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Agent or any Lender.
ARTICLE VIII
THE AGENT AND THE ISSUING BANK
8.1 AUTHORIZATION AND ACTION.
(a) Each Lender hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. As to any matters not expressly provided for
by this Agreement (including enforcement or collection of the Notes), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders,
and such instructions shall be binding upon all Lenders and all holders of
Notes; PROVIDED, HOWEVER, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement.
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(b) The Issuing Bank shall act on behalf of the Lenders with respect
to the Letters of Credit and the Documents associated therewith; PROVIDED that
the Issuing Bank shall have all the benefits and immunities (i) provided to the
Agent in this Article VIII with respect to any acts taken or omissions suffered
by the Issuing Bank in connection with the Letters of Credit as fully as if the
term "Agent", as used in this Article VIII, included the Issuing Bank with
respect to such acts or omissions, and (ii) as otherwise provided in this
Agreement with respect to the Issuing Bank.
(c) The provisions of this Article VIII are solely for the benefit of
the Lenders and the Agent or the Issuing Bank, as the case may be, and Borrower
has no rights as a third party beneficiary of any of the provisions hereof.
8.2 AGENT'S RELIANCE, ETC. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Agent: (i) may treat the payee of any Note
as the holder thereof until the Agent receives written notice of the assignment
or transfer thereof signed by such payee and in form satisfactory to the Agent;
(ii) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement on the part of the
Borrower or to inspect the property (including the books and records) of the
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
8.3 IMPERIAL BANK AND AFFILIATES. With respect to its Commitment, the
Loans made by it, the Note issued to it and the Letters of Credit issued by it,
Imperial Bank shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the Agent and the
Issuing Bank respectively; and the term "LENDER" or "LENDERS" shall, unless
otherwise expressly indicated, include Imperial Bank in its individual capacity.
Imperial Bank and its respective affiliates may accept deposits from, lend money
to, act as trustee under indentures of, and generally engage in any kind of
business with, the Borrower, any of its subsidiaries and any Person who may do
business with or own securities of the Borrower or any such subsidiary, all as
if Imperial Bank were not the Agent and the Issuing Bank, respectively, and
without any duty to account therefor to the Lenders.
8.4 LENDER CREDIT DECISION. Each Lender and the Issuing Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements referred to in Section
4.1((c)) and such other documents and information as it
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has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender and the Issuing Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.
8.5 INDEMNIFICATION. The Lenders agree to indemnify the Agent, and the
Issuing Bank (to the extent not reimbursed by the Borrower), ratably according
to the respective principal amounts of the Notes then held by each of them (or
if no Notes are at the time outstanding or if any Notes are held by Persons
which are not Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent or the Issuing Bank, as the case may be, in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Agent or the Issuing Bank, as the case may be, under this Agreement in its
capacity as Agent or Issuing Bank, as the case may be, PROVIDED that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or the Issuing Bank's, as the case may be, gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse the Agent and the Issuing Bank promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
the Agent or the Issuing Bank, as the case may be, in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Agent or the Issuing Bank, as the case may be, is not
reimbursed for such expenses by the Borrower.
8.6 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right to appoint a successor Agent
with the prior consent of the Borrower, which consent shall not be unreasonably
withheld or delayed, PROVIDED that such consent of the Borrower shall not be
required at any time an Event of Default or Potential Event of Default exists.
If no successor Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or the Majority Lenders' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations as Agent under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VIII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
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ARTICLE XI
MISCELLANEOUS
9.1 AMENDMENTS, ETC. No amendment or waiver of any provision of the
Loan Documents nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following: (a) waive any of the
conditions specified in Sections 4.1, 4.2 and 4.3, (b) increase the Commitments
of the Lenders or subject the Lenders to any additional obligations, (c) reduce
the principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder, (f) amend any of the
provisions in Sections 3.6 through 3.12, (g) alter or limit the obligation of
the Borrower to reimburse the Issuing Bank for amounts drawn under the Letters
of Credit, (h) alter or limit the obligations of the Lenders set forth in
Section 2.5((d)), (i) amend the provisions of Article 10 of the Indenture, (j)
amend this Section 9.1, (k) release any material portion of any collateral
covered by any security agreement given in connection herewith; and PROVIDED,
FURTHER, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or any
other Loan Document; and PROVIDED, FURTHER, that no amendment, waiver or consent
shall, unless in writing and signed by the Issuing Bank in addition to the
Lenders required above to take such action, alter or effect the obligations of
the Issuing Bank under Section 2.5 or effect the rights or duties of the Issuing
Bank under Article VIII; and PROVIDED, FURTHER, that no waiver or consent shall
unless in writing and signed by the affected Lender or the Issuing Bank, as the
case may be, waive the rights of that Lender or the Issuing Bank to receive any
payment or compensation under any of Sections 3.6 through 3.12.
9.2 NOTICES, ETC. Except as otherwise set forth in this Agreement, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex or facsimile communication) and mailed or
telegraphed or telexed or sent by facsimile or delivered, if to the Borrower, at
its address set forth on the signature page hereof; and if to any Lender, the
Issuing Bank or the Agent, at its address set forth on the signature page
hereof; or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and
communications shall be effective three (3) Business Days after deposit in the
U.S. mail, postage prepaid, when sent by telex or sent by facsimile, or when
delivered, respectively, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
Agent.
9.3 RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence
of any Event of Default, each Lender is hereby authorized by the Borrower, at
any time and from time to time, without notice, for the ratable benefit of the
Lenders, (a) to set off against, and to appropriate and apply to the payment of,
the obligations and liabilities of the Borrower under the Loan Documents
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(whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts owing by such Lender to the Borrower (whether
payable in Dollars or any other currency, whether matured or unmatured, and, in
the case of deposits, whether general or special, time or demand and however
evidenced) and (b) pending any such action, to the extent necessary, to hold
such amounts as collateral to secure such obligations and liabilities and to
return as unpaid for insufficient funds any and all checks and other items drawn
against any deposits so held as such Lender in its sole discretion may elect;
PROVIDED that no such setoff, appropriation, or application shall be taken or
made without the prior written consent of Agent or the Majority Lenders. The
Borrower hereby grants to each Lender a security interest in all deposits and
accounts maintained with that Lender. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
set-off) which such Lender may have.
9.4 NO WAIVER; REMEDIES. No failure on the part of the Agent or any
Lender to exercise, and no delay in exercising, any right under any of the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
9.5 COSTS AND EXPENSES. The Borrower agrees to pay on demand all costs
and expenses of the Agent, Imperial Bank and Bank Austria Creditanstalt
Corporate Finance, Inc. (or any Affiliate asssignee of such Lender) (including
attorney's fees and the reasonable estimate of the allocated cost of in-house
counsel and staff) in connection with the preparation, amendment, modification,
enforcement (including in appellate, bankruptcy, insolvency, liquidation,
reorganization, moratorium or other similar proceedings) or restructuring of the
Loan Documents.
9.6 ADDITIONAL LENDERS; ASSIGNMENTS; PARTICIPATIONS.
(a) None of the Loan Documents nor any rights thereunder may be
assigned by Borrower without the prior written consent of all the Lenders, which
consent may be granted or withheld in the Lenders' sole discretion. Any Lender
may assign, from time to time, all or any portion of its pro rata share of the
Commitments and its Note to (i) an Affiliate of that Lender, without the prior
written approval of Agent or Borrower, or (ii) subject at any time prior to the
occurrence of an Event of Default to the prior written approval of the Borrower
(which approval will not be unreasonably withheld or delayed), to any other
financial institution acceptable to the Agent; PROVIDED that the parties to each
such assignment shall execute and deliver to the Agent and Borrower an
assignment agreement reasonably satisfactory to Agent. Upon (A) such execution
and delivery and (B) except in the case of an assignment pursuant to clause (i)
of the preceding sentence, payment of a fee in the amount of $3,500 to Agent to
cover administrative costs, from and after the effective date of such assignment
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it, have the rights and
obligations of a Lender hereunder and (y) the Lender assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it,
relinquish its rights and be released from its obligations under this Agreement
(other than pursuant to Section 9.6((e))), and, in the case of an assignment
covering all or the remaining portion of an assigning Lender's
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rights and obligations under this Agreement, such Lender shall cease to be a
party hereto, subject to its continuing obligations under Section 9.6((e)). The
Commitments hereunder shall be modified to reflect the Commitment of such
assignee, and, if any such assignment occurs while any Notes are outstanding,
new Notes shall, upon the surrender of the assigning Lender's Notes, be issued
to such assignee and to the assigning Lender as necessary to reflect the new
Commitments of the assigning Lender and of its assignee.
(b) Each Lender may sell, negotiate or grant participations to other
parties in all or part of the obligations of the Borrower outstanding under the
Loan Documents, without notice to or the approval of the Agent or the Borrower;
PROVIDED that any such sale, negotiation or participation shall be in compliance
with the applicable federal and state securities laws and the other requirements
of this Section 9.6. No participant shall constitute a "Lender" under any Loan
Document, and the Borrower shall continue to deal solely and directly with the
Agent and the Lenders.
(c) Each Lender may disclose to any proposed assignee or participant
any information relating to the Borrower or any of its Subsidiaries; PROVIDED,
that prior to such disclosure such proposed assignee or participant shall have
agreed in writing to keep any such information confidential substantially on the
terms of Section 9.6((e)).
(d) The grant of a participation interest shall be on such terms as
the granting Lender determines are appropriate, provided only that (i) the
holder of such a participation interest shall not have any of the rights of a
Lender under this Agreement except, if the participation agreement so provides,
rights to demand the payment of costs of the type described in Article III, and
(ii) the consent of the holder of such a participation interest shall not be
required for amendments or waivers of provisions of the Loan Documents other
than those that (A) increase the amount of the Commitments, (B) extend the term
of the Commitments, (C) decrease the rate of interest or the amount of any fee
or any other amount payable to the Lenders under the Loan Documents, (D) reduce
the principal amount payable under the Loan Documents, or (E) extend the date
fixed for the payment of principal or interest or any other amount payable under
the Loan Documents.
(e) Each Lender understands that some of the information and documents
furnished to it pursuant to this Agreement may be confidential and each Lender
agrees that it will keep all non-public information, documents and agreements so
furnished to it confidential and will make no disclosure to other Persons of
such information or agreements until it shall have become public, except (i) to
the extent required in connection with matters involving operations under or
enforcement or amendment of the Loan Documents; (ii) to such Lender's examiners
and auditors or in accordance with such Lender's obligations under law or
regulations or pursuant to subpoenas or other process to make information
available to governmental agencies and examiners or to others; (iii) to any
corporate parent of any Lender so long as such parent agrees to accept such
information or agreement subject to the restrictions provided in this Section
9.6((e)); (iv) to any participant bank or trust company of any Lender so long as
such participant shares the corporate parent with such Lender and agrees to keep
such information, documents or agreement confidential in accordance with the
restrictions provided in this Section 9.6((e)); (v) to the Agent or to any other
Lender and their respective counsel and other
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professional advisors and to its own counsel and professional advisors so long
as such Persons are instructed to keep such information confidential in
accordance with the provisions of this Section 9.6((e)); (vi) to proposed
assignees and participants in accordance with Section 9.6((c)); and (vii) with
the prior written consent of the Borrower.
9.7 AUDITS OF COLLATERAL; FEES. The Agent, on behalf of the Lenders,
shall have the right from time to time to audit Borrower's accounts receivable,
inventory, or other collateral securing the indebtedness hereunder, provided
that such audits will be conducted no more than one (1) time in any fiscal year
unless an Event of Default has occurred and is continuing. Borrower agrees to
reimburse the Agent, on demand, for customary and reasonable fees and costs
incurred by the Agent for such audits, and for each appraisal of collateral and
financial analysis and examination of Borrower performed from time to time by
the Agent or their respective agents.
9.8 EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW. This Agreement shall
become effective when it shall have been executed by the Borrower, the Agent and
each Lender and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent, each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Agent and all
the Lenders. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO
ITS CHOICE OF LAW DOCTRINE. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS AND RULES
DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO RULES OR LAWS ARE DESIGNATED, THE
UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDIT (1983 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UCP") AND, AS TO
MATTERS NOT GOVERNED BY THE UCP, THE LAWS OF THE STATE OF CALIFORNIA.
9.9 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE ISSUING BANK
AND EACH LENDER HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF
THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including contract claims, tort claims, breach of
duty claims, and all other common law and statutory claims. The Agent, each
Lender, the Issuing Bank and the Borrower each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Agreement, and that each will
continue to rely on the waiver in their related future dealings. The Agent, each
Lender, the Issuing Bank and the Borrower further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
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MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
LOAN. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
9.10 CONSENT TO JURISDICTION; VENUE; AGENT FOR SERVICE OF PROCESS. All
judicial proceedings brought against the Borrower with respect to this Agreement
and the Loan Documents may be brought in any state or federal court of competent
jurisdiction in the City and County of San Francisco in the State of California,
and by execution and delivery of this Agreement, the Borrower accepts for itself
and in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. The
Borrower irrevocably waives any right it may have to assert the doctrine of
FORUM NON CONVENIENS or to object to venue to the extent any proceeding is
brought in accordance with this Section. The Borrower designates and appoints
Borrower's Chief Financial Officer, from time to time, and such other Persons as
may hereafter be selected by the Borrower irrevocably agreeing in writing to so
serve as its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by the
Borrower to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to the Borrower at its
address provided in the applicable signature page hereto, except that unless
otherwise provided by applicable law, any failure to mail such copy shall not
affect the validity of service of process. If any agent appointed by the
Borrower refuses to accept service, the Borrower hereby agrees that service upon
it by mail shall constitute sufficient notice. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of the Agent or any Lender to bring proceedings against the Borrower in
courts of any jurisdiction.
9.11 ENTIRE AGREEMENT. This Agreement with Exhibits and Schedules and
the other Loan Documents embody the entire agreement and understanding between
the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof.
9.12 SEPARABILITY OF PROVISIONS. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
9.13 OBLIGATIONS SEVERAL. The obligation of each Lender hereunder is
several, and no Lender shall be responsible for the obligation or commitment of
any other Lender hereunder. Nothing contained in this Agreement and no action
taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of
entity.
9.14 SURVIVAL OF CERTAIN AGREEMENTS. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of the Borrower set
forth in Sections 3.6, 3.7 and
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9.5 and the agreements of the Lenders set forth in Sections 3.9, 8.2, 8.5 and
9.3 shall survive the payment of the Loans and the Notes and the termination of
this Agreement.
9.15 WAIVERS. Borrower shall give Lenders written notice within one
hundred eighty (180) days of obtaining knowledge of the occurrence of any claim
or cause of action it believes it has, or may seek to assert to allege against
Lenders whether such claim is based in law or equity, arising under or related
to this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby or thereby, or any act or omission to act by Lenders with
respect hereto or thereto, and that if it shall fail to give such notice to
Lenders with regard to any such claim or cause of action, Borrower shall be
deemed to have waived, and shall be forever barred from bringing or asserting
such claim or cause of action in any suit, action or proceeding in any court or
before any governmental agency or authority or any arbitrator. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER
AGREES THAT IT SHALL NOT SEEK FROM LENDERS UNDER ANY THEORY OF LIABILITY
(INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES.
9.16 JUDICIAL REFERENCE.
(a) Other than (i) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (ii) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Agreement, which controversy, dispute or claim is not settled
in writing within thirty (30) days after the "Claim Date" (defined as the date
on which a party subject to this Agreement gives written notice to all other
parties that a controversy, dispute or claim exists), will be settled by a
reference proceeding in California in accordance with the provisions of Section
638 et seq. of the California Code of Civil Procedure, or their successor
section ("CCP"), which shall constitute the exclusive remedy for the settlement
of any controversy, dispute or claim concerning this Agreement, including
whether such controversy, dispute or claim is subject to the reference
proceeding and except as set forth above, the parties waive their rights to
initiate any legal proceedings against each other in any court or jurisdiction
other than the Superior Court of Santa Clara County (the "Court"). The referee
shall be a retired Judge of the Court selected by mutual agreement of the
parties, and if they cannot so agree within forty-five (45) days after the Claim
Date, the referee shall be promptly selected by the Presiding Judge of the Court
(or his representative). The referee shall be appointed to sit as a temporary
judge, with all of the powers for a temporary judge, as authorized by law, and
upon selection should take and subscribe to the oath of office as provided for
in Rule 244 of the California Rules of the Court (or any subsequently enacted
Rule). Each party shall have one peremptory challenge pursuant to CCP Section
170.6. The referee shall (a) be requested to set the matter for hearing within
sixty (60) days after the date of selection of the referee and (b) try any and
all issues of law or fact and report a statement of decision upon them, if
possible, within ninety (90) days of the Claim Date. Any decision rendered by
the referee will be final, binding and conclusive and judgment shall be entered
pursuant to CCP Section 644 in any court in the State of California having
jurisdiction. Any party may apply for a reference proceeding at any time after
thirty (30) days following notice to
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any other party of the nature of the controversy, dispute or claim, by filing a
petition for a hearing and/or trial. All discovery permitted by this Agreement
shall be completed no later than fifteen (15) days before the first hearing date
established by the referee. The referee may extend such period in the event of a
party's refusal to provide requested discovery or unavailability of a witness
due to absence or illness. No party shall be entitled to "priority" in
conducting discovery. Depositions may be taken by either party upon seven (7)
days written notice, and request for production or inspection of documents which
cannot be resolved by the parties shall be submitted to the referee as provided
herein. The Superior Court is empowered to issue temporary and/or provisional
remedies, as appropriate.
(b) Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of all hearings, the order of presentation of evidence, and
all other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
(c) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee shall issue a single judgment at the close
of the reference proceeding which shall dispose of all of the claims of the
parties that are the subject of the reference. The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee. The parties hereto
expressly reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provisions.
(d) In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to discovery as
set forth hereinabove shall apply to any such arbitration proceeding.
9.17 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement; signature
pages may be detached from counterpart documents and reassembled to form
duplicate executed originals.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
COINSTAR, INC.,
a Delaware corporation
By: /s/ Kirk A. Collamer
---------------------------------------
Title: Vice President and
Chief Financial Officer
Address:
P.O. Box 91258
Bellevue, WA 98009
Telephone: (425) 943-8220
Facsimile: (425) 637-0045
Attention: Kirk Collamer
THE AGENT:
IMPERIAL BANK
By: /s/ J. P. Michael
---------------------------------------
Title: Vice President
Notice and Payment Address:
226 Airport Parkway
San Jose, CA 95110-1024
Attention: Corporate Banking Center
with a copy to:
Imperial Bank
777 108th Avenue, Suite 1670
Bellevue, WA 98004
Telephone: (425) 452-8582
Facsimile: (425) 454-6224
Attention: Jim Ellison and J.P.
Michael
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THE LENDERS:
IMPERIAL BANK
By: /s/ J. P. Michael
---------------------------------------
Title: Vice President
Notice and Payment Address:
226 Airport Parkway
San Jose, CA 95110-1024
Attention: Corporate Banking Center
with a copy to:
Imperial Bank
777 108th Avenue, Suite 1670
Bellevue, WA 98004
Telephone: (425) 452-8582
Facsimile: (425) 454-6224
Attention: Jim Ellison and J.P. Michael
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BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
By: /s/ Greg Roux
---------------------------------------
Title: Vice
By: /s/ Jack Bertges
---------------------------------------
Title: Senior Vice President
Notice and Payment Address:
Four Embarcadero Center, Suite 600
San Francisco, California 94111
Telephone: (415) 788-7251
Facsimile: (415) 781-0622
Attention: Greg Roux
with a copy of notices to:
Orrick Herrington & Sutcliffe, LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
Attention: Mark J. Coleman, Esq.
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EXHIBIT 4.2
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: Coinstar, Inc., a Delaware corporation
Number of Shares: 51,326
Class of Stock: Common
Initial Exercise Price: $12.177 per Share
Issue Date: February 19, 1999
Expiration Date: February 19, 2009
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, IMPERIAL BANK ("Holder") is entitled to
purchase the number of fully paid and nonassessable shares of Common Stock (the
"Shares") of the corporation (the "Company") at the price per Share (the
"Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of
this Warrant, subject to the provisions and upon the terms and conditions set
forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as
Appendix 1 to the principal office of the Company. Unless Holder is exercising
the conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 CONVERSION RIGHT. In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.4.
1.3 NO RIGHTS OF SHAREHOLDER. This Warrant does not entitle Holder to any
voting rights as a shareholder of the Company prior to the exercise hereof.
1.4 FAIR MARKET VALUE. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking or public accounting firm to undertake such valuation. If
the valuation of such investment banking firm is greater than that determined by
the Board of Directors, then all fees and expenses of such investment
<PAGE>
banking firm shall be paid by the Company. In all other circumstances, such fees
and expenses shall be paid by Holder.
1.5 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE COMPANY.
1.7.1 "ACQUISITION". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.7.2 ASSUMPTION OF WARRANT. Upon the closing of any Acquisition
the successor entity shall assume the obligations of this Warrant, and this
Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly.
1.7.3 PURCHASE RIGHT. Notwithstanding the foregoing, at the
election of Holder, the Company shall purchase the unexercised portion of this
Warrant for cash upon the closing of any Acquisition for an amount equal to
(a) the fair market value of any consideration that would have been received by
Holder in consideration of the Shares had Holder exercised the unexercised
portion of this Warrant immediately before the record date for determining the
shareholders entitled to participate in the proceeds of the Acquisition, less
(b) the aggregate Warrant Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or pays a
dividend on its common stock payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common stock,
then upon exercise of this Warrant, for each Share acquired, Holder shall
receive, without cost to Holder, the total number and kind of securities to
which Holder would have been entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.
2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange,
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substitution, or other event. The Company or its successor shall promptly issue
to Holder a new Warrant for such new securities or other property. The new
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 2 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions
of this Section 2.2 shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events.
2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 NO IMPAIRMENT. The Company shall not, by amendment of its Articles of
Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares or its common stock other than as described above that
adversely affects Holder's rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate Warrant
Price of this Warrant is unchanged.
2.5 FRACTIONAL SHARES. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a
full Share.
2.6 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Holder that all Shares which may be issued upon the exercise of
the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws. The Company shall at all
times reserve a sufficient number of shares of common stock for issuance upon
Holder's exercise of its rights hereunder.
3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell,
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<PAGE>
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 20 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 INFORMATION RIGHTS. So long as the Holder holds this Warrant and/or
any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual financial statements of the Company.
3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED. The Shares
shall be entitled to registration rights in accordance with the terms of that
certain Registration Rights Agreement dated as of the date hereof between the
Company and the Holder.
ARTICLE 4. MISCELLANEOUS.
4.1 TERM. This Warrant is exercisable, in whole or in part, at any time
and from time to time on or before the Expiration Date set forth above.
4.2 LEGENDS. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.
4.4 TRANSFER PROCEDURE. Subject to the provisions of Section 4.2, Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable,
4
<PAGE>
directly or indirectly, upon conversion of the Shares, if any) by giving the
Company notice of the portion of the Warrant being transferred setting forth the
name, address and taxpayer identification number of the transferee and
surrendering this Warrant to the Company for reissuance to the transferee(s)
(and Holder if applicable). Unless the Company is filing financial information
with the SEC pursuant to the Securities Exchange Act of 1934, the Company shall
have the right to refuse to transfer any portion of this Warrant to any person
who directly competes with the Company.
4.5 NOTICES. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 WAIVER. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 ATTORNEYS FEES. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
COINSTAR, INC.
By: /s/ Kirk A. Collamer
-----------------------------------
Title: Vice President and Chief Financial
Officer
5
<PAGE>
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase __________ shares of the
Common Stock of __________________________ pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This
conversion is exercised with respect to _____________________ of the Shares
covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
Chief Financial Officer
Controllers Department
Imperial Bank
P.O. Box 92991
Los Angeles, CA 90009
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
- ------------------ ---------------------------------
(Date) (Signature)
<PAGE>
EXHIBIT 4.3
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: Coinstar, Inc., a Delaware corporation
Number of Shares: 51,326
Class of Stock: Common
Initial Exercise Price: $12.177 per Share
Issue Date: February 19, 1999
Expiration Date: February 19, 2009
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC. ("Holder") is entitled to purchase the number of fully paid and
nonassessable shares of Common Stock (the "Shares") of the corporation (the
"Company") at the price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as
Appendix 1 to the principal office of the Company. Unless Holder is exercising
the conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 CONVERSION RIGHT. In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.4.
1.3 NO RIGHTS OF SHAREHOLDER. This Warrant does not entitle Holder to any
voting rights as a shareholder of the Company prior to the exercise hereof.
1.4 FAIR MARKET VALUE. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking or public accounting firm to undertake such valuation. If
the valuation of such investment banking firm is
<PAGE>
greater than that determined by the Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the Company. In all
other circumstances, such fees and expenses shall be paid by Holder.
1.5 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE COMPANY.
1.7.1 "ACQUISITION". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.7.2 ASSUMPTION OF WARRANT. Upon the closing of any Acquisition
the successor entity shall assume the obligations of this Warrant, and this
Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly.
1.7.3 PURCHASE RIGHT. Notwithstanding the foregoing, at the
election of Holder, the Company shall purchase the unexercised portion of this
Warrant for cash upon the closing of any Acquisition for an amount equal to
(a) the fair market value of any consideration that would have been received by
Holder in consideration of the Shares had Holder exercised the unexercised
portion of this Warrant immediately before the record date for determining the
shareholders entitled to participate in the proceeds of the Acquisition, less
(b) the aggregate Warrant Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or pays a
dividend on its common stock payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common stock,
then upon exercise of this Warrant, for each Share acquired, Holder shall
receive, without cost to Holder, the total number and kind of securities to
which Holder would have been entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.
2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received
2
<PAGE>
for the Shares if this Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. The Company or its
successor shall promptly issue to Holder a new Warrant for such new securities
or other property. The new Warrant shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article 2 including, without limitation, adjustments to the Warrant Price
and to the number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 NO IMPAIRMENT. The Company shall not, by amendment of its Articles of
Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares or its common stock other than as described above that
adversely affects Holder's rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate Warrant
Price of this Warrant is unchanged.
2.5 FRACTIONAL SHARES. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a
full Share.
2.6 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Holder that all Shares which may be issued upon the exercise of
the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws. The Company shall at all
times reserve a sufficient number of shares of common stock for issuance upon
Holder's exercise of its rights hereunder.
3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification
3
<PAGE>
or recapitalization of common stock; (d) to merge or consolidate with or into
any other corporation, or sell, lease, license, or convey all or substantially
all of its assets, or to liquidate, dissolve or wind up; or (e) offer holders of
registration rights the opportunity to participate in an underwritten public
offering of the company's securities for cash, then, in connection with each
such event, the Company shall give Holder (1) at least 20 days prior written
notice of the date on which a record will be taken for such dividend,
distribution, or subscription rights (and specifying the date on which the
holders of common stock will be entitled thereto) or for determining rights to
vote, if any, in respect of the matters referred to in (c) and (d) above; (2) in
the case of the matters referred to in (c) and (d) above at least 20 days prior
written notice of the date when the same will take place (and specifying the
date on which the holders of common stock will be entitled to exchange their
common stock for securities or other property deliverable upon the occurrence of
such event); and (3) in the case of the matter referred to in (e) above, the
same notice as is given to the holders of such registration rights.
3.3 INFORMATION RIGHTS. So long as the Holder holds this Warrant and/or
any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual financial statements of the Company.
3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED. The Shares
shall be entitled to registration rights in accordance with the terms of that
certain Registration Rights Agreement dated as of the date hereof between the
Company and the Holder.
ARTICLE 4. MISCELLANEOUS.
4.1 TERM. This Warrant is exercisable, in whole or in part, at any time
and from time to time on or before the Expiration Date set forth above.
4.2 LEGENDS. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.
4
<PAGE>
4.4 TRANSFER PROCEDURE. Subject to the provisions of Section 4.2, Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company notice of the portion of
the Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder if applicable). Unless
the Company is filing financial information with the SEC pursuant to the
Securities Exchange Act of 1934, the Company shall have the right to refuse to
transfer any portion of this Warrant to any person who directly competes with
the Company.
4.5 NOTICES. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 WAIVER. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 ATTORNEYS FEES. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
COINSTAR, INC.
By: /s/ Kirk A. Collamer
-------------------------------------
Title: Vice President and Chief Financial
Officer
5
<PAGE>
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase __________ shares of the
Common Stock of __________________________ pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This
conversion is exercised with respect to _____________________ of the Shares
covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
Bank Austria Creditanstalt Corporate Finance, Inc.
Four Embarcadero Center, Suite 600
San Francisco, CA 94111
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
___________________________________
(Signature)
_______________________
(Date)
<PAGE>
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made as of
February 19, 1999 by and between Coinstar, Inc., a Delaware corporation (the
"COMPANY") and Imperial Bank ("BANK").
WITNESSETH:
WHEREAS, pursuant to that certain Warrant to Purchase Stock of even
date herewith issued by the Company to Bank (the "WARRANT"), Bank has the right
to acquire certain shares of the common stock of the Company; and
WHEREAS, in partial consideration for Bank's agreement to enter into
loan certain funds to the Company, the Company has agreed to issue the Warrant
and to provide Bank with certain registration rights with respect to the common
stock issuable upon exercise of the Warrant.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth herein, the
Company and Bank agree as follows:
1. DEFINITIONS. As used in this Agreement:
a. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
b. "SECURITIES ACT" means the Securities Act of 1933, as amended.
c. "FORM S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
d. "HOLDER" means: (i) Bank, or (ii) a transferee of Registrable
Securities by Bank, to whom registration rights under this Agreement are
assigned pursuant to Section 4 of this Agreement.
e. "REGISTRABLE SECURITIES" means for each Holder the shares of
the Company's common stock issued to such Holder upon exercise of the Warrant,
together with all other shares of Company common stock issued in respect thereof
(by way of stock split, dividend or otherwise), and for all Holders the
aggregate of all Registrable Securities held by all such Holders. Registrable
Securities shall not include any shares of Company common stock transferred by a
Holder pursuant to Section 4 hereof to any person who does not agree to be bound
by the terms of this Agreement.
<PAGE>
f. "SEC" means the Securities and Exchange Commission.
g. "CREDIT AGREEMENT" means that certain Credit Agreement dated
as of the date hereof by and among the Company, as the borrower, certain
financial institutions (each, "Lender", and collectively, the "Lenders"), and
Imperial Bank, as agent for the Lenders.
Capitalized terms not otherwise defined herein have the meanings given
to them in the Warrant.
2. REGISTRATION OF SHARES ISSUABLE UPON EXERCISE OF THE WARRANT.
(a) Upon the written request of Holders of not less than 100% of
Registrable Securities, the Company shall file a registration statement on Form
S-3 with the SEC covering the Registrable Securities within 60 days of the date
on which all indebtedness and obligations owing to Bank (or permitted assignee)
under the Credit Agreement have been repaid in full and Bank (or permitted
assignee) has no further commitment to make loans or extend credit thereunder
(such date being the "Loan Termination Date"), and shall use all reasonable
efforts to cause such registration statement to become effective no later than
one hundred twenty (120) days following the Loan Termination Date; provided,
however, that each holder of Registrable Securities shall provide all such
information and materials to the Company and take all such action as may be
required in order to permit the Company to comply with all applicable
requirements of the SEC and to obtain any desired acceleration of the effective
date of such registration statement; and provided further, that the Company
shall not be obligated to keep the . registration statement in effect longer
than 45 days following its effective date. Such provision of information and
materials is a condition precedent to the obligations of the Company pursuant to
this Section 2(a). The offering made pursuant to such registration shall not be
underwritten.
(b) If the Company shall determine to register any of its
securities, whether for its own account or for the account of any other party,
the Company will:
(i) promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration, and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such written notice from the
Company by any Holders, except as limited under Section 2(b) below.
Notwithstanding the foregoing, the Company shall not be required to
notify Holders or include Registrable Securities in any registration (i) on SEC
Form S-1, S-3 or S-8 relating solely to employee stock option or purchase plans
or (ii) on Form S-4 relating solely to a transaction within the scope of Rule
145.
(c) If the registration of which the Company gives notice is for
a public
-2-
<PAGE>
offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 2(b)(i). In such event the
right of any Holder to registration pursuant to this Section 2 ("COMPANY
REGISTRATION") shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Company and all Holders
proposing to distribute their securities through such underwriting
("PARTICIPATING HOLDERS") shall enter into an underwriting agreement in
customary form with the underwriters selected by the Company. Notwithstanding
any other provision of this Section 2, if the underwriters determine that
marketing factors require a limitation of the number of shares to be
underwritten, the underwriters and the Company may limit the number of
Registrable Securities to be included in the registration and underwriting, or
may exclude Registrable Securities entirely from such registration and
underwriting; PROVIDED, HOWEVER, that no Registrable Securities shall be so
excluded unless there are first excluded all other securities proposed to be
included in such registration (other than securities registered for the account
of the Company). The Company shall advise all Holders of any such limitation,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders exercising
their registration rights in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders. In the event
of any such limitation of the number of shares to be underwritten, the Company
shall so advise all Participating Holders, and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among the Participating Holders in proportion, as nearly as
practicable, as the respective amounts of Registrable Securities then held by
each Participating Holder bears to the total number of Registrable Securities
held by all Participating Holders. If any Participating Holder disapproves of
the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
(d) The costs and expenses of any registration pursuant to this
Section 2, including, without limitation, printing expenses, legal fees and
disbursements of counsel for the Acquiror, "blue sky" expenses, accounting fees
and filing fees, but not including underwriting commissions or similar charges,
legal fees and disbursements of counsel for the selling Holders, shall be borne
by the Company. All expenses of any registered offering not otherwise borne by
the Company shall be borne pro rata among the Participating Holders (and the
Company and other holders selling securities in the offering) on the basis of
the number of shares registered.
3. INDEMNIFICATION. In the event of any offering registered pursuant
to this Agreement:
(a) INDEMNIFICATION BY THE COMPANY: The Company will indemnify
each Holder and each person controlling a Holder, against all claims, losses,
damages and liabilities (and actions in respect thereof), including any of the
foregoing (i) incurred in settlement of any litigation, commenced or threatened,
(ii) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement, final
prospectus, or any amendment or supplement thereto, (iii) incident to any
offering registered pursuant to this Agreement, or (iv) based on (x) any
omission (or alleged omission) to state
-3-
<PAGE>
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or (y) any violation by the Company of any rule or regulation
promulgated under the Securities Act or state securities laws applicable to the
Company in connection with any such registration. Subject to Section 3(c), the
Company will reimburse each Holder, and each person controlling a Holder, for
any legal and other out-of-pocket expenses reasonably incurred in connection
with investigating, preparing or defending any claim, loss, damage, liability or
action described in the previous sentence, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or omission, or
alleged untrue statement or omission, made in reliance upon and in conformity
with written information furnished to the Company by such Holder or controlling
person and stated to be specifically for use therein.
(b) INDEMNIFICATION BY HOLDERS: Each Holder will indemnify the
Company, each of its directors and officers and its legal counsel and
independent accountants, each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of Section 15 of the Securities Act, and
each other Holder and each person controlling such other Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) (i)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, final prospectus,
or any amendment or supplement thereto, (ii) incident to any offering registered
pursuant to this Agreement, or (iii) based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading. Each Holder will reimburse the
Company, such other Holders, such directors, officers, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any claim, loss, damage, liability or action described in the
previous sentence, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein; PROVIDED, HOWEVER, that the obligations of each Holder hereunder shall
be several and not joint and shall be limited to an amount equal to the
respective gross proceeds (before expenses and commissions) from the sale of
Registrable Securities by such Holder as contemplated herein.
(c) DEFENDING CLAIMS: Each party entitled to indemnification
under this Section 3 (the "INDEMNIFIED PARTY") shall give notice to the party
required to provide indemnification (the "INDEMNIFYING PARTY") promptly after
such Indemnified Party receives written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to
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<PAGE>
the extent, that the Indemnifying Party's ability to defend against such claim
or litigation is impaired as a result of such failure to give notice.
Notwithstanding the foregoing sentence, the Indemnified Party may retain its own
counsel to conduct the defense of any such claim or litigation, and shall be
entitled to be reimbursed by the Indemnifying Party for expenses incurred by the
Indemnified Party in defense of such claim or litigation, in the event that the
Indemnifying Party does not assume the defense of such claim or litigation
within sixty days after the Indemnifying Party receives notice thereof from the
Indemnified Party. Further, an Indemnifying Party shall be liable for amounts
paid in settlement of any such claim or litigation only if the Indemnifying
Party consents in writing to such settlement (which consent shall not be
unreasonably withheld). No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party to release from all liability with respect to such claim or
litigation.
(d) CONTRIBUTION: If the indemnification provided for in this
Section 3 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any claim, loss, damage or liability referred to herein,
then the Indemnifying Party, to the extent such indemnification is unavailable,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such claims, losses,
damages or liabilities in such proportion as is appropriate to reflect the
relative benefit to or fault of the Indemnifying Party and Indemnified Parties
in connection with the actions that resulted in such claims, losses, damages and
liabilities. The relative benefit of such Indemnifying Party and Indemnified
Parties shall be determined by reference to, among other things, the gross
proceeds received by each such party from the sale of Registrable Securities in
the manner contemplated hereby. The relative fault of such Indemnifying Party
and Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the claims, losses, damages or liabilities
referred to above shall be deemed to include any legal fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by PRO RATA allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to above in this paragraph. No party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any party.
(e) The obligations of the Company and each Holder under this
Section 3 shall survive the completion of any offering of stock in a
registration statement under this Agreement.
4. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of a Holder pursuant
to this Agreement may be assigned by a Holder to a transferee of Registrable
Securities only if: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the
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<PAGE>
name and address of such transferee and a copy of a duly executed written
instrument in form reasonably satisfactory to the Company pursuant to which such
transferee (i) assumes all of the obligations and liabilities of its transferor
hereunder, (ii) agrees itself to be bound hereby and (iii) provides the Company
with such reasonable information as the Company may request to permit the
transferee to sell such Registrable Securities pursuant to the registration
statement filed in accordance with Section 2 hereof, and (b) immediately
following such transfer, the disposition of such Registrable Securities by the
transferee is restricted under the Securities Act.
5. AMENDMENT OF REGISTRATION RIGHTS. The Holders of a majority of the
Registrable Securities then outstanding may, with the consent of the Company,
amend the registration rights granted hereunder.
6. TERMINATION. The registration rights set forth in this Agreement
shall terminate with respect to a Holder (and the shares held by such Holder
shall cease to constitute Registrable Securities) upon the earlier of (i) such
time as all of the Registrable Securities then held by such Holder can be sold
by such Holder in a three-month period in accordance with Rule 144 under the
Securities Act and (ii) one year following the date hereof.
7. OBLIGATIONS OF HOLDERS. By exercising any rights hereunder, each
Holder shall be deemed to assume all obligations of a Holder hereunder as though
such Holder were a signatory hereto. The Company may require Holders to execute
an instrument whereby such Holders expressly assume all obligations of Holders
hereunder as a condition precedent to any obligations of the Company hereunder.
8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which together shall be considered one and the same
document.
9. ENTIRE AGREEMENT. This Agreement, together with the Warrant,
contains the entire understanding and agreement of the parties, and may not be
modified or terminated except by a written agreement signed by both parties.
10. GOVERNING LAW. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed in accordance with the laws
of the State of California.
11. NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice.
12. HEADINGS. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Company and Bank have duly executed this
Registration Rights Agreement, as of the date and year first above written.
<TABLE>
<CAPTION>
"COMPANY" "BANK"
<S> <C>
COINSTAR, INC. IMPERIAL BANK
By: /S/ KIRK A. COLLAMER By: /S/ J.P. MICHAEL
-------------------------------------------- ---------------------------------------
Printed: KIRK A. COLLAMER Printed: J.P. MICHAEL
---------------------------------------- ----------------------------------
Title: VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Title: VICE PRESIDENT
------------------------------------------ --------------------------------------
</TABLE>
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<PAGE>
EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made as of
February 19, 1999 by and between Coinstar, Inc., a Delaware corporation (the
"COMPANY") and Bank Austria Creditanstalt Corporate Finance, Inc. ("BANK").
WITNESSETH:
WHEREAS, pursuant to that certain Warrant to Purchase Stock of even date
herewith issued by the Company to Bank (the "WARRANT"), Bank has the right to
acquire certain shares of the common stock of the Company; and
WHEREAS, in partial consideration for Bank's agreement to enter into loan
certain funds to the Company, the Company has agreed to issue the Warrant and to
provide Bank with certain registration rights with respect to the common stock
issuable upon exercise of the Warrant.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth herein, the Company and Bank
agree as follows:
1. DEFINITIONS. As used in this Agreement:
a. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
b. "SECURITIES ACT" means the Securities Act of 1933, as amended.
c. "FORM S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
d. "HOLDER" means: (i) Bank, or (ii) a transferee of Registrable
Securities by Bank, to whom registration rights under this Agreement are
assigned pursuant to Section 4 of this Agreement.
e. "REGISTRABLE SECURITIES" means for each Holder the shares of
the Company's common stock issued to such Holder upon exercise of the Warrant,
together with all other shares of Company common stock issued in respect thereof
(by way of stock split, dividend or otherwise), and for all Holders the
aggregate of all Registrable Securities held by all such Holders. Registrable
Securities shall not include any shares of Company common stock transferred by a
Holder pursuant to Section 4 hereof to any person who does not agree to be bound
by the terms of this Agreement.
<PAGE>
f. "SEC" means the Securities and Exchange Commission.
g. "CREDIT AGREEMENT" means that certain Credit Agreement dated
as of the date hereof by and among the Company, as the borrower, certain
financial institutions (each, "Lender", and collectively, the "Lenders"), and
Imperial Bank, as agent for the Lenders.
Capitalized terms not otherwise defined herein have the meanings given
to them in the Warrant.
2. REGISTRATION OF SHARES ISSUABLE UPON EXERCISE OF THE WARRANT.
(a) Upon the written request of Holders of not less than 100% of
Registrable Securities, the Company shall file a registration statement on Form
S-3 with the SEC covering the Registrable Securities within 60 days of the date
on which all indebtedness and obligations owing to Bank (or permitted assignee)
under the Credit Agreement have been repaid in full and Bank (or permitted
assignee) has no further commitment to make loans or extend credit thereunder
(such date being the "Loan Termination Date"), and shall use all reasonable
efforts to cause such registration statement to become effective no later than
one hundred twenty (120) days following the Loan Termination Date; provided,
however, that each holder of Registrable Securities shall provide all such
information and materials to the Company and take all such action as may be
required in order to permit the Company to comply with all applicable
requirements of the SEC and to obtain any desired acceleration of the effective
date of such registration statement; and provided further, that the Company
shall not be obligated to keep the registration statement in effect longer than
45 days following its effective date. Such provision of information and
materials is a condition precedent to the obligations of the Company pursuant to
this Section 2(a). The offering made pursuant to such registration shall not be
underwritten.
(b) If the Company shall determine to register any of its securities,
whether for its own account or for the account of any other party, the Company
will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration, and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such written notice from the
Company by any Holders, except as limited under Section 2(b) below.
Notwithstanding the foregoing, the Company shall not be required to
notify Holders or include Registrable Securities in any registration (i) on SEC
Form S-1, S-3 or S-8 relating solely to employee stock option or purchase plans
or (ii) on Form S-4 relating solely to a transaction within the scope of Rule
145.
(c) If the registration of which the Company gives notice is for a
public
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<PAGE>
offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 2(b)(i). In such event the
right of any Holder to registration pursuant to this Section 2 ("COMPANY
REGISTRATION") shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Company and all Holders
proposing to distribute their securities through such underwriting
("PARTICIPATING HOLDERS") shall enter into an underwriting agreement in
customary form with the underwriters selected by the Company. Notwithstanding
any other provision of this Section 2, if the underwriters determine that
marketing factors require a limitation of the number of shares to be
underwritten, the underwriters and the Company may limit the number of
Registrable Securities to be included in the registration and underwriting, or
may exclude Registrable Securities entirely from such registration and
underwriting; PROVIDED, HOWEVER, that no Registrable Securities shall be so
excluded unless there are first excluded all other securities proposed to be
included in such registration (other than securities registered for the account
of the Company). The Company shall advise all Holders of any such limitation,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders exercising
their registration rights in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders. In the event
of any such limitation of the number of shares to be underwritten, the Company
shall so advise all Participating Holders, and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among the Participating Holders in proportion, as nearly as
practicable, as the respective amounts of Registrable Securities then held by
each Participating Holder bears to the total number of Registrable Securities
held by all Participating Holders. If any Participating Holder disapproves of
the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
(d) The costs and expenses of any registration pursuant to this
Section 2, including, without limitation, printing expenses, legal fees and
disbursements of counsel for the Acquiror, "blue sky" expenses, accounting fees
and filing fees, but not including underwriting commissions or similar charges,
legal fees and disbursements of counsel for the selling Holders, shall be borne
by the Company. All expenses of any registered offering not otherwise borne by
the Company shall be borne pro rata among the Participating Holders (and the
Company and other holders selling securities in the offering) on the basis of
the number of shares registered.
3. INDEMNIFICATION. In the event of any offering registered pursuant
to this Agreement:
(a) INDEMNIFICATION BY THE COMPANY: The Company will indemnify each
Holder and each person controlling a Holder, against all claims, losses, damages
and liabilities (and actions in respect thereof), including any of the foregoing
(i) incurred in settlement of any litigation, commenced or threatened, (ii)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, final prospectus, or
any amendment or supplement thereto, (iii) incident to any offering registered
pursuant to this Agreement, or (iv) based on (x) any omission (or alleged
omission) to state
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<PAGE>
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or (y) any violation by the Company of any rule or regulation
promulgated under the Securities Act or state securities laws applicable to the
Company in connection with any such registration. Subject to Section 3(c), the
Company will reimburse each Holder, and each person controlling a Holder, for
any legal and other out-of-pocket expenses reasonably incurred in connection
with investigating, preparing or defending any claim, loss, damage, liability or
action described in the previous sentence, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or omission, or
alleged untrue statement or omission, made in reliance upon and in conformity
with written information furnished to the Company by such Holder or controlling
person and stated to be specifically for use therein.
(b) INDEMNIFICATION BY HOLDERS: Each Holder will indemnify the
Company, each of its directors and officers and its legal counsel and
independent accountants, each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of Section 15 of the Securities Act, and
each other Holder and each person controlling such other Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) (i)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, final prospectus,
or any amendment or supplement thereto, (ii) incident to any offering registered
pursuant to this Agreement, or (iii) based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading. Each Holder will reimburse the
Company, such other Holders, such directors, officers, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any claim, loss, damage, liability or action described in the
previous sentence, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein; PROVIDED, HOWEVER, that the obligations of each Holder hereunder shall
be several and not joint and shall be limited to an amount equal to the
respective gross proceeds (before expenses and commissions) from the sale of
Registrable Securities by such Holder as contemplated herein.
(c) DEFENDING CLAIMS: Each party entitled to indemnification under
this Section 3 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party receives written notice of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to
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<PAGE>
the extent, that the Indemnifying Party's ability to defend against such claim
or litigation is impaired as a result of such failure to give notice.
Notwithstanding the foregoing sentence, the Indemnified Party may retain its own
counsel to conduct the defense of any such claim or litigation, and shall be
entitled to be reimbursed by the Indemnifying Party for expenses incurred by the
Indemnified Party in defense of such claim or litigation, in the event that the
Indemnifying Party does not assume the defense of such claim or litigation
within sixty days after the Indemnifying Party receives notice thereof from the
Indemnified Party. Further, an Indemnifying Party shall be liable for amounts
paid in settlement of any such claim or litigation only if the Indemnifying
Party consents in writing to such settlement (which consent shall not be
unreasonably withheld). No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party to release from all liability with respect to such claim or
litigation.
(d) CONTRIBUTION: If the indemnification provided for in this Section
3 from the Indemnifying Party is unavailable to an Indemnified Party hereunder
in respect of any claim, loss, damage or liability referred to herein, then the
Indemnifying Party, to the extent such indemnification is unavailable, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such claims, losses, damages or
liabilities in such proportion as is appropriate to reflect the relative benefit
to or fault of the Indemnifying Party and Indemnified Parties in connection with
the actions that resulted in such claims, losses, damages and liabilities. The
relative benefit of such Indemnifying Party and Indemnified Parties shall be
determined by reference to, among other things, the gross proceeds received by
each such party from the sale of Registrable Securities in the manner
contemplated hereby. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the claims, losses, damages or liabilities
referred to above shall be deemed to include any legal fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by PRO RATA allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to above in this paragraph. No party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any party.
(e) The obligations of the Company and each Holder under this Section
3 shall survive the completion of any offering of stock in a registration
statement under this Agreement.
4. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of a Holder pursuant
to this Agreement may be assigned by a Holder to a transferee of Registrable
Securities only if: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the
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<PAGE>
name and address of such transferee and a copy of a duly executed written
instrument in form reasonably satisfactory to the Company pursuant to which such
transferee (i) assumes all of the obligations and liabilities of its transferor
hereunder, (ii) agrees itself to be bound hereby and (iii) provides the Company
with such reasonable information as the Company may request to permit the
transferee to sell such Registrable Securities pursuant to the registration
statement filed in accordance with Section 2 hereof, and (b) immediately
following such transfer, the disposition of such Registrable Securities by the
transferee is restricted under the Securities Act.
5. AMENDMENT OF REGISTRATION RIGHTS. The Holders of a majority of the
Registrable Securities then outstanding may, with the consent of the Company,
amend the registration rights granted hereunder.
6. TERMINATION. The registration rights set forth in this Agreement
shall terminate with respect to a Holder (and the shares held by such Holder
shall cease to constitute Registrable Securities) upon the earlier of (i) such
time as all of the Registrable Securities then held by such Holder can be sold
by such Holder in a three-month period in accordance with Rule 144 under the
Securities Act and (ii) one year following the date hereof.
7. OBLIGATIONS OF HOLDERS. By exercising any rights hereunder, each
Holder shall be deemed to assume all obligations of a Holder hereunder as though
such Holder were a signatory hereto. The Company may require Holders to execute
an instrument whereby such Holders expressly assume all obligations of Holders
hereunder as a condition precedent to any obligations of the Company hereunder.
8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which together shall be considered one and the same
document.
9. ENTIRE AGREEMENT. This Agreement, together with the Warrant,
contains the entire understanding and agreement of the parties, and may not be
modified or terminated except by a written agreement signed by both parties.
10. GOVERNING LAW. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed in accordance with the laws
of the State of California.
11. NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice.
12. HEADINGS. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Company and Bank have duly executed this
Registration Rights Agreement, as of the date and year first above written.
"COMPANY" "BANK"
COINSTAR, INC. BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Kirk A. Collamer By: /s/ Greg Roux
Printed: Kirk A. Collamer Printed: Greg Roux
Title: Vice President and Chief Title: Vice President
Financial Officer
By: /s/ Jack Bertges
Printed: Jack R. Bertges
Title: Senior Vice President
-7-
<PAGE>
FOR IMMEDIATE RELEASE Contact: Kirk Collamer
Coinstar, Inc.
(425) 943-8000
COINSTAR CLOSES $25 MILLION
COMMERCIAL BANK LINE
BELLEVUE, WASHINGTON--FEBRUARY 26, 1999--Coinstar Inc. (NASDAQ: CSTR) today
announced that it has signed an agreement for a $25 million commercial bank
credit facility. The agreement was reached this week with Imperial Bank and
Bank Austria Creditanstalt Corporate Finance, Inc.
"We are pleased to have closed this facility," said Jens Molbak, Coinstar
founder and CEO. "This credit agreement will supplement the capital resources
available to fund the continued growth and expansion of our network."
"Our agreement with Imperial Bank and Bank Austria Creditanstalt shows the
confidence that the financial community has in Coinstar and in its management,"
said Kirk Collamer, Coinstar Vice-President and CFO. "Furthermore, this credit
agreement gives us the flexibility to continue to grow and develop our
business."
Coinstar, Inc.-Registered Trademark- develops, owns and operates a network of
nearly 5,000 self-service, coin counting machines. The machines, which provide
consumers with a convenient means of converting loose change into cash, are
located in leading supermarket chains in 37 states. Consumers can call 1-800-
928-CASH, or visit http://www.coinstar.com for the location of the nearest
Coinstar-Registered Trademark- machine.
###
Photos can be downloaded from the Coinstar Website at:
http://www.coinstar.com/news/photorel.html
This press release contains forward-looking statements that involve a number of
risks and uncertainties. Actual results could differ materially from the
results identified or implied in any forward-looking statement discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, the risks that are more fully described under the caption "Risk
Factors" included in the most recent reports filed with the Securities and
Exchange Commission by Coinstar, Inc.
