OUTR Outerwall Inc. (MM)

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As filed with the Securities and Exchange Commission on March 5, 2015

Registration 333-            

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

OUTERWALL INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		7200		94-3156448
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

1800 114th Avenue S.E.

Bellevue, Washington 98004

(425) 943-8000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Donald R. Rench

Chief Legal Officer, General Counsel

and Corporate Secretary

Outerwall Inc.

1800 114th Avenue S.E.

Bellevue, Washington 98004

(425) 943-8000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

SEE TABLE OF ADDITIONAL REGISTRANTS

 

 

Copies to:

Jens M. Fischer

Allison C. Handy

Perkins Coie LLP

1201 Third Avenue, Suite 4900

Seattle, Washington 98101-3099

(206) 359-8000

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		x		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

 

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Amount to be Registered		Proposed Maximum Offering Price Per Unit (1)(2)		Proposed Maximum Aggregate Offering Price (1)(2)		Amount of Registration Fee
5.875% Senior Notes due 2021 (3)		$300,000,000		100%		$300,000,000		$34,860
Guarantees of the 5.875% Senior Notes Due 2021 (4)		$300,000,000		N/A		N/A		N/A

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933.

(2)	Equals the aggregate principal amount of the securities being registered.

(3)	The 5.875% Senior Notes due 2021 will be the obligations of Outerwall Inc.

(4)

The registrants listed on the Table of Additional Registrants will guarantee the obligations of Outerwall Inc. under the 5.875% Senior Notes due 2021. The guarantees are not traded separately. Pursuant to Rule 457(n) under the Securities Act of 1933, no additional registration fee is due with respect to the guarantees.

 

 

 

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TABLE OF ADDITIONAL REGISTRANTS

 

Exact Name of Registrant as Specified in Its Charter		State or Other Jurisdiction of Incorporation or Organization		IRS Employer Identification Number (EIN)		Primary Standard Industrial Classification Code Number (SIC)				Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Office
Clover One, LLC		DE		—			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
Coinstar International, Inc.		DE		91-1894114			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
Coinstar Procurement, LLC		DE		45-3032218			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
CUHL Foods, LLC		DE		27-5088486			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
CUHL Holdings, LLC		WA		80-0441670			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
ecoATM, Inc.		DE		26-3879952			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
RAR Ventures, LLC		DE		26-4155256			7841			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
Redbox Automated Retail, LLC		DE		26-0100436			7841			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
Redbox Incentives LLC		DE		80-0771123			7841			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000
Sesame Holdings, LLC		DE		37-1460331			7200			c/o Outerwall Inc. 1800 114th Avenue S.E. Bellevue, Washington 98004 (425) 943-8000

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The information in this Prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer and sale is not permitted.

 

SUBJECT TO COMPLETION, DATED MARCH 5, 2015

PROSPECTUS

OUTERWALL INC.

 

OFFER TO EXCHANGE ITS

5.875% Senior Notes due 2021

that have been registered under the

Securities Act of 1933, as amended,

for any and all of its outstanding

5.875% Senior Notes due 2021

that were issued and sold in a transaction

exempt from registration

under the Securities Act of 1933, as amended

 

 

Outerwall Inc., a Delaware corporation, hereby offers to exchange, upon the terms and conditions set forth in this prospectus and the accompanying letter of transmittal, up to $300 million in aggregate principal amount of its 5.875% senior notes due 2021, which we refer to as the “exchange notes,” for the same principal amount of its outstanding 5.875% senior notes due 2021, which we refer to as the “original notes.” We refer to the original notes and the exchange notes, collectively, as the “Notes.” The original notes are, and the exchange notes will be, general, unsecured unsubordinated obligations, and the original notes rank, and the exchange notes will rank, equally to our other unsecured and unsubordinated indebtedness. The original notes are, and the exchange notes will be, effectively subordinated to our existing and future secured indebtedness to the extent of the value of the assets securing the indebtedness and structurally subordinated to all indebtedness and obligations of our subsidiaries that do not guarantee the original notes or the exchange notes, as the case may be.

The terms of the exchange notes are substantially identical to the terms of the original notes, except that the exchange notes will generally be freely transferable and do not contain certain terms with respect to registration rights and liquidated damages. We will issue the exchange notes under the indenture governing the original notes. For a description of the principal terms of the exchange notes, see “Description of Notes.”

The exchange offer will expire at 5:00 p.m. New York City time, on                     , 2015, unless we extend the offer. At any time prior to the expiration time, you may withdraw your tender of any original notes; otherwise, such tender is irrevocable. We will receive no cash proceeds from the exchange offer.

The exchange notes constitute a new issue of securities for which there is no established trading market. Any original notes not tendered and accepted in the exchange offer will remain outstanding. To the extent original notes are tendered and accepted in the exchange offer, your ability to sell untendered, and tendered but unaccepted, original notes could be adversely affected. Following consummation of the exchange offer, the original notes will continue to be subject to their existing transfer restrictions and we will generally have no further obligations to provide for the registration of the original notes under the Securities Act of 1933, as amended, or the Securities Act. We cannot guarantee that an active trading market will develop or give assurances as to the liquidity of the trading market for either the original notes or the exchange notes. We do not intend to apply for listing of either the original notes or the exchange notes on any exchange or market.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of the exchange notes received in exchange for the original notes where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days following the effective date of the registration statement of which this prospectus forms a part, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

 

 

Investing in the exchange notes involves certain risks. Please read “Risk Factors” beginning on page 9 of this prospectus.

This prospectus and the letter of transmittal are first being mailed to all holders of the original notes on or about                     , 2015.

 

 

Neither the Securities and Exchange Commission, or the SEC or the Commission, nor any state securities commission has approved or disapproved of the exchange notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2015.

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This prospectus incorporates important business and financial information about us that is not included in or delivered with this prospectus. Documents incorporated by reference are available from us without charge. Any person, including any beneficial owner, to whom this prospectus is delivered may obtain documents incorporated by reference in, but not delivered with, this prospectus by requesting them by telephone or in writing at the following address:

Outerwall Inc.

1800 114th Avenue S.E.

Bellevue, Washington 98004

(425) 943-8000

Attn.: Investor Relations

To obtain timely delivery, you must request these documents no later than five business days before the expiration time of the exchange offer.

You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with information different from that contained in this prospectus. We are offering to exchange original notes for exchange notes only in jurisdictions where such offer is permitted. You should not assume that the information in the incorporated documents, this prospectus or any prospectus supplement is accurate as of any other date other than the date on the front of these documents.

No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this prospectus in connection with the exchange offer, and, if given or made, such information or representations must not be relied upon as having been authorized by Outerwall Inc. This prospectus does not constitute an offer of any securities other than those to which it relates or an offer or a solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstance create an implication that there has been no change in the affairs of Outerwall Inc. since the date hereof of this prospectus.

TABLE OF CONTENTS

 

		Page
Cautionary Note Regarding Forward-Looking Statements			ii
Prospectus Summary			1
Risk Factors			9
Private Placement			25
Use of Proceeds			26
Ratio of Earnings to Fixed Charges			26
Capitalization			27
Selected Historical Consolidated Financial Information			28
The Exchange Offer			29
Description of Notes			38
Certain United States Federal Income Tax Considerations			83
Plan of Distribution			84
Where You Can Find More Information			85
Incorporation by Reference			85
Legal Matters			86
Experts			86

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference herein contain forward-looking statements. These statements relate to future events or our future financial performance or condition. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will,” or the negative of such terms. Forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined in the section “Risk Factors” and elsewhere in this prospectus and the documents incorporated by reference herein, that may cause our, or our industry’s, actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. You should not place undue reliance on these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, performance or achievements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

 

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RISK FACTORS

You should carefully consider the following risk factors, as well as the other information contained in this prospectus, including the documents incorporated by reference herein, before exchanging your original notes. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business. If any of the following risks or uncertainties actually occur, our business could be harmed, the value of the Notes could decline and you could lose all or part of your investment in us.

Risks Related to the Exchange Offer

Your original notes will not be accepted for exchange if you fail to follow the exchange offer procedures.

We will issue exchange notes pursuant to the exchange offer only after a timely receipt of your original notes, a properly completed and duly executed letter of transmittal and all other required documents. Therefore, if you want to tender your original notes, please allow sufficient time to ensure timely delivery. If we do not receive your original notes, letter of transmittal and other required documents by the expiration time of the exchange offer, we will not accept your original notes for exchange. We are generally under no duty to give notification of defects or irregularities with respect to the tenders of original notes for exchange. If there are defects or irregularities with respect to your tender of original notes, we may not accept your original notes for exchange.

If you do not exchange your original notes, your original notes will continue to be subject to the existing transfer restrictions and you may be unable to sell your outstanding original notes.

We did not register the original notes and do not intend to do so following the exchange offer. Original notes that are not tendered will therefore continue to be subject to the existing transfer restrictions and may be transferred only in limited circumstances under applicable securities laws. If you do not exchange your original notes, you will lose your right, except in limited circumstances, to have your original notes registered under the federal securities laws. As a result, if you hold original notes after the exchange offer, you may be unable to sell your original notes and the value of the original notes may decline. We have no obligation, except in limited circumstances, and do not currently intend, to file an additional registration statement to cover the resale of original notes that did not tender in the exchange offer or to re-offer to exchange the exchange notes for original notes following the expiration of the exchange offer.

Risks Related to Competition, Evolving Technologies and Consumer Preferences in Our Industry

Competitive pressures could seriously harm our business, financial condition and results of operations.

Our Redbox business faces competition from many other providers, including those using other distribution channels, having more experience, greater or more appealing inventory, better financing, and better relationships with those in the movie and video game industries, than we have, including:

 

•

mail-delivery and online content providers, like Netflix, iTunes or Amazon;

 

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cable, satellite, and telecommunications providers, like Comcast or DISH Network;

 

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traditional movie programmers, like HBO or Showtime;

 

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traditional brick and mortar video retailers, and other DVD kiosk businesses;

 

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other retailers like Walmart and other chain stores selling DVDs and video games;

 

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video game rental providers, like GameFly;

 

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noncommercial sources like libraries; and

 

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general competition from other forms of entertainment such as movie theaters, television and sporting events.

Our Coinstar business faces competition from supermarkets, banks and other companies that obtain coin-counting equipment from companies such as ScanCoin, Cummins-Allison Corporation and others. Our retailers may choose to replace our coin-counting kiosks with competitor machines and operate such kiosks themselves or through a third party, or not carry coin-counting kiosks at all deciding that floor space could be used for other purposes. In addition, retailers, some of which have significantly more resources than we do, may decide to enter the coin-counting market. Some banks and other competitors already provide coin-counting free of charge or for an amount that yields very low margins or that may not generate a profit at all. An expansion of the coin-counting services provided or a reduction in related fees charged by any of these competitors or retailer decisions to use floor space for other than coin-counting, could materially and adversely affect our business and results of operations.

Our ecoATM business faces competition from companies whose primary business consists of the purchase of used electronics, including online retailers and web sites such as Gazelle, as well as brick and mortar stores which buy back used electronics. The business also faces competition from companies in other businesses who also have buyback programs, such as GameStop, Best Buy, Target, Apple, AT&T, Verizon, T-Mobile and Sprint. These competitors may have significantly more resources than we do or offer their customers a higher price or more convenient offering than we do for the same item. Both the proliferation of such programs and the perceived value to consumers provided by such programs could materially and adversely affect our business and results of operations.

There are many risks related to our Redbox business that may negatively impact our business.

The home video industry is highly competitive with many factors affecting our ability to profitably manage our Redbox business. We have invested, and plan to continue to invest, substantially to establish and maintain our infrastructure of Redbox kiosks in the U.S. Because we have now substantially completed our U.S. build-out of Redbox kiosks, future growth of our Redbox business in the U.S. will depend substantially upon growth in same store sales. As a result, we expect our Redbox business to grow more slowly in the future, compared with our historical experience. In addition, the home video distribution market is rapidly evolving as newer technologies and distribution channels compete for market share, and we face an expected secular decline in the physical rental market. If it does, our business, operating results and financial condition could be materially and adversely affected. Some of the risks that could negatively impact our participation in this industry include:

 

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Increased availability of digital movie content and changes in consumer content delivery and viewing options and preferences, including increased use of online streaming, video-on-demand, subscription video-on-demand and time- and place-shifting technologies;

 

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Decreased quantity and quality of movie content availability for DVD distribution due to changes in quantity of new releases by studios, movie content failing to appeal to consumers’ tastes, increased focus on digital sales and rentals, and other general industry-related factors, including financial disruptions, and labor conflicts;

 

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Due to arrangements with certain studios that provide content on a delayed basis, the availability of some new releases in our kiosks may shift to times when consumers are relatively less likely to rent movies, or may be in genres that are off seasonally, such as a holiday movie unavailable until January; and

 

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Decreased costs for consumers to purchase or receive movie content, including less expensive DVDs, more aggressive competitor pricing strategies and piracy.

Adverse developments relating to any of these risks, as well as others relating to our participation in the home video industry, could significantly affect our business, financial condition and operating results.

 

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Risks Related to the Business

The termination, non-renewal or renegotiation on materially adverse terms of our contracts or relationships with one or more of our significant retailers, studios or game publishers could seriously harm our business, financial condition and results of operations.

The success of our business depends in large part on our ability to maintain contractual relationships with our partners in profitable locations. Certain contract provisions with our partners vary, including product and service offerings, the service fees we are committed to pay, and the ability to cancel the contract upon notice after a certain period of time. For Redbox and Coinstar, we typically enter multi-year kiosk installation agreements that automatically renew until we or the retailer gives notice of termination. Our typical ecoATM agreements with mall operators allow the operators to terminate for convenience with minimal notice. We strive to provide direct and indirect benefits to our partners that are superior to, or competitive with, other providers or systems or alternative uses of the floor space that our kiosks occupy. If we are unable to provide them with adequate benefits, we may be unable to maintain or renew our contractual relationships on acceptable terms, causing our business, financial condition and results of operations to suffer.

We do a substantial amount of our business with certain retailers. For example, we have significant relationships with Wal-Mart Stores, Inc., Walgreen Co., and The Kroger Company, which accounted for approximately 15.5%, 13.7%, and 9.7% of our consolidated revenue from continuing operations, respectively, during 2014. In addition, our ecoATM business is largely concentrated within the largest mall operators in the United States. Although we have had, and expect to continue to have, a successful relationship with these partners, changes to these relationships will continue to occur both in the long and short-term, some of which could adversely affect our business and reputation. For example, our Redbox, Coinstar and ecoATM relationship with Walmart is governed by contracts that provide either party the right to terminate the contracts in their entirety, or as to any store serviced by the contracts, with or without cause, on as little as 90 days’ notice. Cancellation, adverse renegotiation of or other changes to these relationships could seriously harm our business and reputation.

Our business also depends on our ability to obtain adequate content from movie studios and video game publishers. We have entered into licensing agreements with certain studios to provide delivery of their DVDs by the “street date,” the first date on which DVD releases are available to the general public for home entertainment purposes on either a rental or sell-through basis. In addition, we have licensing arrangements with other studios that make DVDs available for rent 28 days after the street date. If we are unable to maintain or renew our current relationships to obtain movie or video game content on acceptable terms, our business, financial condition and results of operations may suffer.

Our inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly thereafter, for home entertainment viewing could adversely affect our Redbox business.

Traditionally, businesses that rented movies in physical formats, such as DVDs, had enjoyed a competitive advantage over other movie distribution rental channels. After the initial theatrical release of a movie, the major studios generally had made their movies available on physical formats for a 30- to 45-day release window before release to other movie distribution rental channels, such as pay-per view, video-on-demand, premium television, basic cable, and network and syndicated television.

However, movie studios are experimenting with this model, including shortening or discontinuing altogether, or otherwise restricting, movie distribution windows, including making video-on-demand or other digital delivery methods available prior to or simultaneous with the physical DVD release. For example, certain movie studios have made new release titles available on video-on-demand or for online purchase on the same date as the DVD release, and certain movies have been made available via premium video-on-demand while they are still in theaters. Further, some studios have implemented restrictions on renting DVDs for weeks following the initial release of the same title for purchase. For example, Redbox has entered into arrangements with certain

 

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studios that include delayed rental windows. Entering into these studio licensing arrangements that contain a delayed rental window may decrease consumer satisfaction and consumer demand, and we may lose consumers to our competitors that offer DVD titles without a delayed rental window. In addition, studios may seek to impose longer delays, or studios that currently provide content on street date may seek similar delays. Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

If we do not manage our content library effectively, our business, financial condition and results of operations could be materially and adversely affected.

A critical element of our Redbox business model is to optimize our library of DVD titles, formats, and copy depth to achieve satisfactory availability rates to meet consumer demand while also maximizing margins. If we do not timely acquire sufficient DVD titles, due to, for example, not correctly anticipating demand, intentionally acquiring fewer copies than needed to fully satisfy demand or the lack of available titles, we may not appropriately satisfy consumer demand, which could decrease consumer satisfaction and we could lose consumers to competitors. Conversely, if we attempt to mitigate this risk and acquire a larger number of copies to achieve higher availability rates for select titles or a wider range of titles, our library utilization would become less efficient and our margins for the Redbox business would be adversely affected. Our ability to accurately predict consumer demand as well as market factors, such as our ability to obtain satisfactory distribution arrangements, may impact our ability to timely acquire appropriate quantities of certain DVD titles. In addition, if we are unable to obtain or maintain favorable terms from our suppliers with respect to such matters as timely movie access, copy depth, formats and product destruction, among others, or if the price of DVDs increases or decreases generally or for certain titles, our library may become unbalanced and our margins may be adversely affected.

Further, the delay in our ability to rent certain studios’ DVD titles pursuant to a delayed rental window may negatively affect consumer satisfaction and demand, and we could lose consumers to our competitors because of the timing of our library.

We have entered into licensing agreements with certain studios to allow rental of their titles on the “street date,” and with other studios to make DVDs available for rent 28 days or more after the street date. Our business, financial condition and results of operations could be materially and adversely affected if these agreements do not provide the expected benefits to us. For example, agreements may require us to license minimum quantities of theatrical and direct-to-video DVDs for rental at our kiosks. If the titles or format provided are not attractive to our consumers, we could be required to purchase too many copies of undesirable titles or an undesirable format, possibly in substantial amounts, which could adversely affect our Redbox business by decreasing consumer demand for offered DVD titles and consumer satisfaction with our services or negatively impacting margins. If studios that do not have a delayed rental window elect to delay the general release of DVDs to the rental market for significant periods after they are released for retail sales, demand for rental of these titles may be adversely affected. In addition, we have incurred, and may continue to incur, additional non-cash increases to operating expenses, which are amortized over the terms of any such arrangements, that also could have a dilutive impact on our stockholders, such as the issuance of equity under certain of our existing studio contracts or to the extent we enter into similar arrangements with other movie studios in the future. Further, if some or all of these agreements prove beneficial but are early terminated, we could be negatively impacted. Moreover, if we cannot maintain similar arrangements in the future with these or other studios or distributors, or these arrangements do not provide the expected benefits to us, our business could suffer.

In addition, if we are unable to comply with, or lack the necessary internal controls to ensure appropriate documentation and tracking of our content library, we may, among other things, violate certain of our studio licensing arrangements, be forced to pay a fee for unaccounted for DVDs and be susceptible to risks of theft and misuse of property, any of which may negatively affect our margins in the Redbox business. Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

 

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Defects, failures or security breaches in and inadequate upgrades of, or changes to, our operating systems could harm our business.

The operation of our business depends on sophisticated software, hardware, and computer networking and communication services that may contain undetected errors or may be subject to failures or complications. These errors, failures or complications may arise particularly when new, changed or enhanced products or services are added. In the past, there have been limited delays and disruptions resulting from upgrading or improving these operating systems. Future upgrades, improvements or changes that may be necessary to expand and maintain our business could result in delays or disruptions or may not be timely or appropriately made, any of which could seriously harm our operations.

Further, certain aspects of the operating systems relating to our business are provided by third parties, including telecommunications. Accordingly, the effectiveness of these operating systems is, to a certain degree, dependent on the actions and decisions of third parties over whom we may have limited control.

Failure to adequately comply with privacy notices, information security policies, standards or legal requirements or to adequately safeguard against breaches of such policies could adversely affect our operations and could damage our business, reputation, financial position and results of operations.

As our business expands to provide new products and services, such as ecoATM and Coinstar Exchange, we are increasing the amount of consumer data that we collect, transfer and retain as part of our business. These activities are subject to laws and regulations, as well as industry standards, in the United States and other jurisdictions in which our products and services are available. These requirements, which often differ materially and sometimes conflict among the many jurisdictions in which we operate, are designed to protect the privacy of consumers’ personal information and to prevent that information from being inappropriately collected, used or disclosed. We maintain and review technical and operational safeguards designed to protect this information and generally require third party vendors and others with whom we work to do so as well. However, despite those safeguards, it is possible that hackers, employees acting contrary to our policies, third-party agents or others could improperly access relevant systems or improperly obtain or disclose data about our consumers, or that we may be determined not to be in compliance with applicable legal requirements and industry standards for data security, such as the Payment Card Industry guidelines. A breach or purported breach of relevant security policies or controls that compromises consumer data or determination of non-compliance with applicable legal requirements, privacy notices or industry standards for data security could expose us to regulatory enforcement actions, civil litigation, card association or other monetary fines or sanctions, or contractual liabilities, limit our ability to provide our products and services, subject us to legal action and related costs and damage our business reputation, financial position, and results of operations.

Our failure to meet consumer expectations with respect to pricing our products and services may adversely affect our business and results of operations.

Demand for our products and services may be sensitive to pricing changes. We evaluate and update our pricing strategies from time to time, and changes we institute may have a significant impact on, among other things, our revenue and net income. For example, in December 2014 the rental price for DVDs increased by 30 cents to $1.50 a day, the price for Blu-ray Discs increased by 50 cents to $2.00 a day, and in January 2015, the rental price for video games increased by $1.00 to $3.00 a day. In the future, other fee increases or pricing changes may deter consumers from using our kiosks or reduce the frequency of their usage.

Payment of increased fees to retailers or other third party service providers could negatively affect our business results.

We face ongoing pricing pressure from our retailers to increase the service fees we pay to them on our products and services or to make other financial concessions to win or retain their business. If we are unable to respond effectively to ongoing pricing-related pressures, we may fail to win or retain certain accounts. Our fee

 

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arrangements are based on our evaluation of unique factors with each retailer, such as total revenue, long-term, non-cancelable contracts, installation of our kiosks in high-traffic, geographic locations and new product and service commitments. Together with other factors, an increase in service fees paid, or other financial concessions made, to our retailers could significantly increase our direct operating expenses in future periods and harm our business. In addition, we accept payment for movie and game rentals through debit and credit card transactions. For these payments, we pay interchange and other fees, which have increased and may increase further over time. Further, because Redbox processes millions of small dollar amount transactions, and interchange fees represent a larger percentage of card processing costs compared to a typical retailer, we are relatively more susceptible to any fee increase. When interchange or other fees increase, it generally raises our operating costs and lowers our profit margins or requires that we charge our customers more for our products and services.

We may be unable to attract new partners, broaden current partner relationships, and penetrate new markets and distribution channels.

To increase our kiosk installations, we need to attract new partners, broaden relationships with current partners, and develop operational efficiencies that make it feasible for us to penetrate lower density markets or new distribution channels, such as Coinstar kiosks in banks and credit unions and ecoATM kiosks in grocery locations. We may be unable to attract new retailers or drive down costs relating to the manufacture, installation or servicing of our kiosks to levels that would enable us to operate profitably in lower density markets or penetrate new distribution channels. If we are unable to do so, our future financial performance could be adversely affected.

Our future operating results may fluctuate.

Our future operating results will depend significantly on our ability to continue to drive new and repeat use of our Redbox and Coinstar kiosks, our ability to develop and commercialize new products and services, such as ecoATM, and the costs incurred to do so, and our ability to successfully integrate acquisitions and other third-party relationships into our operations. Our operating results have a history of fluctuating and may continue to fluctuate based upon many factors, including fluctuations in revenue generated by and operating expenses incurred by our different lines of business, seasonality, the timing of the release slate and the relative attractiveness of the titles available for rent in a particular quarter or year which may have lingering effects in subsequent periods, fluctuations in consumer rental patterns, including the number of movies rented per visit, the type of DVDs they want to rent and for how long, and the level of DVD migration between kiosks.

We have historically experienced seasonality in our revenue from our Redbox segment. December and the summer months have historically been high rental months. April has been a low rental month due, in part, to retail release timing in connection with the Academy award ceremonies and the Easter holiday that historically has provided stronger content and resulted in higher rentals in March. September and October have been low rental months, due, in part, to the beginning of the school year and the introduction of the new fall television season. However, we have entered into licensing agreements with certain studios that contain delayed rental windows. This has shifted the availability of titles affected by the delayed rental windows relative to historic patterns. Seasonal effects, however, may be minimized or increased by the actual release slate and the relative attractiveness of movie titles in a particular quarter or year which may have lingering effects in subsequent periods. Our Coinstar segment generally experiences its highest revenue in the second half of the year due to increased retailer foot traffic and holiday shopping in the fourth quarter and an increase in consumers’ desire for disposable income in the summer months. In our New Ventures segment, seasonality generally peaks during the summer months, declines in the fourth quarter and remains flat into the following quarter before increasing in late February but can be significantly impacted by the timing of new phone releases.

If we cannot manage our growth effectively, we could experience a material adverse effect on our business, financial condition and results of operations.

We have experienced periods of substantial growth in our business, particularly due to Redbox, and more recently, the acquisition of ecoATM. This growth has placed, and may continue to place, significant demands on

 

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our operational, financial and administrative infrastructure and our management. As our operations have grown in size, scope and complexity, we have focused on integrating, as appropriate, and improving and upgrading our systems and infrastructure, both those relating to providing attractive and efficient consumer products and services and those relating to our administration and internal systems, processes and controls. For example, management has had to adapt to and provide for oversight of a more decentralized organization as Redbox and ecoATM operations have remained primarily in Oakbrook Terrace, Illinois, and San Diego, California, respectively, while Outerwall’s corporate headquarters and Coinstar operations have remained in Bellevue, Washington. This integration and expansion of our administration, processes, systems and infrastructure have required us to commit and will continue to cause us to commit, substantial financial, operational and technical resources to managing our business.

Although we believe that the total addressable market for automated kiosks is large, we cannot be certain about its size, the most effective plan for locating kiosks, or the optimum market density. Because the kiosk market and our business model are continually evolving, we have incomplete data and track records for predicting kiosk and market performance in future periods. As a result, we may make errors in predicting and reacting to relevant business trends, which could have a material adverse effect on our business, financial condition and results of operations. For example, we may, among other things, over-install kiosks in certain geographic areas leading to non-accretive installations, and we cannot be certain that historical revenue ramps for new kiosks will be sustainable in the future.

Managing our growth will require significant expenditures and allocation of valuable management and operational resources. If we fail to achieve the necessary level of efficiency in our organization, including otherwise effectively growing our business lines, our business, operating results and financial condition could be harmed.

If we cannot execute on our strategy and offer new automated retail products and services, our business could suffer.

Our strategy is based upon leveraging our core competencies in the automated retail space to provide the consumer with convenience and value and to help retailers drive incremental traffic and revenue. To be competitive, we need to offer new product and service offerings that are accepted by the market and establish third-party relationships necessary to develop and commercialize such product and service offerings. We are exploring new businesses to enter, and new products and services to offer, including through our New Ventures segment; however, the complexities and structures of these new businesses and products could create conflicting priorities, constrain limited resources, and negatively impact our core businesses. We may use our financial resources and management’s time and focus to invest in other companies offering automated retail services, such as our acquisition of ecoATM, we may seek to grow businesses organically, such as our SAMPLEit™ product sampling kiosk venture, or we may seek to offer new products or services on our current kiosks. We may enter into joint ventures through which we may expand our product offerings. Any new business opportunity also may have its own unique risks related to operations, finances, intellectual property, technology, legal and regulatory issues, corporate governance or other challenges, for which we may have limited or no prior experience. In addition, if we fail to timely establish or maintain relationships with significant retailers and suppliers, we may not be able to provide our consumers with desirable new products and services. Further, to develop and commercialize certain new products and services, we will need to create new kiosks or enhance the capabilities of our current kiosks, as well as adapt our related networks and systems through appropriate technological solutions for an automated retail environment, and establish market acceptance of such products or services. We cannot assure you that new products or services that we provide will be successful or profitable.

Acquisitions and investments involve risks that could harm our business and impair our ability to realize potential benefits from such acquisitions and investments.

As part of our business strategy, we have in the past sought, and may in the future seek, to acquire or invest in businesses, products or technologies that we feel could complement or expand our business. For example, in

 

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July 2013, we acquired ecoATM. However, we may be unable to adequately address the financial, legal and operational risks raised by such acquisitions or investments and may not successfully integrate these acquisitions or investments, which could harm our business and prevent us from realizing the projected benefits of the acquisitions and investments. In addition, we may not have the right or power to direct the management or policies of companies we have invested in. Further, the evaluation and negotiation of potential acquisitions and investments, as well as the integration of acquired businesses, divert management time and other resources. Accordingly, we cannot assure you that any particular transaction, even if successfully completed, will ultimately benefit our business. Certain financial and operational risks related to acquisitions and investments that may have a material impact on our business are:

 

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the assumption of known and unknown liabilities of an acquired company, including employee and intellectual property claims and other violations of applicable law;

 

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losses related to acquisitions and investments;

 

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managing relationships with other investors and the companies in which we have made investments, including, in some cases, as minority partner;

 

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reduced liquidity, including through the use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions and investments;

 

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entrance into markets in which we have no direct prior experience, and where we face competition from many other companies, including those having more experience, better financing, or better relationships with others in the industry than we have;

 

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impairment of goodwill and acquired intangible assets arising from our arrangements and investments;

 

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difficulties and expenses in assimilating the operations, products, technology, information systems or personnel of an acquired company, acquired assets or joint ventures;

 

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inability to efficiently divest unsuccessful acquisitions and investments;

 

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stockholder dilution if an acquisition is consummated through an issuance of our securities;

 

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imposition of restrictive covenants and increased debt service obligations that provide us less flexibility in how we operate our business to the extent we borrow to finance an acquisition or investment;

 

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amortization expenses related to acquired intangible assets and other adverse accounting consequences;

 

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costs incurred in identifying and performing due diligence on potential targets and negotiating agreements that may or may not be successful, including payment of break-up fees if transactions are not closed; and

 

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impairment of relationships with employees, retailers and affiliates of our business and the acquired business.

We depend upon third-party manufacturers, suppliers and service providers for key components and substantial support for our kiosks.

We conduct limited manufacturing operations and depend on outside parties to manufacture key components of our kiosks. We intend to continue to expand our installed base of kiosks. Such expansion may be limited by the manufacturing capacity of our third-party manufacturers and suppliers. Third-party manufacturers may not be able to meet our manufacturing needs in a satisfactory and timely manner. If there is an unanticipated increase in demand for our kiosks or our manufacturing needs are not met in a timely and satisfactory manner, we may be unable to meet demand due to manufacturing limitations.

Some key hardware components used in our kiosks are obtained from a limited number of suppliers. We may be unable to continue to obtain an adequate supply of these components from our suppliers in a timely manner or, if necessary, from alternative sources. If we are unable to obtain sufficient quantities of components

 

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from our current suppliers or locate alternative sources of supply on a timely basis, we may experience delays in installing or maintaining our kiosks, either of which could seriously harm our business, financial condition and results of operations.

In addition, we rely on third-party service providers for substantial support and service efforts that we currently do not provide directly. In particular, we contract with third-party providers to arrange for pick-up, processing and depositing of coins, as well as to provide limited servicing of our kiosks. We generally contract with a single transportation provider and coin processor to service a particular region. We do not currently have, nor do we expect to have in the foreseeable future, the internal capability to provide back-up coin processing service in the event of a sudden disruption in service from a commercial coin processor. Any failure by us to maintain our existing coin processing relationships or to establish new relationships on a timely basis or on acceptable terms could harm our business, financial condition and results of operations.

There are risks associated with conducting our business and sourcing goods internationally.

We currently have Coinstar operations in Canada, the United Kingdom and Ireland. We expect to continue our deployment of kiosks internationally. Accordingly, political uncertainties, economic changes, exchange rate fluctuations, restrictions on the repatriation of funds, adverse changes in legal requirements, including tax, tariff and trade regulations, difficulties with foreign distributors, operating challenges and other difficulties in managing an organization outside the United States, could seriously harm the development of our business and ability to operate profitably. For example, in January 2015, we made the decision to shut down our Redbox operations in Canada as the business was not meeting the company’s performance expectations. Further, as we do more business in an increasing number of countries, our business becomes more exposed to the impact of the political and economic uncertainties, including government oversight, of foreign jurisdictions.

We purchase products from vendors that obtain a significant percentage of such products from foreign manufacturers. As a result, we are subject to changes in governmental policies, exchange rate fluctuations, various product quality standards, the imposition of tariffs, import and export controls, transportation delays and interruptions and political and economic disruptions which could disrupt the supply and timely delivery of products manufactured abroad. In addition, we could be affected by labor strikes in the sea shipping, trucking and railroad industries. A reduction or interruption in supplies, or a significant increase in the price of one or more supplies could have a material adverse effect on our business.

We are subject to substantial federal, state, local and foreign laws and government regulation specific to our business.

Our business is subject to federal, state, local and foreign laws and government regulation, including those relating to copyright law, access to kiosks in public places, consumer privacy and protection, data protection and information security, taxes, secondhand dealers, vehicle safety, charitable fundraising, the transfer of money or things of value, coins, currency controls, weights and measures, payment cards and other payment instruments, sweepstakes, and contests. The application of existing laws and regulations, changes in laws or enactment of new laws and regulations, that apply, or may in the future apply, to our current or future products or services, changes in governmental authorities’ interpretation of the application of various government regulations to our business, or the failure or inability to gain and retain required permits and approvals could materially and adversely affect our business.

In addition, many jurisdictions require us to obtain certain licenses in connection with the operations of our businesses. There can be no assurance that we will be granted all necessary licenses or permits in the future, that current licenses or permits will be renewed or that regulators will not revoke current licenses or permits. Given the unique nature of our business and new products and services we may develop or acquire in the future, the application of various laws and regulations to our business is uncertain. Further, as governmental and regulatory scrutiny and action with regard to many aspects of our business increase, we expect that our costs of complying with the applicable legal requirements may increase, perhaps substantially.

 

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ecoATM is subject to secondhand dealer laws that regulate the purchase of used goods, such as the phones it purchases from consumers. Such laws contain requirements, or laws may be amended or enacted to create requirements, with which we cannot comply, thus requiring us to cease operations in certain jurisdictions. Moreover, a few legislatures have in the past enacted secondhand dealer laws which directly target our ecoATM business, or potentially Coinstar Exchange, and restrict or prohibit us from operating. If additional similar laws are enacted at either the state or local level, our ability to operate may be adversely impacted, thereby damaging our business and results of operations.

Also, if U.S. copyright law were altered to amend or eliminate the First Sale Doctrine, our business could be adversely affected. Under U.S. copyright law, the First Sale Doctrine provides that once a copyright owner sells a copy of his work, the copyright owner relinquishes all further rights to sell or otherwise dispose of that copy. While the copyright owner retains the underlying copyright to the expression fixed in the work, the copyright owner gives up his ability to control the fate of the work once sold. As such, once we purchase a DVD in the market, we are permitted to re-sell it, rent it or otherwise dispose of it. Although the majority of our content library is licensed directly from studios, and not purchased, if Congress or the courts were to change, or substantially limit, this First Sale Doctrine, our ability to obtain certain purchased content and then rent it could be adversely affected.

Failure to comply with these laws and regulations could result in, among other things, revocation of required licenses or permits, loss of approved status, termination of contracts, administrative enforcement actions and fines, class action lawsuits, cease and desist orders and civil and criminal liability. The occurrence of one or more of these events, as well as the increased cost of compliance, could materially adversely affect our business, financial condition and results of operations.

Events outside of our control, including the current economic environment, have negatively affected, and could continue to negatively affect, consumers’ use of our products and services.

Our consumers’ use of many of our products and services is dependent on discretionary spending, which is affected by, among other things, economic and political conditions, consumer confidence, interest and tax rates, and financial and housing markets. With economic uncertainty still affecting potential consumers, we may be impacted by more conservative purchasing tendencies with fewer non-essential products and services purchases during the coming periods if the current economic environment continues. In addition, because our business relies in part on consumers initially visiting retailers to purchase products and services that are not necessarily our products and services, if consumers are visiting retailers less frequently and being more careful with their money when they do, these tendencies may also negatively impact our business.

Further, our ability to obtain additional funding in the future, if and as needed, through equity issuances or loans, or otherwise meet our current obligations to third parties, could be adversely affected if the economic environment continues to be difficult. In addition, the ability of third parties to honor their obligations to us could be negatively impacted, as retailers, suppliers and other parties deal with the difficult economic environment. Finally, there may be consequences that will ultimately result from the current economic conditions that are not yet known, and any one or more of these unknown consequences (as well as those currently being experienced) could potentially have a material adverse effect on our financial condition, operating results and liquidity, as well as our business generally.

Our business can be adversely affected by severe weather, natural disasters and other events beyond our control, such as earthquakes, fires, power failures, telecommunication loss and terrorist attacks.

A catastrophic event that results in the destruction or disruption of any of our critical business or information technology systems could harm our ability to conduct normal business operations and our operating results. For example, our corporate headquarters and certain critical business operations are located in the Bellevue, Washington area, which is near major earthquake faults. While we have taken steps to protect the security of critical business processes and systems and have established certain back-up systems and disaster

 

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recovery procedures, any disruptions, whether due to inadequate back-up or disaster recovery planning, failures of information technology systems, interruptions in the communications network, or other factors, could seriously harm our business, financial condition and results of operations.

In addition, our operational and financial performance is a direct reflection of consumer use of and the ability to operate and service our kiosks used in our business. Severe weather, natural disasters and other events beyond our control can, for extended periods of time, significantly reduce consumer use of our products and services as well as interrupt the ability of our employees and third-party providers to operate and service our kiosks. For example, in October 2012, Hurricane Sandy caused disruptions to our normal operations in the impacted region for an extended period of time. In some cases, severe weather, natural disasters and other events beyond our control may result in extensive damage to, or destruction of, our infrastructure and equipment, including loss of kiosks used to provide our products and services, which losses may not be fully covered by insurance.

Our business involves the movement of large sums of money, and, as a result, our business is particularly dependent on our ability to process and settle transactions accurately and efficiently.

Our business involves the movement of large sums of money. Our Coinstar business requires the effective transfer of large sums of money between many different locations. Because we are responsible for large sums of money that often are substantially greater than the revenues generated, the success of our business particularly depends upon the efficient, secure, and error-free handling of the money. We rely on the ability of our employees and our operating systems and network to process these transactions in an efficient, uninterrupted and error-free manner. In the event of a breakdown, catastrophic event, security breach, improper operation or any other event impacting our systems or network or our vendors’ systems or processes, or improper or other actions taken by employees, or third party vendors, we could suffer financial loss, loss of consumers, regulatory sanctions and damage to our reputation.

We may be unable to adequately protect our intellectual property or enforce our patents and other proprietary rights.

Our success depends, in part, on our ability to protect our intellectual property and maintain the proprietary nature of our technology through a combination of patents, trademarks, copyrights, trade secrets, licenses and other intellectual property arrangements. We have over 100 U.S. and international patents. For example, we have patents regarding kiosk systems for DVD rentals, managing credits and security and inventory management related to our Redbox business, and patents regarding coin counting, kiosk networking, fraud avoidance and voucher authentication related to our Coinstar business. We also have patents and other rights in the U.S., Canada and Europe related to our New Venture kiosk technologies, including U.S. patents on kiosk systems for identifying and analyzing electronic devices relating to our ecoATM business. In addition, we may apply for or obtain (through development, acquisition or otherwise) additional patents regarding technologies used in our businesses.

Our patents may not be held valid if challenged, our patent applications may not be issued, and other parties may claim rights in or ownership of our patents and other proprietary rights. Patents issued to us may be circumvented or fail to provide adequate protection of our technologies. Our competitors might independently develop or patent technologies that are substantially equivalent or superior to our technologies. Further, since patent terms are limited, other parties may begin practicing our patented technologies when our related patents expire.

In addition, certain parties may assert claims of patent infringement or misappropriation against us based on current or pending U.S. or foreign patents, copyrights or trade secrets, or contracts. If such claims were successful, our business could be harmed. Defending ourselves, our retailers or other third parties against these types of claims, regardless of their merits, or initiating litigation to enforce our rights, could require us to incur substantial costs, divert the attention of key personnel and result in an award of substantial damages. Parties

 

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making these types of claims may be able to obtain injunctive or other equitable relief, which could effectively block or impair our ability to provide our DVD, coin-counting or New Venture products and services in the U.S. or abroad. If third parties have, or obtain, proprietary rights that our products or services infringe, we may be unable to obtain necessary licenses from others at a reasonable cost or at all. The failure to protect our intellectual property rights effectively or to avoid infringing the intellectual property rights of others, as well as unfavorable rulings or settlements, could seriously harm our business, financial condition and results of operations.

Litigation, arbitration, mediation, regulatory actions, investigations or other legal proceedings could result in material rulings, decisions, settlements, fines, penalties or publicity that could adversely affect our business, financial condition and results of operations.

Our business has in the past been, is currently and may in the future continue to be, party to class actions, regulatory actions, investigations, arbitration, mediation and other legal proceedings. The outcome of such proceedings is often difficult to assess or quantify. Plaintiffs, regulatory bodies or other parties may seek very large or indeterminate amounts of money from us or substantial restrictions on our business activities, and the results, including the magnitude, of lawsuits, actions, settlements, decisions and investigations may remain unknown for substantial periods of time. The cost to defend, settle or otherwise finalize lawsuits, regulatory actions, investigations, arbitrations, mediations or other legal proceedings may be significant and such proceedings may divert management’s time. For example, in recent years we have been involved in consumer class action lawsuits, a securities class action and derivative lawsuit, and studio litigation, as well as other litigation in the ordinary course of business. In addition, there may be adverse publicity associated with any such developments that could decrease consumer acceptance of our products and services. As a result, litigation, arbitration, mediation, regulatory actions or investigations involving us or our affiliates may adversely affect our business, financial condition and results of operations.

The loss of key personnel or the inability of replacements to quickly and successfully perform in their new roles could adversely affect our business.

In recent years, we have experienced significant changes in our senior management team, including changes in the presidents of our business lines in 2013 and 2014 and the departure of our CEO in 2015. Further changes in senior management could result in disruptions to our operations. If we lose or terminate the services of one or more of our current executives or key employees or if one or more of our current or former executives or key employees joins a competitor or otherwise leaves or competes with us, it could harm our business and our ability to successfully implement our business plan. Additionally, if we are unable to timely hire qualified replacements for our executive and other key positions, our ability to execute our business plan could be harmed. Even if we can timely hire qualified replacements, we would expect to experience operational disruptions and inefficiencies during any transition.

Risks Related to Our Indebtedness and the Notes

Our obligations under our substantial debt could adversely affect our cash flow and business.

As of December 31, 2014, the total principal value of our outstanding debt, including capital leases, was $971.6 million. Our level of indebtedness could have important consequences for you, including:

 

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increasing our vulnerability to general adverse economic and industry conditions;

 

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requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, share repurchases, dividends and future business opportunities;

 

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restricting us from making strategic acquisitions or investments or causing us to make non-strategic divestitures;

 

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limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes;

 

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limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate, placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting; and

 

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exposing us to variability in interest rates, as our borrowings under our credit facility bear interest at variable rates determined by prevailing interest rates and our leverage ratio.

If we are unable to meet our debt obligations, we could be forced to restructure or refinance such obligations, seek additional equity financing or sell assets, which we may not be able to do on satisfactory terms or at all. As a result, we could default on those obligations, which could prevent or impede us from fulfilling our obligations and adversely affect our business.

To service or repay our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on our indebtedness, including without limitation any payments required to be made to holders of the Notes or our 6.000% Senior Notes due 2019 (the “2019 Notes”) or under our credit facility, and to fund our operations, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness when due or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, reduce or delay capital expenditures, seek additional equity financing or seek other third-party financing to satisfy such obligations. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Our failure to fund indebtedness obligations at any time could constitute an event of default under the instruments governing such indebtedness, and could trigger a cross default under our other outstanding debt, which could result in an acceleration of such indebtedness.

If we do not comply with the covenants in the credit agreement that governs our credit facility and the indentures that govern the Notes and the 2019 Notes or otherwise default under them, we may not have the funds necessary to pay all of our indebtedness that could become due.

The credit agreement governing our credit facility and the indentures governing the Notes and our 2019 Notes will require us to comply with certain covenants that may limit our ability to engage in activities that may be in our long-term best interests. For example, our credit agreement prohibits us from incurring any additional indebtedness, except in specified circumstances, without lender approval. Further, our credit agreement restricts our ability to acquire and dispose of assets, engage in mergers or reorganizations, pay dividends or make investments or capital expenditures. Other restrictive covenants require that we meet a maximum consolidated net leverage ratio and a minimum consolidated interest coverage ratio, each as defined in our credit agreement. A violation of any of these covenants could cause an event of default under our credit agreement, which could result in the acceleration of our outstanding indebtedness.

Our failure to comply with these covenants or others under our indentures could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness, which would adversely affect our financial health. We cannot assure you that we would have sufficient funds to repay all the outstanding amounts, and any acceleration of amounts due under our credit agreement or the indentures governing our outstanding indebtedness likely would have a material adverse effect on us.

 

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Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional debt. This could further increase the risks associated with our substantial leverage.

The terms of the indenture that will govern the Notes will permit us to incur additional indebtedness under certain circumstances. The indenture governing the 2019 Notes does not necessarily limit our ability to incur debt. In addition, the credit agreement governing our credit facility permits us to incur additional indebtedness beyond the amounts outstanding under our term loan and amounts available under our revolving credit facility. As of December 31, 2014, we had $440.0 million of availability (not giving effect to $6.4 million of undrawn standby letters of credit) under our revolving credit facility. If we incur additional indebtedness, the related risks that we now face could increase.

We may not be able to satisfy our obligations to holders of the Notes upon a change of control.

In the event of a change of control, each holder of the Notes may require us to purchase all or a portion of its Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest (and additional interest, if any) thereon to the date of purchase. However, certain events involving a change of control will result in an event of default under our credit facility and may result in an event of default under other indebtedness that we may have at the time of any such event. In addition, the purchase of the Notes or our 2019 Notes prior to their stated maturity would be an event of default under our credit facility unless, after giving effect to the relevant cash payment, we would be in pro forma compliance with certain financial covenants. An event of default under our credit facility or other indebtedness could result in an acceleration of such indebtedness and a cross default and acceleration of indebtedness under the Notes and our 2019 Notes. We cannot assure you that we would be able to repay such accelerated indebtedness or obtain necessary consents under the credit facility to avoid an event of default and be able to repurchase the Notes in connection with a change in control.

The change of control provision in the indenture that will govern the Notes may not protect you in the event we consummate a highly leveraged transaction, reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a change of control under the indenture. Such a transaction may not involve a change in voting power or beneficial ownership or, even if it does, may not involve a change of the magnitude required under the definition of change of control in the indenture to trigger our obligation to repurchase the Notes. Except as described above, the indenture does not contain provisions that permit the holders of the Notes to require us to repurchase or redeem such Notes in an event of a takeover, recapitalization or similar transaction.

We rely on our subsidiaries for a portion of our operating funds, and our subsidiaries have no obligation to supply us with any funds.

We conduct some of our operations through subsidiaries, including Redbox, and are dependent to a certain extent on our subsidiaries for the funds we need to operate and repay our debt obligations. We will be dependent to a certain extent on the transfer of funds from our subsidiaries to make the payments due under the Notes and our other indebtedness. Each of our subsidiaries is a distinct legal entity and has no obligation, contingent or otherwise, to transfer funds to us. Our ability to pay the Notes, and the ability of our subsidiaries to transfer funds to us, could be restricted by the terms of subsequent financings.

Your right to receive payments on the Notes will be effectively junior to the lenders under our credit facility.

Our obligations under the Notes and the guarantors’ obligations under their guarantees of the Notes will be unsecured. As a result, the Notes and any related guarantees will be effectively subordinated to all of our and the guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness. The credit facility is secured by a first priority security interest in substantially all of our assets and the assets of our domestic subsidiaries, as well as a pledge of a substantial portion of our equity interests in our subsidiaries. In the event that we or a guarantor are declared bankrupt, become insolvent or are liquidated or reorganized, our obligations under our credit facility and any other secured obligations will be entitled to be paid in full from our

 

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assets or the assets of such guarantor pledged as security for such obligation before any payment may be made with respect to the Notes. Holders of the Notes would participate ratably in our remaining assets or the remaining assets of the guarantors with all holders of unsecured indebtedness that are deemed to rank equally with the Notes, based upon the respective amount owed to each creditor. In addition, if we default under our credit facility, the lenders could declare all of the funds borrowed thereunder, together with accrued interest, immediately due and payable. If we were unable to repay such indebtedness, the lenders could foreclose on the pledged assets to the exclusion of holders of the Notes, even if an event of default exists under the indenture under which the Notes were issued at such time. In any such event, because the Notes will not be secured by any of our assets or any equity interests in subsidiary guarantors, it is possible that there would be no assets remaining from which your claims could be satisfied or, if any assets remained, they might be insufficient to satisfy your claims fully.

As of December 31, 2014, we had $321.6 million of secured indebtedness, of which $306.2 million was indebtedness under our credit facility (which does not include additional borrowing availability under our revolving line of credit) and $15.4 million was capital lease obligations. Further, the indenture governing the Notes permits the incurrence of substantial additional indebtedness by us and our subsidiaries in the future, including secured indebtedness, subject to certain restrictions. Any secured indebtedness incurred would rank senior to the Notes to the extent of the value of the collateral securing such indebtedness.

The Notes will be structurally subordinated to all liabilities of our non-guarantor subsidiaries.

The Notes will be structurally subordinated to the indebtedness and other liabilities of our existing and future subsidiaries that do not guarantee the Notes. Our non-guarantor subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Notes, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Any right that we or any guarantors have to receive any assets of any nonguarantor subsidiaries upon the liquidation or reorganization of those subsidiaries, and the consequent rights of holders of Notes to realize proceeds from the sale of any of those subsidiaries’ assets, will be structurally subordinated to the claims of those subsidiaries’ creditors, including trade creditors. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiaries, such non-guarantor subsidiaries will pay the holders of their indebtedness, holders of preferred equity interests, if any, and their trade creditors before they will be able to distribute any of their assets to us to satisfy obligations under the Notes and our other indebtedness. The credit agreement that governs our credit facility permits, and the indentures that govern the Notes and the 2019 Notes permit, our non-guarantor subsidiaries to incur additional indebtedness, subject to certain limits, and will not limit their ability to incur liabilities that do not constitute indebtedness, as defined in such agreements.

Our non-guarantor subsidiaries generated approximately 2.6% and 0.9% of our consolidated revenues and operating income, respectively, for the year ended December 31, 2014 and approximately 2.2% of our consolidated revenues and an operating loss of $14.0 million, which represented approximately 5.4% of our operating income on an absolute value basis, for the year ended December 31, 2013. As of December 31, 2014, our non-guarantor subsidiaries had $92.9 million in total assets and $21.0 million in total outstanding liabilities (including capital lease obligations but excluding intercompany liabilities).

A ratings agency downgrade could lead to increased borrowing costs and credit stress.

If one or more rating agencies that rate the Notes either assigns the Notes a rating lower than the rating expected by the investors in the Notes or reduces its rating in the future, the market price of the Notes, if any, would be adversely affected. In addition, if any of our outstanding debt that is rated is downgraded, raising capital will become more difficult for us, borrowing costs under our credit facility and other future borrowings may increase and the market price of the Notes, if any, may decrease.

 

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If the Notes receive an investment grade rating, many of the covenants in the indenture governing the Notes will be suspended, thereby reducing some of your protections in the indenture.

If at any time the Notes receive investment grade ratings from both Standard & Poor’s Rating Services and Moody’s Investor Services, subject to certain additional conditions, many of the covenants in the indenture governing the Notes, applicable to us and our restricted subsidiaries, including the limitations on indebtedness and disqualified capital stock and restricted payments, will be suspended. While these covenants will be reinstated if we fail to maintain investment grade ratings on the Notes or in the event of a continuing default or event of default thereunder, during the suspension period holders of the Notes will not have the protection of these covenants and we will have greater flexibility to incur indebtedness and make restricted payments.

Federal and state fraudulent transfer laws permit a court to void the Notes and the related guarantees, and, if that occurs, you may not receive any payments on the Notes.

The issuance of the Notes and the related guarantees may be subject to review under federal and state fraudulent transfer and conveyance statutes. While the relevant laws may vary from state to state, under such laws the payment of consideration will be a fraudulent conveyance if (i) we paid the consideration with the intent of hindering, delaying or defrauding creditors or (ii) we or any of our guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for issuing either the Notes or a related guarantee and, in the case of (ii) only, one of the following is also true:

 

•

we or any of our guarantors were insolvent or rendered insolvent by reason of the incurrence of the indebtedness; or

 

•

payment of the consideration left us or any of our guarantors with an unreasonably small amount of capital to carry on the business; or

 

•

we or any of our guarantors intended to, or believed that we or it would, incur debts beyond our or its ability to pay as they mature.

If a court were to find that the issuance of the Notes or a related guarantee was a fraudulent conveyance, the court could void the payment obligations under such Notes or such guarantee or subordinate such Notes or such guarantee to presently existing and future indebtedness of ours or such guarantor, or require the holders of such Notes to repay any amounts received with respect to such Notes or such guarantee. In the event of a finding that a fraudulent conveyance occurred, you may not receive any repayment on the Notes.

Further, the voidance of the Notes could result in an event of default with respect to our other debt and that of our guarantors that could result in acceleration of such debt.

Generally, an entity would be considered insolvent if at the time it incurred indebtedness:

 

•

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets; or

 

•

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts and liabilities, including contingent liabilities, as they become absolute and mature; or

 

•

it could not pay its debts as they become due.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time, or regardless of the standard that a court uses, that the issuance of the Notes and the related guarantees would not be subordinated to our or any guarantor’s other debt.

If the guarantees were legally challenged, any guarantee could also be subject to the claim that, since the guarantee was incurred for our benefit, and only indirectly for the benefit of the guarantor, the obligations of the

 

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applicable guarantor were incurred for less than fair consideration. A court could thus void the obligations under the guarantees, subordinate them to the applicable guarantor’s other debt or take other action detrimental to the holders of the Notes.

Your ability to transfer the Notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market will develop for such Notes.

We do not intend to have the original notes or the exchange notes listed on a national securities exchange or included on any automated dealer quotation system. Certain of the initial purchasers have advised us that they intend to make a market in the original notes and the exchange notes as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in any of the original notes or the exchange notes, and they may discontinue their market-making activities at any time without notice. Furthermore, such market-making activity will be subject to limits imposed by the Securities Act and the Exchange Act of 1934, as amended (the “Exchange Act”) and may be limited during the exchange offer or while the effectiveness of a shelf registration statement is pending. Therefore, we cannot assure you as to the development or liquidity of any trading market for the Notes. Accordingly, you may be required to bear the financial risk of your investment in the Notes indefinitely. If a trading market were to develop, the liquidity of any market for the Notes will depend on any number of factors, including:

 

•

the number of holders of Notes;

 

•

our operating performance and financial condition;

 

•

industry, markets, political and economic developments;

 

•

our ability to complete the offer to exchange the original notes for the exchange notes;

 

•

the market for similar securities;

 

•

the interest of securities dealers in making a market in the original notes or the exchange notes, if issued; and

 

•

prevailing interest rates.

Historically, the market for non-investment-grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Notes. We cannot assure you that the market, if any, for the Notes will be free from similar disruptions or that any such disruptions may not adversely affect the prices at which you may sell your Notes. You may not be able to sell your Notes at a particular time, and the price you receive when you sell may not be favorable. In addition, subsequent to their initial issuance, the Notes may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar notes, our performance, and other factors.

In addition, any original note holder who tenders in the exchange offer for the purpose of participating in a distribution of the Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

PRIVATE PLACEMENT

We issued $300.0 million in principal amount of the original notes on June 9, 2014 to the initial purchasers of those original notes and received proceeds that after deducting expenses and commissions represented an aggregate of approximately $294.0 million in net proceeds. We issued the original notes to the initial purchasers in transactions exempt from or not subject to registration under the Securities Act. The initial purchasers then offered and resold the original notes to qualified institutional buyers in compliance with Rule 144A or non-U.S. persons in compliance with Regulation S under the Securities Act.

 

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USE OF PROCEEDS

We are making the exchange offer to satisfy our obligations under the original notes, the indenture and the registration rights agreement. We will not receive any cash proceeds from the exchange offer. In consideration of issuing the exchange notes in the exchange offer, we will receive an equal principal amount of original notes. Any original notes that are properly tendered and accepted in the exchange offer will be canceled.

RATIO OF EARNINGS TO FIXED CHARGES

For purposes of computing the ratio of earnings to fixed charges, earnings represent pre-tax income (loss) from continuing operations before adjustments for non-controlling interests in consolidated subsidiaries or income (loss) from equity investees plus distributed income of equity investees, plus fixed charges. Fixed charges represent the sum of interest expenses, including amortization of deferred financing costs, amortization of debt discounts, and the assumed interest component of rental expenses.

The following table sets forth our ratio of earnings to fixed charges for each period indicated (unaudited):

 

		Year Ended December 31,
		2014				2013				2012				2011				2010
Ratio of Earnings to Fixed Charges (1)			4.79				8.24				13.14				7.90				4.16

 

(1)	During the periods covered by this table, we did not have any shares of preferred stock outstanding.

 

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2014.

The information in this table is derived from and should be read together with our historical consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which is incorporated herein by reference. You should also read this table in conjunction with the information contained in the “Use of Proceeds,” included elsewhere in this prospectus.

 

		As of December 31, 2014
		(in millions)
Cash and equivalents (1)		$	242.7
Debt
Revolving line of credit (2)			160.0
Term Loan			146.2
6.000% Senior Notes due 2019			350.0
5.875% Senior Notes due 2021 (the original notes)			300.0
Capital leases			15.4
Total debt (including capital leases)			971.6
Stockholders’ equity:
Total equity			97.4
Total capitalization			1,069.0

 

(1)

Cash and cash equivalents include $81.7 million that we identified for settling our accrued payable to our retail partners in relation to our Coinstar kiosks. Also separately included in our cash and cash equivalents is $66.5 million as of December 31, 2014 of cash and cash equivalents held in financial institutions domestically.

(2)	As of December 31, 2014, we had $440.0 million of availability under our revolving line of credit not giving effect to $6.4 million of undrawn standby letters of credit.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following tables set forth selected consolidated financial information of Outerwall as of and for the years ended December 31, 2014, 2013, 2012, 2011, and 2010. The selected consolidated financial information of Outerwall as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012, is derived from the audited consolidated financial statements of Outerwall incorporated by reference in this prospectus. The selected consolidated financial information of Outerwall as of December 31, 2012, 2011, and 2010, and for the years ended December 31, 2011 and 2010, are derived from the audited consolidated financial statements of Outerwall not incorporated by reference in this prospectus. The selected consolidated financial information below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2014, which are incorporated by reference herein.

 

(In thousands)		Year Ended December 31,
Statement of Net Income Data		2014				2013				2012				2011				2010
Revenue		$	2,303,003			$	2,306,601			$	2,199,884			$	1,844,046			$	1,435,721
Operating income		$	248,377			$	260,968			$	279,405			$	223,014			$	153,064
Income from continuing operations		$	107,386			$	208,091			$	160,452			$	122,934			$	71,964
Loss from discontinued operations, net of tax (1)		$	(768	)		$	(33,299	)		$	(10,222	)		$	(19,051	)		$	(20,956	)
Net income		$	106,618			$	174,792			$	150,230			$	103,883			$	51,008
		As of December 31,
Balance Sheet Data		2014				2013				2012				2011				2010
Cash and cash equivalents		$	242,696			$	371,437			$	282,894			$	341,855			$	183,416
Total assets		$	1,583,319			$	1,891,383			$	1,561,725			$	1,450,837			$	1,265,598
Total debt, capital lease obligations and other long term liabilities		$	994,085			$	785,292			$	385,760			$	397,099			$	377,321
Common stock		$	473,592			$	482,481			$	504,881			$	481,249			$	434,169
Total stockholders’ equity		$	97,378			$	518,689			$	549,088			$	513,902			$	426,009

 

(1)	Discontinued operations for all periods presented includes the results of operations from:

 

•

four ventures previously included in our New Ventures operating segment, Orango, Rubi, Crisp Market, and Star Studio, which were discontinued during 2013;

 

•

our Money Transfer Business, which we met the criteria to classify as a discontinued operation in the second quarter of 2010 and sold in June 2011;

 

•

our E-Payment Business, which was sold in the second quarter of 2010; and

 

•

our Entertainment Business, which was sold in the third quarter of 2009.

 

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

In connection with the sale of the original notes, we entered into a registration rights agreement (the “registration rights agreement”) with the initial purchasers of the original notes. In that agreement, we agreed to file a registration statement relating to an offer to exchange the original notes for the exchange notes. We also agreed to use our reasonable best efforts to have the SEC declare that registration statement effective by June 4, 2015. We are offering the exchange notes under this prospectus in an exchange offer for the original notes to satisfy our obligations under the registration rights agreement. We refer to our offer to exchange the exchange notes for the original notes as the “exchange offer.”

Resale of Exchange Notes

Based on interpretations by the staff of the SEC, as described in no-action letters issued to third parties that are not related to us, we believe the exchange notes will be freely transferable by holders other than our affiliates after the exchange offer without further registration under the Securities Act if the holder of the exchange notes represents to us in the exchange offer that it is acquiring the exchange notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in the distribution of the exchange notes and that it is not our affiliate, as such terms are interpreted by the SEC; provided, however, that broker-dealers (“Participating Broker-Dealers”) receiving exchange notes in the exchange offer will have a prospectus delivery requirement with respect to resales of such exchange notes. We also believe that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to exchange notes (other than a resale of an unsold allotment from the original sale of the Notes) with this prospectus.

If you tender your original notes in the exchange offer with the intention of participating in any manner in a distribution of the exchange notes, you:

 

•

cannot rely on such interpretations of the SEC staff; and

 

•

must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the exchange notes.

Unless an exemption from registration is otherwise available, the resale by any security holder intending to distribute exchange notes should be covered by an effective registration statement under the Securities Act containing the selling security holder’s information required under the Securities Act. This prospectus may be used for an offer to resell, a resale or other retransfer of exchange notes only as specifically described in this prospectus. Each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

Terms of the Exchange Offer

Upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any original notes properly tendered and not withdrawn prior to the expiration time of the exchange offer. We will issue $1,000 principal amount of exchange notes in exchange for each $1,000 principal amount of original notes surrendered under the exchange offer and accepted by us. Original notes may be tendered only in integral multiples of $1,000, subject to a $2,000 minimum, and untendered original notes may only be in a minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof.

The terms of the exchange notes are identical in all material respects to those of the original notes, except the exchange notes will not be subject to transfer restrictions and holders of the exchange notes, with limited exceptions, will have no registration rights. Also, the exchange notes will not include provisions contained in the

 

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original notes that required payment of liquidated damages in the event we failed to satisfy our registration obligations with respect to the original notes. The exchange notes will be issued under and entitled to the benefits of the same indenture that authorized the issuance of the outstanding original notes.

The exchange offer is not conditioned on any minimum aggregate principal amount of original notes being tendered for exchange.

As of the date of this prospectus, $300.0 million principal amount of original notes are outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of the original notes. There will be no fixed record date for determining registered holders of the original notes entitled to participate in the exchange offer.

We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Exchange Act, and the SEC rules and regulations. Original notes that are not tendered for exchange in the exchange offer:

 

•

will remain outstanding,

 

•

will continue to accrue interest, and

 

•

will be entitled to the rights and benefits that holders have under the indenture relating to such notes and, under limited circumstances, the registration rights agreement.

We will be deemed to have accepted for exchange properly tendered original notes when we have given oral or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the registration rights agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us. We will issue the exchange notes promptly after the expiration of the exchange offer.

If you tender original notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read “—Fees and Expenses” for more details about fees and expenses incurred in the exchange offer.

We will return any original notes that we do not accept for exchange for any reason without expense to the tendering holder as promptly as practicable after the expiration or termination of the exchange offer.

Expiration Time

The exchange offer will expire at 5:00 p.m., New York City time, on                     , 2015, unless at our sole discretion we extend the offer.

Extensions, Delay in Acceptance, Termination or Amendment

We expressly reserve the right, at any time or at various times, to extend the period of time during which the exchange offer is open. We may delay acceptance for exchange of any original notes by giving oral or written notice of the extension to their holders. During any such extensions, all original notes you have previously tendered will remain subject to the exchange offer for that series, and we may accept them for exchange.

To extend the exchange offer, we will notify the exchange agent orally or in writing (if oral to be promptly confirmed in writing) of any extension. We also will make a public announcement of the extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration time.

If any of the conditions described below under “—Conditions to the Exchange Offer” have not been satisfied with respect to the exchange offer, we reserve the right, at our sole discretion:

 

•

to extend the exchange offer,

 

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•

to delay accepting for exchange any original notes, or

 

•

to terminate the exchange offer.

We will give oral or written notice (if oral to be promptly confirmed in writing) of such extension, delay or termination to the exchange agent. Subject to the terms of the registration rights agreement, we also reserve the right to amend the terms of the exchange offer in any manner.

Any such extension, delay in acceptance, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders of the original notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose that amendment by means of a prospectus supplement. We will distribute the supplement to the registered holders of the original notes. Depending on the significance of the amendment and the manner of disclosure to the registered holders, we may extend, pursuant to the terms of the registration rights agreement and the requirements of federal securities law, the exchange offer if the exchange offer would otherwise expire during such period.

Without limiting the manner in which we may choose to make public announcements of any extension, delay in acceptance, termination or amendment of the exchange offer, we have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency.

Conditions to the Exchange Offer

Notwithstanding any other provision of the exchange offer and subject to the terms of the registration rights agreement, we will not be required to accept for exchange, or to issue exchange notes in exchange for, any original notes and may terminate or amend the exchange offer, if at any time before the expiration time of the exchange offer any of the following events occur:

 

•

any injunction, order or decree has been issued by any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer; or

 

•

the exchange offer violates any applicable law or any applicable interpretation of the staff of the SEC.

In addition, we will not be obligated to accept for exchange the original notes of any holder that has not made to us:

 

•

the representations described under “—Procedures for Tendering” and “Plan of Distribution,” and

 

•

such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registering the exchange notes under the Securities Act.

We expressly reserve the right to amend or terminate the exchange offer notwithstanding the satisfaction of the foregoing, and to reject for exchange any original notes upon the occurrence of any of the conditions to the exchange offer specified above. We will give oral or written notice of any extension, non-acceptance, termination or amendment to the holders of the original notes as promptly as practicable.

These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times at our sole discretion. Our failure at any time to exercise any of these rights will not mean that we have waived our rights. Each right will be deemed an ongoing right that we may assert at any time or at various times. If we waive a condition, we may be required in order to comply with applicable securities laws, to extend the expiration time of the exchange offer.

In addition, we will not accept for exchange any original notes tendered, and will not issue exchange notes in exchange for any such original notes, if at such time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture relating to the Notes under the Trust Indenture Act of 1939.

 

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Procedures for Tendering

How to Tender Generally

Only a holder of the original notes as determined by our records or those of U.S. Bank National Association, as Trustee or DTC may tender original notes in the exchange offer. To tender in the exchange offer, a holder must either (1) comply with the procedures for physical tender or (2) comply with the automated tender offer program procedures of DTC, described below.

To complete a physical tender, a holder must:

 

•

complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal,

 

•

have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires,

 

•

mail or deliver the letter of transmittal or facsimile to the exchange agent prior to the expiration time, and

 

•

deliver the original notes to the exchange agent prior to the expiration time or comply with the guaranteed delivery procedures described below.

To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at its address provided above under “Prospectus Summary—The Exchange Agent” prior to the expiration time.

To complete a tender through DTC’s automated tender offer program, the exchange agent must receive, prior to the expiration time, a timely confirmation of book-entry transfer of such original notes into the exchange agent’s account at DTC according to the procedure for book-entry transfer described below or a properly transmitted agent’s message.

The tender by a holder that is not withdrawn prior to the expiration time and our acceptance of that tender will constitute an agreement between the holder and us in accordance with the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

THE METHOD OF DELIVERY OF ORIGINAL NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK. RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION TIME. YOU SHOULD NOT SEND THE LETTER OF TRANSMITTAL OR ORIGINAL NOTES TO US. YOU MAY REQUEST YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.

How to Tender if You Are a Beneficial Owner

If you beneficially own original notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender those original notes, you should contact the registered holder as soon as possible and instruct the registered holder to tender on your behalf. If you are a beneficial owner and wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your original notes, either:

 

•

make appropriate arrangements to register ownership of the original notes in your name, or

 

•

obtain a properly completed bond power from the registered holder of your original notes.

The transfer of registered ownership may take considerable time and may not be completed prior to the expiration time.

 

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Signatures and Signature Guarantees

You must have signatures on a letter of transmittal or a notice of withdrawal described below under “—Withdrawal of Tenders” guaranteed by an eligible institution unless the original notes are tendered:

 

•

by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal, or

 

•

for the account of an eligible institution.

An “eligible institution” is a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act, that is a member of one of the recognized signature guarantee programs identified in the letter of transmittal.

When Endorsements or Bond Powers Are Needed

If a person other than the registered holder of any original notes signs the letter of transmittal, the original notes must be endorsed or accompanied by a properly completed bond power. The registered holder must sign the bond power as the registered holder’s name appears on the original notes. An eligible institution must guarantee that signature.

If the letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, they also must submit evidence satisfactory to us of their authority to deliver the letter of transmittal.

Tendering Through DTC’s Automated Tender Offer Program

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s automated tender offer program to tender. Accordingly, participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the original notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent’s message to the exchange agent.

An agent’s message is a message transmitted by DTC to and received by the exchange agent and forming part of the book-entry confirmation, stating that:

 

•

DTC has received an express acknowledgment from a participant in DTC’s automated tender offer program that is tendering original notes that are the subject of such book-entry confirmation;

 

•

the participant has received and agrees to be bound by the terms of the letter of transmittal, or, in the case of an agent’s message relating to guaranteed delivery, the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and

 

•

we may enforce the agreement against such participant.

Determinations Under the Exchange Offer

We will determine at our sole discretion all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered original notes and withdrawal of tendered original notes. Our determination will be final and binding. We reserve the absolute right to reject any original notes not properly tendered or any original notes our acceptance of which, in the opinion of our counsel, might be unlawful. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties.

 

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Unless waived, any defects or irregularities in connection with tenders of original notes must be cured within such time as we determine. Neither we, the exchange agent nor any other person will be under any duty to give notification of defects or irregularities with respect to tenders of original notes, nor will we or those persons incur any liability for failure to give such notification. Tenders of original notes will not be deemed made until such defects or irregularities have been cured or waived. Any original notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration time.

When We Will Issue Exchange Notes

In all cases, we will issue exchange notes for original notes that we have accepted for exchange in the exchange offer only after the exchange agent timely receives:

 

•

original notes or a timely book-entry confirmation of transfer of such original notes into the exchange agent’s account at DTC, and

 

•

a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

Return of Original Notes Not Accepted or Exchanged

If we do not accept any tendered original notes for exchange for any reason described in the terms and conditions of the exchange offer or if original notes are submitted for a greater principal amount than the holder desires to exchange, we will return the unaccepted or non-exchanged original notes without expense to their tendering holder. In the case of original notes tendered by book-entry transfer into the exchange agent’s account at DTC according to the procedures described below, such non-exchanged original notes will be credited to an account maintained with DTC. These actions will occur as promptly as practicable after the expiration or termination of the exchange offer.

Your Representations to Us

By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

 

•

any exchange notes that you receive will be acquired in the ordinary course of your business;

 

•

you have no arrangement or understanding with any person to participate in the distribution of the exchange notes;

 

•

you are not our “affiliate,” as defined in Rule 405 under the Securities Act;

 

•

if you are not a broker-dealer, you are not engaged in and do not intend to engage in the distribution of the exchange notes; and

 

•

if you are a broker-dealer, that you will receive exchange notes for your own account in exchange for original notes that were acquired as a result of market-making activities or other trading activities and that you will deliver a prospectus in connection with any resale of such exchange notes.

Book-Entry Transfer

The exchange agent will make a request to establish an account with respect to the original notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution participating in DTC’s system may make book-entry delivery of original notes by causing DTC to transfer such original notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. If you are unable to deliver confirmation of the book-entry tender of your original notes into the exchange agent’s account at DTC or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration time, you must tender your original notes according to the guaranteed delivery procedures described below.

 

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Guaranteed Delivery Procedures

If you wish to tender your original notes but they are not immediately available or if you cannot deliver your original notes, the letter of transmittal or any other required documents to the exchange agent, or comply with the applicable procedures under DTC’s automated tender offer program prior to the expiration time, you may tender if:

 

•

the tender is made through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution;

 

•

prior to the expiration time, the exchange agent receives from such member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., commercial bank or trust company having an office or correspondent in the United States, or eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery by facsimile transmission, mail or hand delivery or a properly transmitted agent’s message and notice of guaranteed delivery:

 

•

stating your name and address, the registered number(s) of your original notes and the principal amount of original notes tendered,

 

•

stating that the tender is being made thereby, and

 

•

guaranteeing that, within three New York Stock Exchange trading days after the expiration time, the letter of transmittal or facsimile thereof or agent’s message in lieu thereof, together with the original notes or a book-entry confirmation, and any other documents required by the letter of transmittal will be deposited by the eligible guarantor institution with the exchange agent; and

 

•

the exchange agent receives such properly completed and executed letter of transmittal or facsimile or agent’s message, as well as all tendered original notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, within three New York Stock Exchange trading days after the expiration time.

Upon request to the exchange agent, the exchange agent will send a notice of guaranteed delivery to you if you wish to tender your original notes according to the guaranteed delivery procedures described above.

Resales

Each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

Withdrawal of Tenders

Except as otherwise provided in this prospectus, you may withdraw your tender at any time prior to the expiration time.

For a withdrawal to be effective:

 

•

the exchange agent must receive a written notice of withdrawal at one of the addresses listed above under “Prospectus Summary—The Exchange Agent,” and

 

•

the withdrawing holder must comply with the appropriate procedures of DTC’s automated tender offer program.

Any notice of withdrawal must:

 

•

specify the name of the person who tendered the original notes to be withdrawn,

 

•

identify the original notes to be withdrawn, including the registration number or numbers and the principal amount of such original notes,

 

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•

be signed by the person who tendered the original notes in the same manner as the original signature on the letter of transmittal used to deposit those original notes or be accompanied by documents of transfer sufficient to permit the trustee to register the transfer in the name of the person withdrawing the tender, and

 

•

specify the name in which such original notes are to be registered, if different from that of the person who tendered the original notes.

If original notes have been tendered under the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn original notes and otherwise comply with the procedures of DTC.

We will determine all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal, and our determination shall be final and binding on all parties. We will deem any original notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer.

Any original notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder, or, in the case of original notes tendered by book-entry transfer into the exchange agent’s account at DTC according to the procedures described above, such original notes will be credited to an account maintained with DTC for the original notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. You may retender properly withdrawn original notes by following one of the procedures described under “—Procedures for Tendering” at any time on or prior to the expiration time.

Fees And Expenses

We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitation by facsimile, email, telephone or in person by our officers and regular employees and those of our affiliates.

We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the original notes and in handling or forwarding tenders for exchange.

We will pay cash expenses to be incurred in connection with the exchange offer. They include:

 

•

SEC registration fees for the exchange notes,

 

•

fees and expenses of the exchange agent and the trustee,

 

•

accounting and legal fees,

 

•

printing costs, and

 

•

related fees and expenses.

 

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Transfer Taxes

If you tender your original notes for exchange, you will not be required to pay any transfer taxes. We will pay all transfer taxes, if any, applicable to the exchange of original notes in the exchange offer. The tendering holder will, however, be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

 

•

certificates representing exchange notes or original notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the original notes tendered,

 

•

tendered original notes are registered in the name of any person other than the person signing the letter of transmittal, or

 

•

a transfer tax is imposed for any reason other than the exchange of original notes for exchange notes in the exchange offer.

If satisfactory evidence of payment of any transfer taxes payable by a tendering holder is not submitted with the letter of transmittal, the amount of the transfer taxes will be billed directly to that tendering holder. The exchange agent will retain possession of exchange notes with a face amount equal to the amount of the transfer taxes due until it receives payment of the taxes.

Accounting Treatment

We will record the exchange notes at the same carrying value as the original notes as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any material gain or loss for accounting purposes upon completion of the exchange offer.

Consequences of Failure to Exchange

If you do not exchange your original notes for exchange notes in the exchange offer, you will remain subject to the existing restrictions on transfer of the original notes. In general, you may not offer or sell the original notes unless either they are registered under the Securities Act or the offer or sale is exempt from or not subject to registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the original notes under the Securities Act. We generally have no obligation to re-offer to exchange the exchange notes for original notes following the expiration of the exchange offer.

The tender of original notes in the exchange offer will reduce the outstanding principal amount of the original notes. Due to the corresponding reduction in liquidity, this may have an adverse effect on, and increase the volatility of, the market price of any original notes that you continue to hold.

Other

Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial, legal, and tax advisors in making your decision on what action to take. In the future, we may at our discretion seek to acquire untendered original notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plan to acquire any original notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered original notes, except as required by the registration rights agreement.

 

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DESCRIPTION OF NOTES

We will issue the exchange notes pursuant to an indenture dated as of June 9, 2014, among us, our subsidiaries acting as Guarantors and U.S. Bank National Association, as trustee (the “indenture”).

You can find the definitions of certain terms used in this description under “—Certain Definitions.” In this Description of Notes, the terms “Outerwall”, “the Company”, “we”, “us” and “our” refer only to Outerwall Inc., and any successor obligor on the Notes, and not to any of its or their subsidiaries, and the term “Notes” refers to both the original notes and the exchange notes, unless the context provides otherwise.

The following description is a summary of the material provisions of the indenture and the registration rights agreement (as defined under “—Registered Exchange Offer; Registration Rights” below), and does not purport to be complete and may not contain all the information that is important to you. This summary is subject to and is qualified in its entirety by reference to all of the provisions of the indenture and the registration rights agreement, including the definitions of certain terms used herein. We urge you to read the indenture and the registration rights agreement because they, and not this description, define your rights as holders of the Notes. The terms of the Notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939 (the “Trust Indenture Act”). Copies of the indenture and the registration rights agreement are available as set forth below under “—Additional Information.” Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the indenture.

The registered holder of a Note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture.

Brief Description of the Notes and the Note Guarantees

The Notes

The Notes will be:

 

•

general unsecured unsubordinated obligations of Outerwall ranking on a parity with other unsubordinated obligations of Outerwall, including its $350.0 million in aggregate principal amount of outstanding 6.000% Senior Notes due 2019;

 

•

effectively subordinated to all existing and future secured Indebtedness of Outerwall, including obligations under its Credit Agreement, to the extent of the collateral securing such Indebtedness;

 

•

senior to all future subordinated Indebtedness of Outerwall; and

 

•

unconditionally guaranteed by the Guarantors.

The Note Guarantees

The Notes will be guaranteed by all of the Wholly Owned Domestic Subsidiaries of Outerwall that are Material Subsidiaries.

Each Note Guarantee will be:

 

•

a general unsecured unsubordinated obligation of the relevant Guarantor ranking on a parity with other unsubordinated obligations of each Guarantor, including obligations under Outerwall’s $350.0 million in aggregate principal amount of outstanding 6.000% Senior Notes due 2019;

 

•

effectively subordinated to all existing and future secured Indebtedness of the relevant Guarantor, including obligations under Outerwall’s Credit Agreement, to the extent of the collateral securing such Indebtedness; and

 

•

senior to all future subordinated Indebtedness of the relevant Guarantor.

 

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As of the date of the indenture, all of our Subsidiaries will be “Restricted Subsidiaries.” However, under the circumstances described below under the subheading “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” we will be permitted to designate certain of our Subsidiaries as “Unrestricted Subsidiaries.” Our Unrestricted Subsidiaries will not be subject to most of the restrictive covenants in the indenture and will not guarantee the Notes. In addition, our joint venture Redbox Instant by Verizon is not our Subsidiary and will not be subject to any of the restrictive covenants in the indenture and will not guarantee the Notes.

Future Subsidiaries will not have to guarantee the Notes if they are Foreign Subsidiaries, if they are not Wholly Owned Domestic Subsidiaries that are Material Subsidiaries or if they are designated as Unrestricted Subsidiaries as provided in the indenture. In the event of a bankruptcy, liquidation or reorganization of any of these non-Guarantor Subsidiaries, the non-Guarantor Subsidiaries would pay the holders of their debt and their trade creditors before they would be able to distribute any of their assets to us. Our non-guarantor subsidiaries generated approximately 2.6% and 0.9% of our consolidated revenues and operating income, respectively, for the year ended December 31, 2014 and approximately 2.2% of our consolidated revenues and an operating loss of $14.0 million, which represented approximately 5.4% of our operating income on an absolute value basis, for the year ended December 31, 2013. As of December 31, 2014, our non-guarantor subsidiaries had $92.9 million in total assets and $21.0 million in total outstanding liabilities (including capital lease obligations but excluding intercompany liabilities).

Principal, Maturity and Interest

The Notes will initially be limited to a maximum aggregate principal amount of $300.0 million. Outerwall may issue additional Notes under the indenture from time to time. Any issuance of additional Notes is subject to all of the covenants in the indenture, including the covenant described below under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.” The Notes and any additional Notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. If the additional Notes are not fungible with the Notes offered hereby for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Outerwall will issue Notes in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The Notes will mature on June 15, 2021.

Interest on the Notes will accrue at the rate of 5.875% per annum and will be payable semi-annually in arrears on June 15 and December 15. Outerwall will make each interest payment to the Persons who were holders of record on the immediately preceding June 1 or December 1, as applicable.

Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date through which it was most recently paid. Interest will be computed on the basis of a 360-day year composed of twelve 30-day months.

Methods of Receiving Payments on the Notes

For so long as the Notes remain in the form of a global security, we will pay all principal, interest and premium and additional interest, if any, on the Notes to the applicable depositary or its nominee as the registered holder of the global security representing the Notes. All other payments on the Notes will be made at the office or agency of the paying agent and registrar within the City and State of Saint Paul, Minnesota unless Outerwall elects to make interest payments by check mailed to the Note holders at their address set forth in the register of holders.

Paying Agent and Registrar for the Notes

The trustee will initially act as paying agent and registrar. Outerwall may change the paying agent or registrar without prior notice to the holders of Notes, and Outerwall or any of its Subsidiaries may act as paying agent or registrar.

 

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Transfer and Exchange

A holder of Notes may transfer or exchange Notes in accordance with the indenture. The registrar and the trustee may require a holder of Notes, among other things, to furnish appropriate endorsements and transfer documents and Outerwall may require a holder of Notes to pay any transfer taxes and fees required by law. Outerwall is not required to transfer or exchange any Note selected for redemption. Also, Outerwall is not required to transfer or exchange any Note for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.

Note Guarantees

The Notes will be fully and unconditionally guaranteed, jointly and severally, by all of Outerwall’s existing and future Wholly Owned Domestic Subsidiaries that are Material Subsidiaries.

The obligations of each Guarantor under its Note Guarantee are limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. By virtue of this limitation, a Guarantor’s obligation under its Note Guarantee could be significantly less than amounts payable with respect to the Notes, or a Guarantor may have effectively no obligation under its Note Guarantee. See “Risk Factors—Risks Related to the Notes—Federal and state fraudulent transfer laws permit a court to void the Notes and the related guarantees, and, if that occurs, you may not receive any payments on the Notes.”

A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than Outerwall or another Guarantor, unless:

(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and

(2) either:

(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under the indenture, its Note Guarantee and the registration rights agreement pursuant to a supplemental indenture; or

(b) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the indenture.

The Note Guarantee of a Guarantor will be automatically and unconditionally released:

(1) upon the sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Outerwall or a Restricted Subsidiary of Outerwall, if the sale or other disposition is otherwise permitted by the indenture;

(2) if Outerwall provides an officers’ certificate to the trustee certifying that such Guarantor is not a Wholly Owned Domestic Subsidiary that is a Material Subsidiary and does not guarantee any other Indebtedness of Outerwall or any Guarantor;

(3) upon the sale or other disposition of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) Outerwall or a Restricted Subsidiary of Outerwall, if the sale or other disposition is otherwise permitted by the indenture;

(4) if Outerwall designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the covenant described under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries”; or

(5) upon legal defeasance or satisfaction and discharge of the indenture as provided below under the captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and Discharge.”

 

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Ranking

The Notes and the Note Guarantees will rank equally to all of Outerwall’s and the Guarantors’ other unsecured and unsubordinated indebtedness, but will effectively be junior to all of Outerwall’s and the Guarantors’ secured Indebtedness, to the extent of the collateral securing such Indebtedness.

The Notes will also effectively rank junior to all liabilities of Outerwall’s subsidiaries that do not guarantee the Notes. Claims of creditors of non-Guarantor subsidiaries, including trade creditors, and creditors holding debt and guarantees issued by those subsidiaries, and claims of preferred stockholders (if any) of those subsidiaries generally will have priority with respect to the assets and earnings of those subsidiaries over the claims of creditors of the Company, including holders of the Notes. The Notes and each Note Guarantee therefore will be effectively subordinated to creditors (including trade creditors) and preferred stockholders (if any) of subsidiaries of the Company (other than the Guarantors). Although the indenture limits the incurrence of Indebtedness and the issuance of preferred stock of Restricted Subsidiaries, the limitation is subject to a number of significant exceptions. Moreover, the indenture does not impose any limitation on the incurrence by Restricted Subsidiaries of liabilities that are not considered Indebtedness or preferred stock under the indenture. See “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.”

As of December 31, 2014, the Notes:

 

•

ranked equally with $350.0 million in aggregate principal amount of our 6.000% Senior Notes due 2019;

 

•

ranked effectively junior to $306.2 million of secured indebtedness under our senior secured credit facility and $15.4 million of capital leases of Outerwall and its guarantor subsidiaries, to the extent of the collateral therefor; and

 

•

ranked effectively junior to $21.0 million of total outstanding liabilities of our non-guarantor subsidiaries.

As of December 31, 2014, our total debt (including capital leases) was $971.6 million.

Optional Redemption

At any time prior to June 15, 2017, Outerwall may redeem some or all of the Notes at a price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium, plus accrued and unpaid interest (including additional interest), if any, to, but excluding, the redemption date.

In addition, at any time prior to June 15, 2017, Outerwall may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the indenture at a redemption price of 105.875% of the principal amount thereof, plus accrued and unpaid interest (including additional interest), if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that:

(1) at least 65% of the aggregate principal amount of Notes issued under the indenture remain outstanding immediately after the occurrence of such redemption (excluding Notes held by Outerwall and its Subsidiaries); and

(2) the redemption occurs within 90 days of the date of the closing of such Equity Offering.

Except pursuant to the preceding paragraphs, the Notes will not be redeemable at Outerwall’s option prior to June 15, 2017.

 

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On or after June 15, 2017, Outerwall may redeem some or all of the Notes upon not less than 30 nor more than 60 days’ prior notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and additional interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on June 15 of the years indicated below subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

 

Year		Percentage
2017			104.406	%
2018			102.938	%
2019			101.469	%
2020			100.000	%

Unless Outerwall defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

Mandatory Redemption

Outerwall is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

Registered Exchange Offer; Registration Rights

Outerwall and the initial purchasers entered into a registration rights agreement on the Issue Date (the “registration rights agreement”) pursuant to which we agreed to:

(1) within 270 days after the Issue Date, file a registration statement (the “Exchange Offer Registration Statement”) with the SEC with respect to a registered offer (the “Registered Exchange Offer”) to exchange the original notes for new notes of Outerwall (the “exchange notes”) having terms substantially identical in all material respects to the original notes (except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest);

(2) use our reasonable best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 360 days after the Issue Date; and

(3) keep the Registered Exchange Offer open for not less than 20 Business Days (or longer if required by applicable law) after the date notice of the Registered Exchange Offer is first provided to the holders of the original notes.

In the event that:

(1) any changes in applicable law or interpretations thereof by the staff of the SEC do not permit us to effect such a Registered Exchange Offer as contemplated above; or

(2) for any other reason we do not consummate the Registered Exchange Offer within 390 days of the Issue Date; or

(3) any initial purchaser notifies us following consummation of the Registered Exchange Offer that original notes held by it are not eligible to be exchanged for exchange notes in the Registered Exchange Offer, provided that such notice is received by us within 20 Business Days of the consummation of the Registered Exchange Offer; or

(4) certain holders are prohibited by law or SEC policy from participating in the Registered Exchange Offer or may not resell the exchange notes acquired by them in the Registered Exchange Offer to the public without delivering a prospectus,

 

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then, we will, subject to certain conditions, at our cost:

(A) as promptly as practicable, file with the SEC a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, each a “Registration Statement”) on an appropriate form under the Securities Act covering resales of the original notes or the exchange notes, as the case may be, and use our reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act; and

(B) use our commercially reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the holders of such Notes, for a period of two years (or for a period of one year from the effective date of the Shelf Registration Statement if the Shelf Registration Statement is filed at the request of the initial purchasers) from the date of its effectiveness or such shorter period that will terminate when all the Notes covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer “restricted securities” (as defined in Rule 144 under the Securities Act, or any successor rule thereof).

We will, in the event a Shelf Registration Statement is filed, among other things, provide to each holder for whom such Shelf Registration Statement was filed copies of the prospectus which is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement has become effective and take certain other actions as are required to permit unrestricted resales of the original notes or the exchange notes, as the case may be. A holder selling such Notes pursuant to the Shelf Registration Statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be required to provide us with certain information in connection with any shelf registration statement or prospectus included therein within 20 Business Days after receiving a request by us to do so, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement that are applicable to such holder (including certain indemnification obligations).

We will pay additional cash interest (“additional interest”) on the applicable original notes and exchange notes:

(1) if by the 270th day after the Issue Date, either the Exchange Offer Registration Statement or any Shelf Registration Statement required to be filed pursuant to the Registration Rights Agreement has not been filed with the SEC;

(2) if by the 390th day after the Issue Date, either the Registered Exchange Offer has not been consummated or, if any Shelf Registration Statement is required to be filed pursuant to the Registration Rights Agreement, such Shelf Registration Statement has not been declared effective by the SEC; or

(3) if after either the Exchange Offer Registration Statement or the Shelf Registration Statement is declared effective (A) such Registration Statement thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in certain circumstances), in either case of (A) or (B) without being succeeded immediately by a post-effective amendment to such Registration Statement that is immediately declared effective (each such event referred to in the preceding clauses (1) through (3) a “Registration Default”),

from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured.

Additional interest to each holder of Notes with respect to the first 90-day period immediately following the occurrence of the first Registration Default will accrue at a rate per annum of 0.25%. The rate of the additional interest will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured (after which time additional interest will no longer accrue), up to a maximum amount of additional interest for all Registration Defaults of 1.0% per annum.

 

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We will pay such additional interest on regular interest payment dates. Such additional interest will be in addition to any other interest payable from time to time with respect to the Notes.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, each holder of Notes will have the right to require Outerwall to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that holder’s Notes pursuant to the offer described below (the “Change of Control Offer”) on the terms set forth in the indenture. In the Change of Control Offer, Outerwall will offer a payment (the “Change of Control Payment”) in cash equal to 101% of the aggregate principal amount of Notes to be repurchased, plus accrued and unpaid interest and additional interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, Outerwall will mail a notice to each holder of Notes describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed pursuant to the procedures required by the indenture and described in such notice. Outerwall will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control.

To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the indenture, Outerwall will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture by virtue of such compliance.

On the Change of Control Payment Date, Outerwall will, to the extent lawful:

(1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

(2) on or prior to 10:00 A.M. New York City time deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the trustee the Notes properly accepted together with an officers’ certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by Outerwall.

The paying agent will mail to each holder of Notes so tendered the Change of Control Payment for such Notes, and the trustee will authenticate and mail (or cause to be transferred by book-entry) to each holder of Notes a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided, that each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. Outerwall will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require Outerwall to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the holders of the Notes to require that Outerwall repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

Outerwall will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by Outerwall and purchases

 

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all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the indenture as described above under the caption “—Optional Redemption,” unless and until there is a default in payment of the applicable redemption price.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of Outerwall and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require Outerwall to repurchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Outerwall and its Subsidiaries taken as a whole to another Person or group may be uncertain.

The provisions under the indenture relating to the Company’s obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or amended as described in “—Amendment, Supplement and Waiver.”

Asset Sales

Outerwall will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) Outerwall (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (determined as of the date of contractual agreement to such Asset Sale) of the assets or Equity Interests issued or sold or otherwise disposed of;

(2) Outerwall delivers an officer’s certificate to the trustee certifying that such Asset Sale complies with the requirements specified under this caption “—Asset Sales”; and

(3) at least 75% of the consideration received in the Asset Sale by Outerwall or such Restricted Subsidiary is in the form of cash or Cash Equivalents, with the understanding that, for purposes of this provision, each of the following will be deemed to be cash:

(a) any liabilities, as shown on Outerwall’s most recent consolidated balance sheet, of Outerwall or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Outerwall or such Restricted Subsidiary from further liability; and

(b) any securities, Notes or other obligations received by Outerwall or any such Restricted Subsidiary from such transferee that are converted by Outerwall or such Restricted Subsidiary within 90 days into cash or Cash Equivalents, to the extent of the cash and Cash Equivalents received in that conversion.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale (or if a binding agreement to apply such Net Proceeds in accordance with provisions (2) through (5) below has been entered into within 365 days of receipt of any such Net Proceeds, within 120 days of the end of the 365 day period), Outerwall or the applicable Restricted Subsidiary may apply such Net Proceeds:

(1) to repay secured Indebtedness and, if the secured Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;

(2) to acquire all or substantially all of the assets of, or the majority of the Capital Stock of, another Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of Outerwall;

(3) to make capital expenditures;

 

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(4) to acquire or license other assets (other than Capital Stock) that are used or useful in a Permitted Business; and/or

(5) to repay unsecured Indebtedness (other than Subordinated Debt) of Outerwall or any Restricted Subsidiary (and to correspondingly reduce any outstanding commitments with respect thereto, if applicable); provided that if Outerwall or any Restricted Subsidiary shall so repay any such other Indebtedness, Outerwall will reduce obligations under the Notes on a pro rata basis by, at its option, (A) redeeming Notes as described under “—Optional Redemption” or (B) purchasing Notes through open market purchases, at a price equal to or higher than 100% of the principal amount thereof.

Pending the final application of any Net Proceeds, Outerwall may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $20.0 million, within 30 days thereof, Outerwall will make an offer (an “Asset Sale Offer”) to all holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the Notes being purchased plus accrued and unpaid interest and additional interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Outerwall may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis, by lot, or by such method as the trustee deems fair and appropriate. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

Outerwall will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the indenture, Outerwall will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such compliance.

Outerwall’s Credit Agreement imposes limitations on asset sales and provides that any change of control (as defined therein) would constitute an event of default. Any future credit agreements or other agreements relating to Indebtedness to which Outerwall becomes a party may contain similar restrictions and provisions and may impose limitations on Outerwall’s ability to repurchase Notes. In the event a Change of Control or Asset Sale occurs at a time when Outerwall is prohibited from purchasing Notes (and, in the case of an Asset Sale, assuming Outerwall is not required by the Credit Agreement to apply the Net Proceeds thereof as described in clause (1) of the second paragraph of this covenant and Outerwall elects not to reinvest the Net Proceeds in a manner permitted by such paragraph), Outerwall could seek the consent of the required lenders under the Credit Agreement or could attempt to refinance the borrowings that contain such prohibition. If Outerwall does not obtain such consent or refinance such borrowings, Outerwall would remain prohibited from purchasing Notes. The exercise by holders of the Notes of their right to require Outerwall to repurchase their Notes could cause a default under existing or future debt of Outerwall even if the Change of Control itself does not, due to the financial effect of such repurchase on Outerwall, and Outerwall’s ability to pay cash to holders of the Notes upon a repurchase may be limited by Outerwall’s financial resources at that time. Outerwall’s failure to purchase tendered Notes would constitute an Event of Default under the indenture which could, in turn, constitute a default under the Credit Agreement.

 

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Selection and Notice

If less than all of the Notes are to be redeemed at any time, the trustee will select Notes for redemption as follows:

(1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or

(2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate.

No Notes of $2,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail (or in the case of Notes held in book entry form, by electronic transmission) at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the indenture. Notices of redemption may not be conditional.

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the holder of Notes thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

Certain Covenants

Restricted Payments

Outerwall will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of Outerwall’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving Outerwall or any of its Restricted Subsidiaries) or to the direct or indirect holders of Outerwall’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Outerwall and other than dividends or distributions payable to Outerwall or a Restricted Subsidiary of Outerwall);

(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Outerwall) any Equity Interests of Outerwall;

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of Outerwall or any Guarantor that is contractually subordinated to the Notes or the Note Guarantees (“Subordinated Debt”), except (i) regularly scheduled payments of interest, principal and other charges and a payment of interest or principal at the Stated Maturity thereof, (ii) Subordinated Debt owed to Outerwall or any of its Restricted Subsidiaries or (iii) the purchase, redemption or other acquisition for value of any Subordinated Debt purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition; or

(4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and

 

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(2) Outerwall would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four fiscal quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Outerwall and its Restricted Subsidiaries since the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (9) and (12) of the next paragraph) is less than the sum, without duplication, of:

(a) 50% of the Consolidated Net Income of Outerwall for the period (taken as one accounting period) from the beginning of the fiscal quarter commencing on April 1, 2014 to the end of Outerwall’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(b) 100% of the aggregate net proceeds, including the fair market value of the property other than cash, received by Outerwall since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of Outerwall (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Outerwall that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of Outerwall); plus

(c) without duplication, 100% of the sum of:

(I) the aggregate amount returned in cash on or with respect to Restricted Investments made after the Issue Date, whether through interest payments, principal payments, dividends or other distributions or payments;

(II) the Net Proceeds received from the disposition of all or any portion of such Investments (other than to a Subsidiary of Outerwall); and

(III) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the Fair Market Value of such Subsidiary (valued in each case as provided in the definition of “Investment”);

provided, however, that the sum of clauses (I), (II) and (III) above will not exceed the aggregate amount of all such Investments made by Outerwall or any Restricted Subsidiary in the relevant Person or Unrestricted Subsidiary after the Issue Date.

So long as no Default has occurred and is continuing or would be caused thereby (in the case of clauses (6), (7), (8), (9), (10), (11), (12) and (13) below), the preceding provisions will not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration, the dividend would have complied with the provisions of the indenture;

(2) the payment, repurchase, redemption, defeasance or other acquisition or retirement of any Subordinated Debt of Outerwall or any Restricted Subsidiary or of any Equity Interests of Outerwall in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Outerwall) of, Equity Interests of Outerwall (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to Outerwall; provided, that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(b) of the preceding paragraph;

(3) the repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Debt of Outerwall or any Restricted Subsidiary with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness;

 

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(4) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of Outerwall to the holders of its Equity Interests on a pro rata basis;

(5) the retirement of any shares of Disqualified Stock by conversion into, or by exchange for, shares of Disqualified Stock in an amount not in excess of the Net Proceeds of the substantially concurrent sale (other than to a Subsidiary) of other shares of Disqualified Stock;

(6) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Outerwall or any Restricted Subsidiary of Outerwall held by any current or former officer, director or employee of Outerwall or any of its Restricted Subsidiaries pursuant to any employment agreement, equity subscription agreement, stock option agreement, shareholders’ agreement, benefit plan or similar agreement or arrangement; provided, that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5.0 million in any fiscal year after the Issue Date (with unused amounts in any fiscal year being carried over to the next succeeding fiscal year but not thereafter);

(7) the purchase or redemption of Subordinated Debt or Equity Interests (utilizing any Net Cash Proceeds remaining in the case of an Asset Sale) after Outerwall (or a third party, to the extent permitted under the indenture) has complied with the requirements of the covenants described above under the captions “—Repurchase at the Option of Holders—Asset Sales” and “—Repurchase at the Option of Holders—Change of Control”;

(8) other Restricted Payments in an aggregate principal amount not to exceed $25.0 million since the Issue Date;

(9) the repurchase of Equity Interests deemed to occur upon the vesting of restricted shares or the exercise of stock options or stock appreciation rights to the extent such Equity Interests represent a portion of the exercise price of those stock options or stock appreciation rights;

(10) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of Outerwall issued on or after the Issue Date in accordance with the Fixed Charge Coverage Ratio test described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(11) payments or distributions to shareholders exercising appraisal rights pursuant to applicable law pursuant to or in connection with a merger or consolidation that complies with the provisions of the indenture;

(12) the purchase, redemption, acquisition, cancellation or other retirement for a nominal value per right of any rights granted to all the holders of Capital Stock of Outerwall pursuant to any shareholders’ rights plan adopted for the purpose of protecting shareholders from unfair takeover practices; provided that any such purchase, redemption, acquisition, cancellation or other retirement of such rights shall not be for the purpose of evading the limitations of this covenant (as determined in good faith by the Board of Directors of Outerwall); and

(13) other Restricted Payments, provided that after giving pro forma effect thereto (including, without limitation, the incurrence of any Indebtedness to finance such payment), the Consolidated Net Leverage Ratio of Outerwall does not exceed 2.50 to 1.00, calculated on a pro forma basis for Outerwall’s most recently ended four fiscal quarter period ending immediately prior to the date of the proposed Restricted Payment for which financial statements are available.

The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Outerwall or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined by (1) the Chief Executive Officer, the Chief Financial Officer or the Board of Directors of Outerwall for transactions involving assets or

 

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securities that are required to be valued if Fair Market Value is less than or equal to $10.0 million, and (2) the Board of Directors of Outerwall for transactions involving assets or securities that are required to be valued if Fair Market Value is greater than $10.0 million. If determined by the Board of Directors of Outerwall, the resolution with respect thereto will be delivered to the trustee. The Board of Directors’ determination must be based upon an opinion or appraisal issued by an Independent Financial Advisor if the Fair Market Value exceeds $35.0 million.

Incurrence of Indebtedness and Issuance of Preferred Stock

Outerwall will not, and will not permit any of its Restricted Subsidiaries to, directly, or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and Outerwall will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue preferred stock; provided, however, that Outerwall may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for Outerwall’s most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four fiscal quarter period.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(1) the incurrence by Outerwall and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of Outerwall and its Restricted Subsidiaries thereunder assuming timely payment and performance) not to exceed (x) the greater of: (a) $750.0 million and (b) an amount such that, on a pro forma basis after giving effect to the incurrence of such Indebtedness (and the application of the net proceeds therefrom), the Consolidated Net Leverage Ratio would be less than 3.00 to 1.00, less (y) the aggregate amount of all Net Proceeds of Asset Sales applied by Outerwall or any of its Restricted Subsidiaries since the Issue Date to repay any Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”;

(2) the incurrence by Outerwall and its Restricted Subsidiaries of the Existing Indebtedness;

(3) the incurrence by Outerwall and the Guarantors of Indebtedness represented by the original notes and the related Note Guarantees issued on the Issue Date and the exchange notes and the related Note Guarantees to be issued pursuant to the registration rights agreement;

(4) the incurrence by Outerwall or any of its Guarantors of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price or the cost of design, construction, installation or improvement of property, plant or equipment or other assets used or useful in the business of Outerwall or any of its Restricted Subsidiaries (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and whether such Indebtedness is owed to the seller or Person carrying out such construction or improvement or to any third party) in an aggregate principal amount, including, without duplication, all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (a) $125.0 million and (b) 20.0% of the Consolidated Net Tangible Assets of Outerwall and its Restricted Subsidiaries at any time outstanding;

 

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(5) the incurrence by Outerwall or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (5), (9) or (14) of this paragraph;

(6) the incurrence by Outerwall or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Outerwall and any of its Restricted Subsidiaries; provided, however, that:

(a) if Outerwall or any Guarantor is the obligor on such Indebtedness and the holder of such Indebtedness is not Outerwall or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of Outerwall, or the Note Guarantee, in the case of a Guarantor; and

(b)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Outerwall or a Restricted Subsidiary of Outerwall and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Outerwall or a Restricted Subsidiary of Outerwall, will be deemed, in each case, to constitute an incurrence of such Indebtedness by Outerwall or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7) the incurrence by Outerwall or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;

(8) the Guarantee by Outerwall or any of the Guarantors of Indebtedness of Outerwall or a Restricted Subsidiary of Outerwall that was permitted to be incurred by another provision of this covenant; provided, that if the Indebtedness being guaranteed is subordinated to the Notes, then the Guarantee shall be subordinated to the same extent as the Indebtedness guaranteed;

(9) the incurrence by Outerwall or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable), including, without duplication, all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (9), not to exceed $50.0 million at any time outstanding;

(10) the incurrence by Outerwall or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance, completion, surety and appeal bonds or guarantees, and similar types of obligations in the ordinary course of business;

(11) the incurrence by Outerwall or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is covered within five Business Days;

(12) the incurrence by Outerwall or any of its Restricted Subsidiaries of Indebtedness consisting of guarantees, earn-outs, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of property or assets, including, without limitation, shares of Capital Stock;

(13) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts; and

(14) Indebtedness of a Restricted Subsidiary incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by Outerwall (other than Indebtedness incurred in contemplation of, or in connection with, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary of or was otherwise acquired by Outerwall); provided, however, that for any such Indebtedness outstanding at any time under this clause (14), on the date that such Subsidiary is acquired by Outerwall, Outerwall would have been able to incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant.

 

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For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (14) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Outerwall will be permitted to classify all or a portion of such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the Issue Date will at all times be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt.

The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of Outerwall as accrued. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that Outerwall or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(a) the Fair Market Value of such assets at the date of determination; and

(b) the amount of the Indebtedness of the other Person.

Neither Outerwall nor any Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to any Indebtedness of Outerwall or the Guarantor unless such Indebtedness is also subordinated or junior in right of payment to the Notes or the relevant Note Guarantee on substantially identical terms. This does not apply to distinctions between categories of Indebtedness that exist by reason of any Liens or Guarantees securing or in favor of the holders of some but not all of such Indebtedness.

Liens

Outerwall will not and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) securing Indebtedness upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the indenture and the Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. Any Lien created for the benefit of the holders of Notes pursuant to the preceding sentence shall provide that such Lien shall be automatically and unconditionally released upon the release of the other Lien referred to in the preceding sentence.

 

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Dividend and Other Payment Restrictions Affecting Subsidiaries

Outerwall will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to Outerwall or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to Outerwall or any of its Restricted Subsidiaries;

(2) make loans or advances to Outerwall or any of its Restricted Subsidiaries; or

(3) sell, lease or transfer any of its properties or assets to Outerwall or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the Issue Date and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided, that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in agreements in place on the Issue Date;

(2) the indenture, the Notes and the Note Guarantees;

(3) any applicable law, rule, regulation or order;

(4) any instrument governing Indebtedness or Capital Stock of a Person acquired by Outerwall or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided, that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred;

(5) customary non-assignment provisions in contracts, leases, and licenses entered into in the ordinary course of business;

(6) obligations applicable to property acquired in the ordinary course of business and operating leases and Capital Lease Obligations that impose restrictions on the property purchased, constructed, improved or leased of the nature described in clause (3) of the preceding paragraph;

(7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;

(8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

(9) agreements governing Permitted Debt or other Indebtedness not prohibited by the indenture; provided that such agreements are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Credit Agreement as in effect on the Issue Date;

(10) Liens permitted to be incurred under the provisions of the covenant described above under the caption “—Liens” that limit the right of the debtor to dispose of the assets subject to such Liens;

 

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(11) provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of Outerwall’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;

(12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(13) in the case of clause (3) of the first paragraph of this covenant, encumbrances or restrictions:

(a) that restrict in a customary manner the leasing, subletting, licensing, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset,

(b) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of Outerwall or any Restricted Subsidiary not otherwise prohibited by the indenture, or

(c) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of Outerwall or any Restricted Subsidiary in any manner material to Outerwall or any Restricted Subsidiary;

(14) customary provisions in partnership agreements, limited liability company organizational and governance documents, joint venture agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in or the payment of dividends or distributions from such partnership, limited liability company, joint venture or similar Person; and

(15) contained in the terms of any Indebtedness or any agreement pursuant to which such Indebtedness was issued if:

(a) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial covenant contained in such Indebtedness or agreement,

(b) the encumbrance or restriction is not materially more disadvantageous to the holders of the Notes than is customary in comparable financings (as determined by Outerwall in good faith), and

(c) Outerwall determines that any such encumbrance or restriction will not materially affect Outerwall’s ability to make principal or interest payments on the Notes.

Merger, Consolidation or Sale of Assets

Outerwall will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Outerwall is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Outerwall and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

(1) either: (a) in the case of a merger or consolidation, Outerwall is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than Outerwall) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company, partnership or trust organized or existing under the laws of the United States, any state of the United States or the District of Columbia, provided that if such Person is not a corporation, a corporate wholly-owned Subsidiary of such Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia is added as a co-obligor;

(2) the Person formed by or surviving any such consolidation or merger (if other than Outerwall) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of Outerwall under the Notes, the indenture and the registration rights agreement (as applicable) pursuant to agreements satisfactory to the trustee;

 

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(3) immediately after such transaction, no Default or Event of Default exists;

(4) Outerwall or the Person formed by or surviving any such consolidation or merger (if other than Outerwall), or to which such sale, assignment, transfer, conveyance or other disposition has been made would on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four fiscal quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

(5) the Company has delivered to the trustee an officers’ certificate and opinion of counsel stating that such transaction is permitted under the Indenture.

In addition, Outerwall will not, directly or indirectly, lease all or substantially all of the properties and assets of it and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person.

This “Merger, Consolidation or Sale of Assets” covenant will not apply to:

(1) a merger of Outerwall with an Affiliate solely for the purpose of reincorporating Outerwall in another jurisdiction so long as clauses (1) and (2) above are complied with, or

(2) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among Outerwall and its Restricted Subsidiaries.

Transactions with Affiliates

Outerwall will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Outerwall (each, an “Affiliate Transaction”), unless:

(1) the Affiliate Transaction is on terms that are no less favorable to Outerwall or the relevant Restricted Subsidiary than those that might have been obtained at the time in a comparable transaction by Outerwall or such Restricted Subsidiary with an unrelated Person; and

(2) Outerwall delivers to the trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, a resolution of the Board of Directors of Outerwall set forth in an officers’ certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of Outerwall; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to Outerwall or such Subsidiary of such Affiliate Transaction from a financial point of view issued by an Independent Financial Advisor.

The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) any employment agreement, service, consulting or termination agreement, employee benefit plan or program, officer or director reimbursement or indemnification agreement or any similar arrangement entered into by Outerwall or any of its Restricted Subsidiaries in the ordinary course of business and payments pursuant thereto;

 

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(2) transactions between or among Outerwall and/or its Restricted Subsidiaries or any Person that will become a Restricted Subsidiary as a result of any such transaction;

(3) transactions with a Person (other than an Unrestricted Subsidiary of Outerwall) that is an Affiliate of Outerwall solely because Outerwall (i) owns, directly or through a Restricted Subsidiary, an Equity Interest in, or (ii) may control, such Person;

(4) payment of directors’ fees to Persons who are not otherwise Affiliates of Outerwall, and payment of reasonable compensation or fees to other directors, officers, employees, and consultants of or to Outerwall and its Restricted Subsidiaries;

(5) any issuance of Equity Interests (other than Disqualified Stock) of Outerwall to Affiliates of Outerwall;

(6) Restricted Payments that do not violate the provisions of the indenture described above under the caption “—Restricted Payments” and Permitted Investments; and

(7) transactions pursuant to or contemplated by any agreement or arrangement of Outerwall or any Restricted Subsidiary as in effect on the Issue Date, or any amendment, modification or supplement thereto or any replacement agreements or arrangements so long as any such amendment or replacement agreement, taken as a whole, is not more disadvantageous to the holders of Notes in any material respect than the original agreement or arrangement as in effect on the Issue Date.

Note Guarantees

If Outerwall or any of its Restricted Subsidiaries acquires or creates a Wholly Owned Domestic Subsidiary that is a Material Subsidiary after the Issue Date, or any Subsidiary becomes a Wholly Owned Domestic Subsidiary that is a Material Subsidiary after the Issue Date, then that Wholly Owned Domestic Subsidiary that is a Material Subsidiary will become a Guarantor and execute a supplemental indenture and deliver an opinion of counsel within 30 Business Days of the date on which it was acquired or created or becomes a Wholly Owned Domestic Subsidiary that is a Material Subsidiary; provided, however, this covenant shall not apply to any Subsidiary that has been designated as an Unrestricted Subsidiary in accordance with the covenant described under the subheading “—Designation of Restricted and Unrestricted Subsidiaries” for so long as it continues to constitute an Unrestricted Subsidiary.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of Outerwall may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Outerwall and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption “—Restricted Payments” or under the definition of Permitted Investments, as determined by Outerwall. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Any designation of a Subsidiary of Outerwall as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of the board resolution giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “—Restricted Payments.”

If, at any time, any Unrestricted Subsidiary would fail to meet the definition of an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Outerwall as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” Outerwall will be in default of such covenant.

 

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The Board of Directors of Outerwall may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Outerwall of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four fiscal quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

Payments for Consent

Outerwall will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the Notes unless such consideration is offered to be paid and is paid to all holders of Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports

Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, Outerwall will furnish to the holders of Notes or cause the trustee to furnish to the holders of Notes:

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if Outerwall were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by Outerwall’s certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if Outerwall were required to file such reports.

All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports and filed with the SEC or furnished to holders of Notes, as applicable, within the time periods specified in the SEC’s rules and regulations. In addition, Outerwall will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request.

If, at any time, Outerwall is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, Outerwall will nevertheless continue filing the reports specified in the preceding paragraphs of this covenant with the SEC within the time periods specified above unless the SEC will not accept such a filing. Outerwall will not take any action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the foregoing, the SEC will not accept Outerwall’s filings for any reason, Outerwall will post the reports referred to in the preceding paragraphs on its website within the time periods that would apply if Outerwall were required to file those reports with the SEC.

Outerwall will be deemed to have provided the foregoing information and reports at the time Outerwall has filed such reports containing the required information with the SEC via the EDGAR filing system and such reports have been accepted, or, if the SEC will not accept Outerwall’s filings for any reason, at the time Outerwall has posted such reports containing the required information to its website and the reports are publicly available; provided, however that the trustee shall have no responsibility whatsoever to determine if such filing or posting has occurred.

 

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If Outerwall has designated any of its Subsidiaries or any group of Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraphs will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of Outerwall and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of Outerwall.

In addition, Outerwall and the Guarantors agree that, for so long as any Notes remain outstanding and constitute “restricted securities” under Rule 144, if at any time they are not required to file with the SEC the reports required by the preceding paragraphs, they will furnish to the holders of Notes and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Covenant Suspension

If on any date following the Issue Date (1) the Notes have an Investment Grade Rating from both Rating Agencies and (2) no Default has occurred and is continuing under the indenture (the occurrence of the events described in the foregoing clauses (1) and (2) being collectively referred to as a “Covenant Suspension Event”), Outerwall and the Restricted Subsidiaries will not be subject to the covenants (the “Suspended Covenants”) described under:

(1) “—Restricted Payments”;

(2) “—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(3) “—Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries”;

(4) clause (4) of “—Merger, Consolidation or Sale of Assets”;

(5) “—Transactions with Affiliates”;

(6) “—Repurchase at the Option of Holders—Change of Control”; and

(7) “—Repurchase at the Option of Holders—Asset Sales.”

In the event that Outerwall and the Restricted Subsidiaries are not subject to the Suspended Covenants under the indenture for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) (a) one or both of the Rating Agencies withdraws its or their Investment Grade Rating of the Notes or downgrades the rating assigned to the Notes below an Investment Grade Rating or (b) Outerwall or any of its affiliates enters into an agreement to effect a transaction that would result in a Change of Control and one or both of the Rating Agencies indicates that if consummated, such transaction (alone or together with any related recapitalization or financing transactions) would cause such Rating Agency or Rating Agencies to withdraw its or their Investment Grade Rating of the Notes or downgrade the rating assigned to the Notes below an Investment Grade Rating, then Outerwall and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under the Indenture with respect to future events and such event, in the case of clause (b), will constitute a Change of Control on or after the Reversion Date, if consummated. The period beginning on the day of a Covenant Suspension Event and ending on a Reversion Date is called a “Suspension Period.” On each Reversion Date, all Indebtedness incurred, or Disqualified Stock or preferred stock issued, during the Suspension Period will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (2) of the second paragraph under “—Incurrence of Indebtedness and Issuance of Preferred Stock.” Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under the first paragraph under “—Restricted Payments” will be made as though the covenant described under “—Restricted Payments” had been in effect since the Issue Date and throughout the Suspension Period.

 

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Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under the first paragraph of “—Restricted Payments” (but will not reduce any amounts available to be made as Restricted Payments under the second paragraph of “—Restricted Payments). However, no Default or Event of Default will be deemed to have occurred on the Reversion Date (or thereafter) under any Suspended Covenant solely as a result of any actions taken by Outerwall or the Restricted Subsidiaries, or events occurring, during the Suspension Period. For purposes of the covenant described under “—Repurchase at the Option of Holders—Asset Sales,” on the Reversion Date, the amount of unutilized Excess Proceeds will be reset to zero.

There can be no assurance that the Notes will ever achieve or maintain an Investment Grade Rating.

Events of Default and Remedies

Each of the following is an “Event of Default”:

(1) default for 30 days in the payment when due of interest (including additional interest) on the Notes;

(2) default in payment when due of the principal of, or premium, if any, on the Notes;

(3) failure by Outerwall or any of its Restricted Subsidiaries to comply with the provisions described under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets”;

(4) failure by Outerwall or any of its Restricted Subsidiaries to comply with the provisions described under the captions “—Repurchase at the Option of Holders—Change of Control” and “—Repurchase at the Option of Holders—Asset Sales” for 45 days after written notice by the trustee or the holders of at least 25% in principal amount of the then outstanding Notes to comply with such provisions;

(5) failure by Outerwall or any of its Restricted Subsidiaries for 60 days after written notice by the trustee or the holders of at least 25% in principal amount of the then outstanding Notes to comply with any of the other agreements in the indenture;

(6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Outerwall or any of its Restricted Subsidiaries (or the payment of which is guaranteed by Outerwall or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default:

(a) is caused by a failure to pay at final Stated Maturity principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

(b) results in the acceleration of such Indebtedness prior to its final Stated Maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $25.0 million or more;

(7) failure by Outerwall or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $25.0 million, which judgments are not paid, discharged or stayed for a period of 60 consecutive days;

(8) except as permitted by the indenture, any Significant Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor that is a Significant Subsidiary, or any Person acting on behalf of any such Guarantor, shall deny or disaffirm its obligations under its Significant Note Guarantee; and

 

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(9) certain events of bankruptcy or insolvency described in the indenture with respect to Outerwall or any of its Significant Restricted Subsidiaries.

In the case of an Event of Default described in clause (9) above with respect to Outerwall, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

Holders of the Notes may not enforce the indenture or the Notes except as provided in the indenture. Subject to certain limitations, holders of Notes of a majority in principal amount of the then outstanding Notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest and additional interest, if any) if it determines that withholding notice is in their interest.

Subject to the provisions of the indenture relating to the duties of the trustee, in case an Event of Default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any holders of Notes unless such holders have offered to the trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest or additional interest, if any, when due, no holder of a Note may pursue any remedy with respect to the indenture or the Notes unless:

(1) such holder has previously given the trustee written notice that an Event of Default is continuing;

(2) holders of at least 25% in aggregate principal amount of the then outstanding Notes have requested the trustee to pursue the remedy;

(3) such holders have offered the trustee security or indemnity satisfactory to it against any loss, liability or expense;

(4) the trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5) holders of a majority in aggregate principal amount of the then outstanding Notes have not given the trustee a direction inconsistent with such request within such 60-day period.

The holders of a majority in aggregate principal amount of the Notes then outstanding by written notice to the trustee may on behalf of the holders of all of the Notes rescind an acceleration or waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of interest or premium or additional interest on, or the principal of, the Notes.

Outerwall is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, Outerwall is required to deliver to the trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of Outerwall or any Guarantor, as such, shall have any liability for any obligations of Outerwall or the Guarantors under the Notes, the indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

 

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Legal Defeasance and Covenant Defeasance

Outerwall may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and all obligations of the Guarantors discharged with respect to their Note Guarantees (“Legal Defeasance”) except for:

(1) the rights of holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium or additional interest, if any, on such Notes when such payments are due from the trust referred to below;

(2) Outerwall’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the trustee, and Outerwall’s and the Guarantor’s obligations in connection therewith; and

(4) the Legal Defeasance provisions of the indenture.

In addition, Outerwall may, at its option and at any time, elect to have the obligations of Outerwall and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “—Events of Default and Remedies” will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) Outerwall must irrevocably deposit with the trustee, in trust, for the benefit of the holders of Notes, cash in U.S. dollars, non-callable government securities, or a combination of cash in U.S. dollars and non-callable government securities, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest or premium or additional interest, if any, on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and Outerwall must specify whether the Notes are being defeased to maturity or to a particular redemption date;

(2) in the case of Legal Defeasance, Outerwall shall have delivered to the trustee an opinion of counsel confirming that (a) Outerwall has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the beneficial owners of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, Outerwall has delivered to the trustee an opinion of counsel confirming that the beneficial owners of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from any concurrent transaction involving the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Outerwall or any Guarantor is a party or by which Outerwall or any Guarantor is bound;

 

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(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which Outerwall or any of its Subsidiaries is a party or by which Outerwall or any of its Subsidiaries is bound;

(6) Outerwall must deliver to the trustee an officers’ certificate stating that the deposit was not made by Outerwall with the intent of preferring the holders of Notes over the other creditors of Outerwall with the intent of defeating, hindering, delaying or defrauding creditors of Outerwall or others; and

(7) Outerwall must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of the indenture or the Notes or the Note Guarantees may be waived with the consent of the holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

Without the consent of each holder of Notes affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting holder):

(1) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption “—Repurchase at the Option of Holders”);

(3) reduce the rate of or change the time for payment of interest on any Note;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium or additional interest, if any, on the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

(5) make any Note payable in money other than that stated in the Notes;

(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of Notes to receive payments of principal of, or interest or premium or additional interest, if any, on the Notes;

(7) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the caption “—Repurchase at the Option of Holders”);

(8) release any Guarantor that is a Significant Subsidiary from any of its obligations under its Note Guarantee or the indenture, except in accordance with the terms of the indenture; or

(9) make any change in the preceding amendment and waiver provisions.

 

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Notwithstanding the preceding, without the consent of any holder of Notes, Outerwall, the Guarantors and the trustee may amend or supplement the indenture or the Notes or the Note Guarantees:

(1) to cure any ambiguity, defect or inconsistency as evidenced in an officers’ certificate;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes, or otherwise alter the provisions of the indenture relating to issuance and transfer of the Notes in a manner that does not materially adversely affect any holder of Notes;

(3) to provide for the assumption of Outerwall’s or a Guarantor’s obligations to holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of Outerwall’s or such Guarantor’s assets, as applicable;

(4) to make any change that would provide any additional rights or benefits to the holders of Notes or that does not, in the good faith opinion of Outerwall’s Board of Directors, materially adversely affect the legal rights under the indenture of any such holder;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act;

(6) to conform the text of the indenture, the Note Guarantees or the Notes to any provision of this Description of Notes;

(7) to provide for the issuance of additional Notes in accordance with the limitations set forth in the indenture as of the Issue Date;

(8) to allow any Guarantor to execute a Note Guarantee and/or a supplemental indenture providing a Note Guarantee; or

(9) to evidence or provide for the acceptance of the appointment under the indenture of a successor trustee.

Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when:

(1) either:

(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid, and Notes for whose payment money has been deposited in trust and thereafter repaid to Outerwall, have been delivered to the trustee for cancellation; or

(b) all Notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and Outerwall or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable government securities, or a combination of cash in U.S. dollars and non-callable government securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the trustee for cancellation for principal, premium and additional interest, if any, and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from any concurrent transaction involving the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Outerwall or any Guarantor is a party or by which Outerwall or any Guarantor is bound;

 

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(3) Outerwall or any Guarantor has paid or caused to be paid all sums then due and payable by it under the indenture; and

(4) Outerwall has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

In addition, Outerwall must deliver an officers’ certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Concerning the Trustee

U.S. Bank National Association is the trustee under the indenture.

If the trustee becomes a creditor of Outerwall or any Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue (if the indenture has been qualified under the Trust Indenture Act) or resign.

The holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of Notes, unless such holder of Notes has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Form, Denomination and Registration of Notes

Exchange Notes

The exchange notes will be issued in registered form, without interest coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof, in the form of one or more global and certificated notes, as further provided below.

Original Notes

The original notes were issued in registered form, without interest coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof, in the form of one or more global and certificated notes, as further provided below.

Original notes sold in reliance upon Regulation S under the Securities Act that are not exchanged in the exchange offer will continue to be represented by an offshore global note. No payments of principal, interest or premium will be paid to holders of a beneficial interest in the temporary offshore global note until exchanged or transferred for an interest in another global note or certificated note. Original notes sold in reliance upon Rule 144A under the Securities Act that are not exchanged in the exchange offer will continue to be represented by the U.S. global note. Original notes not exchanged in the exchange offer that are subsequently resold to institutional accredited investors will be in the form of an Institutional Accredited Investor global note.

Service Charges

No service charge will be imposed in connection with any transfer or exchange of any Note, but the Company may in general require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith.

 

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Global Notes

Global notes will be deposited with a custodian for DTC, and registered in the name of a nominee of DTC. Beneficial interests in the global notes will be shown on records maintained by DTC and its direct and indirect participants. So long as DTC or its nominee is the registered owner or holder of a global note, DTC or such nominee will be considered the sole owner or holder of the Notes represented by such global note for all purposes under the indenture and the Notes. No owner of a beneficial interest in a global note will be able to transfer such interest except in accordance with DTC’s applicable procedures and the applicable procedures of its direct and indirect participants.

Any beneficial interest in one global note that is transferred to a Person who takes delivery in the form of an interest in another global note will, upon transfer, cease to be an interest in such global note and become an interest in the other global note and, accordingly, will thereafter be subject to all transfer restrictions applicable to beneficial interests in such other global note for as long as it remains such an interest.

The Company will apply to DTC for acceptance of the global notes in its book-entry settlement system. Investors may hold their beneficial interests in the global notes directly through DTC if they are participants in DTC, or indirectly through organizations which are participants in DTC.

Payments of principal and interest under each global note will be made to DTC’s nominee as the registered owner of such global note. The Company expects that the nominee, upon receipt of any such payment, will immediately credit DTC participants’ accounts with payments proportional to their respective beneficial interests in the principal amount of the relevant global note as shown on the records of DTC. The Company also expects that payments by DTC participants to owners of beneficial interests will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants, and none of the Company, the trustee, the custodian or any paying agent or registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in any global note or for maintaining or reviewing any records relating to such beneficial interests.

Transfer Restrictions on Original Notes

A beneficial interest in the offshore global note may be transferred to a Person who wishes to hold such beneficial interest through the U.S. global note only upon receipt by the trustee of a written certification of the transferee (a “Rule 144A certificate”) to the effect that such transferee is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A. A beneficial interest in the temporary offshore global note may be transferred to a Person who wishes to hold such beneficial interest in the form of a certificated note only upon receipt by the trustee of (x) a Rule 144A certificate of the transferee or (y) a written certification of the transferee (an “institutional accredited investor certificate”) to the effect that such transferee is an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act, and/or an opinion of counsel and such other certifications and evidence as the Company may reasonably require in order to determine that the proposed transfer is being made in compliance with the Securities Act. Any such transfer of certificated original notes to an institutional accredited investor must involve original notes having a principal amount of not less than $100,000. After the Restricted Period, beneficial interests in the temporary offshore global note will be exchangeable for beneficial interests in the permanent offshore global note only upon receipt by the trustee of a certification on behalf of the beneficial owner that such beneficial owner is either (i) not a U.S. person (within the meaning of Regulation S under the Securities Act) or (ii) a U.S. person who purchased the original notes in a transaction that did not require registration under the Securities Act.

A beneficial interest in the U.S. global note may be transferred to a Person who wishes to hold such beneficial interest through the offshore global note only upon receipt by the trustee of a written certification of the transferor (a “Regulation S certificate”) to the effect that such transfer is being made in compliance with

 

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Regulation S under the Securities Act. A beneficial interest in the U.S. global note may be transferred to a Person who wishes to hold such beneficial interest in the form of a certificated note only upon receipt by the trustee of (x) a Rule 144A certificate of the transferee, (y) a Regulation S certificate of the transferor or (z) an institutional accredited investor certificate of the transferee, and/or an opinion of counsel and such other certifications and evidence as the Company may reasonably require in order to determine that the proposed transfer is being made in compliance with the Securities Act. Any such transfer of certificated original notes to an institutional accredited investor must involve original notes having a principal amount of not less than $100,000.

The restrictions on transfer described in the preceding two paragraphs will not apply (1) to Notes sold pursuant to a registration statement under the Securities Act or to exchange notes or (2) after such time (if any) as the Company determines and instructs the trustee that the original notes are eligible for resale pursuant to Rule 144 under the Securities Act without the need for current public information. There is no assurance that the original notes will become eligible for resale pursuant to Rule 144.

Certificated Notes

A global note is exchangeable for Notes in registered certificated form (“certificated notes”) if: (1) DTC notifies the Company that it is unwilling or unable to continue as depositary for a global note and a successor depositary is not appointed by the Company within 90 days of such notice, or (2) an Event of Default has occurred. In addition, if the trustee has received a request from DTC, the trustee will exchange each beneficial interest in that global note for one or more certificated notes registered in the name of the owner of such beneficial interest, as identified by DTC. Any such certificated note issued in exchange for a beneficial interest in a global note will bear the applicable restricted legend unless that legend is not required by applicable law.

Transfers of Certificated Original Notes

A certificated note may be transferred to a Person who wishes to hold a beneficial interest in the U.S. global note only upon receipt by the trustee of a Rule 144A certificate of the transferee. A certificated note may be transferred to a Person who wishes to hold a beneficial interest in the offshore global note only upon receipt by the trustee of a Regulation S certificate of the transferor. A certificated note may be transferred to a Person who wishes to hold a certificated note only upon receipt by the trustee of (x) a Rule 144A certificate of the transferee, (y) a Regulation S certificate of the transferor or (z) an institutional accredited investor certificate of the transferee, and/or an opinion of counsel and such other certifications and evidence as the Company may reasonably require in order to determine that the proposed transfer is being made in compliance with the Securities Act. Any such transfer of certificated original notes to an institutional accredited investor must involve original notes having a principal amount of not less than $100,000. The restrictions on transfer described in this paragraph will not apply (1) to Notes sold pursuant to a registration statement under the Securities Act or to exchange notes or (2) after such time (if any) as the Company determines and instructs the trustee that the original notes are eligible for resale pursuant to Rule 144 under the Securities Act without the need for current public information. There is no assurance that the original notes will become eligible for resale pursuant to Rule 144. Notwithstanding the foregoing, certificated original notes that do not bear a restricted legend will not be subject to the restrictions described above applicable to transfers to Persons who will hold in the form of beneficial interests in the offshore global note or certificated notes.

Same Day Settlement

The Notes represented by the global notes are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any certificated Notes will also be settled in immediately available funds.

 

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Governing Law

The indenture, including any Note Guarantees, and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflicts of law principles thereof.

Additional Information

Anyone who receives this prospectus may obtain a copy of the indenture and registration rights agreement without charge by writing to Outerwall Inc., 1800 114th Avenue SE, Bellevue, Washington 98004, Attention: General Counsel and Corporate Secretary.

Certain Definitions

Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and

(2) Indebtedness of any other Person secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition,

“control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Applicable Premium” means, with respect to any Note on any redemption date, the greater of (1) 1.0% of the principal amount of such Note; and (2) the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such Note on June 15, 2017 (as stated in the table under “—Optional Redemption”), plus (ii) all required interest payments due on such Note through June 15, 2017 (excluding accrued but unpaid interest, if any, to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of such Note.

“Asset Acquisition” means:

(1) any transaction pursuant to which any Person shall become a Restricted Subsidiary of Outerwall or shall be consolidated or merged with Outerwall or any Restricted Subsidiary of Outerwall; or

(2) the acquisition by Outerwall or any Restricted Subsidiary of Outerwall of assets of any Person comprising all or substantially all of the assets of such Person or of a division or line of business of such Person; provided, that the assets acquired are related, ancillary or complementary to the business of Outerwall and its Restricted Subsidiaries on the date of such acquisition.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights; provided, that the sale, lease, conveyance or other disposition of all or substantially all of the assets of Outerwall and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the

 

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caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and

(2) the issuance of Equity Interests in any of Outerwall’s Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $5.0 million;

(2) a transfer of assets between or among Outerwall and its Restricted Subsidiaries;

(3) an issuance of Equity Interests by Outerwall or an issuance of Equity Interests by a Restricted Subsidiary of Outerwall to Outerwall or to a Restricted Subsidiary of Outerwall;

(4) the sale, lease, sublease, assignment, license or sublicense of products, services or accounts receivable in the ordinary course of business, any sale or other disposition of surplus, damaged, worn-out or obsolete assets in the ordinary course of business, and any release of intangible claims or rights in connection with the loss or settlement of a bona fide lawsuit, dispute or other controversy;

(5) the sale or other disposition of cash or Cash Equivalents;

(6) a transfer of properties or assets to another Person in a transaction in which: (i) at least 75% of the consideration received consists of properties or assets (other than cash or Capital Stock) that will be used in the business of Outerwall or a Restricted Subsidiary; (ii) the aggregate Fair Market Value of the property or assets being transferred by Outerwall or such Restricted Subsidiary is not greater than the aggregate Fair Market Value of the property or assets received by Outerwall or such Restricted Subsidiary in such exchange; and (iii) the Fair Market Value is evidenced by a resolution of the Board of Directors set forth in an officers’ certificate delivered to the trustee;

(7) a Restricted Payment that does not violate the covenant described above under the caption “—Certain Covenants—Restricted Payments” or a Permitted Investment;

(8) any financing transaction with respect to property built or acquired by Outerwall or any Restricted Subsidiary after the Issue Date, including any sale-leaseback transactions permitted by the indenture;

(9) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, as amended, any exchange of like property (excluding any boot thereon) for use in a Permitted Business;

(10) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(11) the creation of or realization on any Lien permitted under the indenture and any disposition of any assets resulting from the enforcement or foreclosure of any such Lien;

(12) sales or grants of licenses or sublicenses to use the patents, trade secrets, know-how and other intellectual property, and licenses, leases or subleases of other assets, of Outerwall or any Restricted Subsidiary to the extent not materially interfering with the business of Outerwall and the Restricted Subsidiaries; and

(13) any sale of assets or property for Fair Market Value; provided that the aggregate book value of all property disposed of in reliance on this clause (13) in any fiscal year shall not exceed $25.0 million and provided, further that any cash consideration received shall be treated as Net Proceeds under the covenant described under “—Repurchase at the Option of Holders—Asset Sales.”

 

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“Asset Sale Offer” has the meaning assigned to that term under the caption “—Repurchase at the Option of Holders—Asset Sales.”

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” shall have a corresponding meaning.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the board of directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banking institutions in New York City are authorized or required by law to close. If a payment date is a day on which commercial banking institutions are authorized or required by law to close at the place of payment, then payment may be made on the next succeeding day that is not such a legal holiday.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means:

(1) United States dollars;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided, that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than twelve months from the date of acquisition;

 

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(3) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year from the date of acquisition, and having, at the time of acquisition, a credit rating of at least “A-2” from S&P or at least “P-2” from Moody’s;

(4) time deposits, certificates of deposit, eurodollar time deposits and eurodollar certificates of deposit with maturities not exceeding 364 days from the date of acquisition, bankers’ acceptances with maturities not exceeding 364 days from the date of acquisition, and overnight bank deposits, in each case, with (x) any lender party to the Credit Agreement, (y) any domestic commercial bank of recognized standing having capital and surplus in excess of $500.0 million and (z) any bank whose short-term commercial paper rating at the time of acquisition thereof is at least A-2 or the equivalent thereof from S&P or is at least P-2 or the equivalent thereof from Moody’s;

(5) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (2), (3) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6) commercial paper or variable or fixed rate notes rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s and, in each case, maturing within six months after the date of acquisition;

(7) obligations of any state of the United States or any political subdivision thereof for the payment of the principal and redemption price of and interest on which there shall have been irrevocably deposited Cash Equivalents (of the kind described in clause (2) of this definition) maturing as to principal and interest at times and in amounts sufficient to provide such payment;

(8) money market accounts at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (7) of this definition; and

(9) shares of any so-called “money market fund” that is registered under the Investment Company Act of 1940, has net assets of at least $500,000,000 and has an investment portfolio with an average maturity of 365 days or less.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, 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 properties or assets of Outerwall and its Restricted Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act);

(2) the adoption of a plan relating to the liquidation or dissolution of Outerwall;

(3) any Person (including a Person’s Affiliates and associates), becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of Outerwall, measured by voting power rather than a number of shares;

(4) the first day on which a majority of the members of the Board of Directors of Outerwall are not Continuing Directors; or

(5) Outerwall consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, Outerwall, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of Outerwall or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of Outerwall outstanding immediately prior to such transaction (x) remains outstanding and constitutes a majority of the then outstanding Voting Stock of

 

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Outerwall and is held by the holders thereof immediately prior to such transaction or (y) is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance).

“Change of Control Offer” has the meaning set forth above under the caption “—Repurchase at the Option of Holders—Change of Control.”

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus (or in the case of clause (5) below, minus), without duplication, the following items to the extent deducted (or added) in computing Consolidated Net Income for such period:

(1) provision for taxes based on or by reference to income or profits of such Person and its Restricted Subsidiaries for such period; plus

(2) the Fixed Charges of such Person and its Restricted Subsidiaries for such period; plus

(3) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (including any non-consolidated non-cash equity interest losses in joint ventures and excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period; plus

(4) expenses and charges resulting from equity offerings, investments, mergers, recapitalizations, the incurrence of Permitted Refinancing Indebtedness and refinancing thereof, option buyouts, Dispositions, Asset Acquisitions and similar transactions (whether or not completed), including such expenses and charges relating to (i) the offering of the Notes, (ii) any amendment or other modification of the Notes or the Credit Agreement, (iii) the redemption or repurchase of Outerwall’s existing 4.00% Convertible Senior Notes due 2014 or the redemption or repurchase of Outerwall’s 6.000% Senior Notes due 2019 and (iv) the consummation of any other transactions in connection with the repayment or refinancing of Outerwall’s Existing Indebtedness; minus

(5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP.

Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of Outerwall will be added to Consolidated Net Income to compute Consolidated Cash Flow of Outerwall only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to Outerwall by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided, that:

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;

 

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(2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income has not previously been effected in compliance with applicable law and is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;

(3) the cumulative effect of a change in accounting principles will be excluded;

(4) non-cash expenses or charges arising from the grant, issuance or repricing of stock, stock options or other equity-based awards or any amendment, modification, substitution or change of any stock, stock options or other equity-based awards will be excluded; and

(5) notwithstanding clause (1) above, the Net Income of any Unrestricted Subsidiary will be excluded to the extent not distributed to the specified Person or one of its Subsidiaries.

“Consolidated Net Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Debt minus Domestic Cash as of such date to (b) Consolidated Cash Flow for the four fiscal quarters most recently ended immediately prior to such date for which financial statements are available, with such pro forma adjustments as are set forth under the definition of “Fixed Charge Coverage Ratio.”

“Consolidated Net Tangible Assets” means Total Assets after deducting:

(1) all current liabilities;

(2) any item representing investments in Unrestricted Subsidiaries; and

(3) all goodwill, trade names, trademarks, patents, unamortized debt discount, organization expenses and other like intangibles,

all as set forth on the most recent internal balance sheet of Outerwall and its consolidated Restricted Subsidiaries and computed in accordance with GAAP.

“Consolidated Total Debt” means, at any date of determination, the aggregate amount of Indebtedness of the Company and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP, but in any event, excluding obligations for undrawn letters of credit, bank guaranties and contingent reimbursement obligations under surety bonds; provided that, notwithstanding the treatment thereof under GAAP (including under FASB ASC 825 and FASB ASC 470-20), such Indebtedness will include the aggregate principal amount of all Indebtedness that may be convertible into Equity Interests of Outerwall or any of its Subsidiaries, including the aggregate principal amount of Outerwall’s 4.00% Convertible Senior Notes due 2014 and any other convertible notes that may be issued by Outerwall or any of its Subsidiaries from time to time.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of Outerwall who:

(1) was a member of such Board of Directors on the Issue Date; or

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

“Covenant Suspension Event” has the meaning assigned to such term under the caption “—Certain Covenants—Covenant Suspension.”

 

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“Credit Agreement” means that certain Second Amended and Restated Credit Agreement, dated as of July 15, 2011, as amended, among Outerwall Inc., as successor to Coinstar, Inc., and inter alia Bank of America N.A., as administrative agent, providing for revolving credit and term loan borrowings and letters of credit, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified (in whole or in part, and without limitation as to amount, terms, covenants or other conditions), renewed, extended, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time whether (in whole or in part) with the same or other lenders.

“Credit Facilities” means, one or more debt facilities (including, without limitation, the Credit Agreement), indentures, note purchase agreements or commercial paper facilities or financings, in each case, with banks or other institutional lenders providing for revolving credit loans, term loans, notes, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified (in whole or in part, and without limitation as to amount, terms, covenants or other conditions), renewed, extended, refunded, replaced (whether upon or after termination or otherwise) or refinanced in whole or in part from time to time whether (in whole or in part) with the same or other lenders.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Disposition” means, with respect to any Person, any merger, consolidation or other business combination involving such Person (whether or not such Person is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of such Person’s assets or Capital Stock.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Outerwall to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Outerwall may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the indenture will be the maximum amount that Outerwall and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“Domestic Cash” means the aggregate amount of cash and Cash Equivalents of Outerwall and its Domestic Subsidiaries in deposit or investment accounts of Outerwall and its Domestic Subsidiaries in the United States free and clear of all Liens (other than Liens created by the Credit Agreement).

“Domestic Subsidiary” means any Restricted Subsidiary of Outerwall that was formed under the laws of the United States or any state of the United States or the District of Columbia.

“DTC” means The Depository Trust Company.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

 

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“Equity Offering” means any offering of Qualified Capital Stock of Outerwall.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Indebtedness” means all Indebtedness of Outerwall and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid.

“Fair Market Value” means (unless otherwise provided in the indenture) the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by (1) the Chief Executive Officer, the Chief Financial Officer or the Board of Directors of Outerwall for transactions involving Fair Market Value that is less than or equal to $10.0 million, and (2) the Board of Directors of Outerwall for transactions involving Fair Market Value that is greater than $10.0 million.

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four fiscal quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four fiscal quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four fiscal quarter reference period and any pro forma calculations shall be determined in good faith by the chief financial officer of Outerwall;

(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four fiscal quarter reference period;

(5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four fiscal quarter reference period; and

(6) interest expense attributable to Indebtedness that is to be computed on a pro forma basis and bears a floating rate of interest will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire reference period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date of at least 12 months).

 

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“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of original issue discount, non-cash interest payments, capitalized interest, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus

(2) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon, the amount of which shall be the portion of interest equal to the proportionate amount (if less than all) of such Indebtedness of such other Person so guaranteed or secured by such Lien (or, if less, the Fair Market Value of the assets subject to such Lien); plus

(3) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of Outerwall (other than Disqualified Stock) or to Outerwall or a Restricted Subsidiary of Outerwall, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP;

less, to the extent included above, the amortization during such period of debt issuance and deferred financing costs, commissions and fees and any amortization of deferred charges resulting from the application of Accounting Standards Codification 470-20, Debt (but only to the extent of the information therein that was codified from Financial Accounting Standards Board Staff Position No. APB 14-1—Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) or related interpretations or guidance).

“Foreign Subsidiary” means any Restricted Subsidiary other than a Domestic Subsidiary.

“GAAP” means 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 have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

“Guarantors” means any Subsidiaries that execute a Note Guarantee in accordance with the provisions of the indenture, and their respective successors and assigns, in each case, until the Note Guarantee of any such Person has been released in accordance with the provisions of the indenture.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and

 

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(3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), without duplication, whether or not contingent:

(1) in respect of borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations;

(5) representing the balance deferred and unpaid of the purchase price (other than trade payables incurred in the ordinary course of business) of any property or services due more than six months after such property is acquired or such services are completed; or

(6) representing any Hedging Obligations other than Hedging Obligations that are incurred for the purpose of protecting Outerwall or any of the Restricted Subsidiaries against fluctuations in interest rates, commodity prices or foreign currency exchange rates, and not for speculative purposes,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person, to the extent, as applicable, of the amount of Indebtedness covered by such Guarantee, or the fair market value of the asset or assets subject to such Lien. The principal amount of any Hedging Obligations shall be the net amount payable upon termination (if any) at such time.

“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing that is, in the judgment of the Board of Directors, qualified to perform the task for which it has been engaged.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or equivalent) by Moody’s and BBB- (or equivalent) by S&P, or, in either case, an equivalent rating by any other Rating Agency.

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees or other obligations), advances or capital contributions (excluding loans and advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If Outerwall or any Subsidiary of Outerwall sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of Outerwall such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of Outerwall, Outerwall will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of Outerwall’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the last paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The acquisition by Outerwall or any Subsidiary of Outerwall of a Person that holds an Investment in a third Person will be deemed to be an Investment by Outerwall or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the last

 

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paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” Except as otherwise provided in the indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“Issue Date” means the date on which the original notes were originally issued under the indenture.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof (but excluding any operating leases), any option or other agreement to sell or give a security interest in and any valid authorization to file any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Material Subsidiary” means (a) a Subsidiary whose consolidated assets or revenues as of the end of the most recently ended fiscal year or for such fiscal year, as the case may be, exceeded 10% of the consolidated assets or revenues of Outerwall as of the end of such fiscal year or for such fiscal year, as the case may be, or (b) a Subsidiary that guarantees any other Indebtedness of Outerwall or any Guarantor.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss).

“Net Proceeds” means the aggregate cash proceeds received by Outerwall or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, (2) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (3) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale, (4) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP, (5) all distributions and other payments required to be made to any Person owning a beneficial interest in assets subject to sale or minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale, (6) any reserve, established in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Sale and retained by Outerwall or any Restricted Subsidiary of Outerwall after such Asset Sale, and (7) any reserves established in accordance with GAAP with respect to the purchase price adjustments or indemnification obligations relating to such Asset Sale or otherwise in connection with such Asset Sale.

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither Outerwall nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; and

 

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(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of Outerwall or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of such other Indebtedness to be accelerated or payable prior to its Stated Maturity.

“Note Guarantee” means the Guarantee by each Guarantor of Outerwall’s obligations under the indenture and the original notes and the exchange notes, as the case may be, executed pursuant to the provisions of the indenture.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Permitted Business” means any business conducted by Outerwall or its Restricted Subsidiaries on the Issue Date and any business related, ancillary or complementary to, or a reasonable extension of, the business of Outerwall or its Restricted Subsidiaries on the Issue Date.

“Permitted Investments” means:

(1) any Investment in Outerwall or in a Restricted Subsidiary;

(2) any Investment in Cash Equivalents;

(3) any Investment by Outerwall or any Restricted Subsidiary of Outerwall in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary, or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Outerwall or a Restricted Subsidiary.

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”;

(5) any acquisition of assets or Capital Stock solely in exchange for (or out of the net proceeds of) the issuance of Equity Interests (other than Disqualified Stock) of Outerwall;

(6) any Investments received in compromise or resolution of (a) obligations of trade creditors or customers that were incurred in the ordinary course of business of Outerwall or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (b) litigation, arbitration or other disputes with Persons who are not Affiliates;

(7) Investments represented by Hedging Obligations;

(8) loans or advances to employees made in the ordinary course of business of Outerwall or any of its Restricted Subsidiaries in an aggregate principal amount not to exceed $2.0 million at any one time outstanding;

(9) extensions of trade credit or advances to customers and/or suppliers on commercially reasonable terms in the ordinary course of business (including concessionary trade terms as Outerwall or its Restricted Subsidiary (as the case may be) deems reasonable under the circumstances);

(10) Guarantees of Indebtedness of Outerwall or any of its Restricted Subsidiaries issued in accordance with the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;

 

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(11) repurchases of the Notes;

(12) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (12) that are at the time outstanding, not to exceed the greater of (A) $100.0 million and (B)(i) the greater of (1) $200.0 million and (2) 30.0% of the Consolidated Net Tangible Assets of Outerwall and its Restricted Subsidiaries at any time outstanding less (ii) the amount of Investment previously made pursuant to clause (13) of the second paragraph under “—Certain Covenants—Restricted Payments”; and

(13) for the avoidance of doubt, any Investments existing on the Issue Date and any extension, modification, replacement or renewal of any such Investments existing on the Issue Date, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date (or as subsequently amended or otherwise modified in a manner not disadvantageous to the holders of the Notes in any material respect).

“Permitted Liens” means:

(1) Liens securing Indebtedness incurred by Outerwall or any Guarantor pursuant to clause (1) of the definition of “Permitted Debt” and any cash management obligations owed to any lender or any Affiliates thereof;

(2) Liens in favor of Outerwall or any Guarantor;

(3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with Outerwall or any Restricted Subsidiary of Outerwall; provided, that such Liens were in existence prior to, and not incurred in contemplation of, such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with Outerwall or the Restricted Subsidiary and any proceeds of such property;

(4) Liens on property of a Person at the time such Person becomes a Restricted Subsidiary of Outerwall, provided, that such Liens were in existence prior to, and not created in contemplation thereof and do not extend to any other property of Outerwall or any Restricted Subsidiary other than any proceeds of such property;

(5) Liens on assets (including Capital Stock) existing at the time of acquisition of the assets by Outerwall or any Subsidiary of Outerwall, together with any proceeds thereof; provided, that such Liens were in existence prior to such acquisition, and not incurred in contemplation of such acquisition;

(6) Liens to secure the performance of statutory obligations, bids, trade contracts, leases (other than Capital Lease Obligations), surety or appeal bonds, performance bonds, letters of credit or other obligations of a like nature incurred in the ordinary course of business;

(7) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” covering only the assets acquired with or financed by such Indebtedness and assets reasonably related thereto (and any proceeds thereof) and incurred within 180 days after the date of the acquisition, or the completion of the construction or improvement, thereof;

(8) Liens existing on the Issue Date (other than Liens referred to in clause (1) above), and replacements thereof encumbering only the assets subject to the Liens being replaced and any proceeds thereof (and securing obligations not exceeding in aggregate amount the obligations secured on the Issue Date by such Liens being replaced);

 

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(9) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(10) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(11) survey exceptions, minor defects or irregularities in title, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(12) Liens created for the benefit of (or to secure) the Notes (or the Note Guarantees) or payment obligations to the trustee;

(13) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture (other than Permitted Refinancing Indebtedness refinancing Indebtedness secured by Liens referred to in clause (1) above); provided, however, that:

(a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(14) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, and Liens securing reimbursement obligations in respect of letters of credit, or to secure the performance of tenders, statutory obligations, indemnity, surety and appeal bonds, bids, leases, contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

(15) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(16) Liens upon specific items of inventory or other goods purchased by Outerwall or its Restricted Subsidiaries in the ordinary course of business in favor of the vendors thereof, together with any proceeds thereof;

(17) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods that are incurred in the ordinary course of business;

(18) Liens with respect to obligations that do not exceed $20.0 million at any one time outstanding;

(19) Liens solely on any cash earnest money deposits made by Outerwall or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted under the indenture;

(20) Liens securing Hedging Obligations made in the ordinary course of business and not for speculation; provided that such Hedging Obligations are permitted under the indenture;

 

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(21) bankers’ Liens, rights of setoff, and similar Liens granted or incurred in the ordinary course of business with respect to deposits and deposit accounts in favor of the banks with which such accounts are maintained;

(22) Liens arising in connection with the filing of precautionary UCC financing statements or functionally similar documents, relating solely to operating leases of personal property entered into in the ordinary course of business;

(23) Liens or rights of setoff on coins contained in the automated coin counting machines or other machines owned by Outerwall and its Subsidiaries in favor of a counterparty to a Outerwall Installation Agreement to the extent that such counterparty has paid or otherwise honored a voucher issued in respect of such coins in accordance with such Outerwall Installation Agreement; and

(24) Liens on assets of Foreign Subsidiaries securing Indebtedness of Foreign Subsidiaries.

“Permitted Refinancing Indebtedness” means any Indebtedness of Outerwall or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of Outerwall or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the initial principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of all customary expenses and premiums incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(4) such Indebtedness is incurred either by (a) Outerwall or a Guarantor or (b) by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“preferred stock” of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Stock.

“Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by Outerwall which shall be substituted for Moody’s or S&P or both, as the case may be.

“Restricted Investments” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

 

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“Reversion Date” has the meaning assigned to such term under the caption “—Certain Covenants— Covenant Suspension.”

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc. and its successors.

“SEC” means the United States Securities and Exchange Commission.

“Significant Note Guarantee” means a Note Guarantee executed and delivered by a Significant Restricted Subsidiary.

“Significant Restricted Subsidiary” means any Restricted Subsidiary that is a Significant Subsidiary.

“Significant Subsidiary” means any Subsidiary that is a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

“Surviving Person” means, with respect to any Person involved in or that makes any Disposition, the Person formed by or surviving such Disposition or the Person to which such Disposition is made.

“Suspended Covenants” has the meaning assigned to such term under the caption “—Certain Covenants—Covenant Suspension.”

“Suspension Period” has the meaning assigned to such term under the caption “—Certain Covenants— Covenant Suspension.”

“Total Assets” means the total consolidated assets of Outerwall and its Subsidiaries as of the end of the most recent fiscal quarter of Outerwall for which financial statements are required to be delivered under the indenture.

“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to June 15, 2017; provided that if the period from the redemption date to June 15, 2017 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

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“Unrestricted Subsidiary” means any Subsidiary of Outerwall that is designated by the Board of Directors of Outerwall as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) except as permitted by the covenant described above under the caption “—Certain Covenants— Transactions with Affiliates,” is not party to any agreement, contract, arrangement or understanding with Outerwall or any Restricted Subsidiary of Outerwall unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Outerwall or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Outerwall;

(3) is a Person with respect to which neither Outerwall nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Outerwall or any of its Restricted Subsidiaries.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

“Wholly Owned Domestic Subsidiary” means any Wholly Owned Subsidiary that is a Domestic Subsidiary.

“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares and shares issued to foreign nationals under applicable law) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

General

The following summary describes the material United States federal income tax consequences relevant to the exchange of original notes for exchange notes pursuant to the exchange offer, but does not purport to be a complete analysis of all potential tax considerations. The following discussion is based on the provisions of the United States Internal Revenue Code of 1986, as amended, or the Code, and related United States Treasury regulations, administrative rulings and judicial decisions now in effect, changes to which subsequent to the date hereof may affect the tax consequences described below.

This summary is limited to the tax consequences of those persons who are original beneficial owners of the original notes, who exchange original notes for exchange notes in this exchange offer and who hold the original notes, and that will hold the exchange notes, as capital assets within the meaning of Section 1221 of the Code, all of whom we refer to as “holders” for purposes of this summary. This summary does not purport to deal with all

 

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aspects of United States federal income taxation that might be relevant to particular holders in light of their particular circumstances or status nor does it address specific tax consequences that may be relevant to particular persons (including, for example, financial institutions, broker-dealers, insurance companies, partnerships or other pass-through entities, expatriates, banks, real estate investment trusts, regulated investment companies, tax-exempt organizations and persons that have a functional currency other than the United States Dollar, or persons in special situations, such as those who have elected to mark securities to market or those who hold Notes as part of a straddle, hedge, conversion transaction or other integrated investment). In addition, this summary does not address United States federal alternative minimum, estate or gift tax consequences or consequences under the tax laws of any state, local or foreign jurisdiction. We have not sought any ruling from the Internal Revenue Service (the “IRS”), with respect to the statements made and the conclusions reached in this summary, and we cannot assure you that the IRS will agree with such statements and conclusions.

If a partnership or other entity treated as a partnership for United States federal income tax purposes holds original notes and participates in the exchange offer, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership.

This summary is for general information only. We encourage holders to consult their own tax advisors regarding the United States federal income and other tax consequences of the exchange offer and being a holder of the exchange notes in light of their particular circumstances, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.

Exchange of Original Notes for Exchange Notes Pursuant to this Exchange Offer

An exchange of original notes for exchange notes pursuant to the exchange offer will not constitute a significant modification of the terms of the original notes and, accordingly, will not constitute a taxable event for United States federal income tax purposes. Instead, the exchange notes will be treated as a continuation of the original notes. Consequently, holders will not recognize any taxable gain or loss as a result of exchanging original notes for exchange notes pursuant to the exchange offer. The holding period of the exchange notes will include the holding period of the original notes, and the tax basis in the exchange notes will be the same as the tax basis in the original notes immediately before the exchange.

PLAN OF DISTRIBUTION

Based on interpretations of the staff of the SEC, as described in no-action letters issued to third parties that are not related to us, we believe that the exchange notes will be freely transferable by holders other than our affiliates after the exchange offer without further registration under the Securities Act if the holder of the exchange notes represents to us in the exchange offer that it is acquiring the exchange notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in the distribution of the exchange notes and that it is not our affiliate, as such terms are interpreted by the SEC; provided, however, that broker-dealers receiving exchange notes in the exchange offer will have a prospectus delivery requirement with respect to resales of such exchange notes as further discussed below. We also believe that such broker-dealers may fulfill their prospectus delivery requirements with respect to exchange notes (other than a resale of an unsold allotment from the original sale of the Notes) with this prospectus.

We believe that you may not transfer exchange notes issued in the exchange offer without further compliance with such requirements or an exemption from such requirements if you are:

 

•

our affiliate within the meaning of Rule 405 under the Securities Act, or

 

•

a broker-dealer that acquired original notes as a result of market-making or other trading activities.

The information described above concerning interpretations of and positions taken by the SEC staff is not intended to constitute legal advice. Broker-dealers should consult their own legal advisors with respect to these matters.

 

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If you wish to exchange your original notes for exchange notes in the exchange offer, you will be required to make representations to us as described in “The Exchange Offer—Procedures for Tendering,” including in the subheading “—Your Representations to Us,” of this prospectus and in the letter of transmittal.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for original notes where such original notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days following the effective date of the registration statement of which this prospectus forms a part, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until (and including)             , 2015, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days following the effective date of the registration statement of which this prospectus forms a part, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the Notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Exchange Act, and in accordance therewith file annual, quarterly and special reports, as well as registration and proxy statements and other information, with the SEC. These reports, statements and other information may be inspected and copied at prescribed rates from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These materials may also be accessed electronically by means of commercial document retrieval services and the SEC’s website on the Internet at http://www.sec.gov.

INCORPORATION BY REFERENCE

We filed with the SEC a registration statement on Form S-4 dated March 5, 2015 of which this prospectus is a part. This prospectus does not contain all the information in the registration statement. We have omitted parts of the registration statement, as permitted by the rules and regulations of the SEC. You may inspect and obtain a

 

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copy of the registration statement, including exhibits, at the SEC’s public reference facilities or its website as described above. Our statements in this prospectus about the contents of any contract or other document are not necessarily complete. You should refer to the copy of each contract or other document we have filed as an exhibit to the registration statement for complete information.

The SEC allows us to “incorporate by reference” into this prospectus the information that we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information we incorporate by reference is considered a part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below, all filings filed by us pursuant to the Exchange Act after the date of the initial registration statement and prior to effectiveness of the registration statement and any future filings that we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until the exchange offer is completed, except for information in any such documents or filings “furnished” under any current report or otherwise “furnished” to the SEC, including under Item 2.02 or Item 7.01 or any Current Report on Form 8-K:

 

•

Our annual report on Form 10-K for the year ended December 31, 2014; and

 

•

Our current reports on Form 8-K filed with the SEC on January 20, 2015 (other than items furnished to the SEC under Item 2.02), February 5, 2015 (other than items furnished to the SEC under Item 2.02), and February 13, 2015.

Copies of the documents listed above are also available free of charge through our website (www.outerwall.com) as soon as reasonably practicable after we electronically file the material with, or furnish it to, the SEC. In addition, you can obtain the documents referenced above by contacting us as described on the inside front cover of this prospectus.

LEGAL MATTERS

The validity of the exchange notes being offered under this prospectus will be passed upon for Outerwall Inc. by Perkins Coie LLP, Seattle, Washington.

EXPERTS

The consolidated financial statements of Outerwall Inc. as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2014 have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2014 consolidated financial statements refers to a change to the method of accounting for content library amortization.

 

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OUTERWALL INC.

OFFER TO EXCHANGE ITS

5.875% Senior Notes due 2021

that have been registered under the

Securities Act of 1933, as amended,

for any and all of its outstanding

5.875% Senior Notes due 2021

that were issued and sold in a transaction

exempt from registration

under the Securities Act of 1933, as amended

 

 

 

PROSPECTUS

 

 

 

                    , 2015

Until                     , 2015, all dealers that effect transactions in these securities, whether or not participating in the exchange offer, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

 

 

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 20.

Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers on terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act.

As permitted by the Delaware General Corporation Law, the certificate of incorporation of each of Outerwall, Coinstar International, Inc. and ecoATM, Inc. includes a provision that eliminates the personal liability of its directors to such corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director’s duty of loyalty to such corporation or its stockholders; (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law; (iii) under Section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchase or redemption); or (iv) for any transaction from which the director derived an improper personal benefit.

As permitted by the Delaware General Corporation Law, the bylaws of each of Outerwall, Coinstar International, Inc. and ecoATM, Inc. provide that: (i) such corporation is required to indemnify its directors and officers to the fullest extent permitted by the Delaware General Corporation Law, subject to certain very limited exceptions; (ii) such corporation is required to advance expenses, as incurred, to its directors and officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to certain very limited exceptions; and (iii) the rights conferred in such corporation’s bylaws are not exclusive.

Each of Outerwall, Coinstar International, Inc. and ecoATM, Inc. may enter into indemnification agreements with certain of its directors and officers to give such directors and officers additional contractual assurances regarding the scope of the indemnification set forth in its certificate of incorporation and its bylaws and to provide additional procedural protections.

Section 18-108 of the Delaware Limited Liability Company Act provides that a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever, subject to the standards and restrictions, if any, set forth in its limited liability company agreement.

The limited liability company agreements of each of Clover One, LLC, Coinstar Procurement, LLC, CUHL Foods, LLC, RAR Ventures, LLC, Redbox Automated Retail, LLC and Sesame Holdings, LLC provide that such company is required to indemnify its member and manager to the fullest extent not prohibited by law.

Section 15-7(a) of the Illinois Limited Liability Company Act provides that a limited liability company shall indemnify a member or manager for liabilities incurred in the ordinary course of business of the company or for the preservation of its business or property.

The limited liability company agreement of Redbox Incentives LLC provides that Redbox Incentives LLC is required to indemnify its member and manager to the fullest extent not prohibited by law.

Section 25.15.040 of the Washington Limited Liability Company Act provides that a limited liability company agreement may contain provisions not inconsistent with law that: (a) eliminate or limit the personal liability of a member or manager to the limited liability company or its members for monetary damages for conduct as a member or manager, provided that such provisions shall not eliminate or limit the liability of a member or manager for acts or omissions that involve intentional misconduct or a knowing violation of law by a member or manager, for conduct of the member or manager violating Section 25.15.235 of the Washington

 

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Limited Liability Company Act (limiting a company’s ability to make distributions that would leave it unable to pay its debts when due or would cause its liabilities to exceed its assets) or for any transaction from which the member or manager will personally receive a benefit in money, property, or services to which the member or manager is not legally entitled; or (b) indemnify any member or manager from and against any judgments, settlements, penalties, fines, or expenses incurred in a proceeding to which an individual is a party because he or she is, or was, a member or a manager, provided that no such indemnity shall indemnify a member or a manager from or on account of acts or omissions of the member or manager finally adjudged to be intentional misconduct or a knowing violation of law by the member or manager, conduct of the member or manager adjudged to be in violation of Section 25.15.235 of the Washington Limited Liability Company Act or any transaction with respect to which it was finally adjudged that such member or manager received a benefit in money, property, or services to which such member or manager was not legally entitled.

The limited liability company agreement of CUHL Holdings, LLC provides that CUHL Holdings, LLC is required to indemnify its member and manager to the fullest extent not prohibited by law.

The indemnification provision in each registrant’s governing documents and any indemnity agreements such registrant may enter into with certain of its directors and officers (including those of Outerwall) may be sufficiently broad to permit indemnification of such registrant’s directors and officers for liabilities arising under the Securities Act. Outerwall has also obtained directors’ and officers’ liability insurance.

 

Item 21.

Exhibits and Financial Statement Schedules

(a) Exhibits

Reference is made to the Exhibit Index starting on page E-1.

 

Item 22.

Undertakings

The undersigned Registrants hereby undertake:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be this initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than

 

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registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

(6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(7) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

(8) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(9) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel		Interim Chief Executive Officer and Director     (Principal Executive Officer)
Nora M. Denzel
/s/ Galen C. Smith		Chief Financial Officer     (Principal Financial Officer)
Galen C. Smith
/s/ Peter Osvaldik		Chief Accounting Officer     (Principal Accounting Officer)
Peter Osvaldik
/s/ Nelson C. Chan		Chair of the Board
Nelson C. Chan
/s/ Seth Bernstein		Director
Seth Bernstein
/s/ David M. Eskenazy		Director
David M. Eskenazy
/s/ Ross G. Landsbaum		Director
Ross G. Landsbaum
/s/ Robert D. Sznewajs		Director
Robert D. Sznewajs
/s/ Ronald B. Woodard		Director
Ronald B. Woodard

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel Nora M. Denzel		President     (Principal Executive Officer)
/s/ Galen C. Smith Galen C. Smith		Vice President and Treasurer     (Principal Financial and Accounting Officer)
OUTERWALL INC.		Sole Member and Manager
/s/ Donald R. Rench Donald R. Rench Chief Legal Officer, General Counsel and Corporate Secretary

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel Nora M. Denzel		President and Director     (Principal Executive Officer)
/s/ Galen C. Smith Galen C. Smith		Chief Financial Officer     (Principal Financial and Accounting Officer)
/s/ Donald R. Rench Donald R. Rench		Director

 

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel Nora M. Denzel		President     (Principal Executive Officer)
/s/ Sonia Jain Sonia Jain		Treasurer     (Principal Financial and Accounting Officer)
OUTERWALL INC.		Sole Member and Manager
/s/ Donald R. Rench Donald R. Rench Chief Legal Officer, General Counsel and Corporate Secretary

 

S-4

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel Nora M. Denzel		President     (Principal Executive Officer)
/s/ Sonia Jain Sonia Jain		Treasurer     (Principal Financial and Accounting Officer)
CUHL HOLDINGS, LLC		Sole Member and Manager
/s/ Donald R. Rench Donald R. Rench Vice President and Secretary

 

S-5

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel Nora M. Denzel		President     (Principal Executive Officer)
/s/ Galen C. Smith Galen C. Smith		Vice President and Treasurer     (Principal Financial and Accounting Officer)
OUTERWALL INC.		Sole Member and Manager
/s/ Donald R. Rench Donald R. Rench Chief Legal Officer, General Counsel and Corporate Secretary

 

S-6

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Maria D. Stipp Maria D. Stipp		President     (Principal Executive Officer, Principal Financial and     Accounting Officer)
/s/ Donald R. Rench Donald R. Rench		Director

 

S-7

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
REDBOX AUTOMATED RETAIL, LLC		Sole Member and Manager     (Principal Executive, Financial and Accounting     Officer)
/s/ Donald R. Rench Donald R. Rench Vice President

 

S-8

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Mark Horak Mark Horak		President     (Principal Executive Officer)
/s/ Galen C. Smith Galen C. Smith		Treasurer     (Principal Financial and Accounting Officer)
OUTERWALL INC.		Sole Member and Manager
/s/ Donald R. Rench Donald R. Rench Chief Legal Officer, General Counsel and Corporate Secretary

 

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
REDBOX AUTOMATED RETAIL, LLC		Member and Manager (Principal Executive, Financial and Accounting Officer)
/s/ Donald R. Rench Donald R. Rench Vice President

 

S-10

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-4 and has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on the 5th day of March, 2015.

 

Each person whose signature appears below hereby constitutes, appoints and authorizes Galen C. Smith and Donald R. Rench, or any one of them, as his or her attorney in fact and agent, with full power of substitution and resubstitution, to execute, in his or her name and on his or her behalf, in any and all capacities, this Registration Statement on Form S-4 and any amendments thereto (and any additional registration statement related thereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments including post-effective amendments thereto)) necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any other laws, and any rules, regulations and requirements of the Securities and Exchange Commission, in respect thereof, in connection with the registration of the securities which are the subject of such registration statement, which amendments may make such changes in such registration statement as such attorney may deem appropriate, and with full power and authority to perform and do any and all acts and things whatsoever which any such attorney or substitute may deem necessary or advisable to be performed or done in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and approving all acts of any such attorney or substitute.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated below on the 5th day of March, 2015.

 

Signature		Title
/s/ Nora M. Denzel		President     (Principal Executive Officer)
/s/ Galen C. Smith Galen C. Smith		Vice President and Treasurer     (Principal Financial and Accounting Officer)
OUTERWALL INC.		Sole Member and Manager
/s/ Donald R. Rench Donald R. Rench Chief Legal Officer, General Counsel and Secretary

 

S-11

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Table of Contents

EXHIBIT INDEX

 

Number		Description
3.1		Outerwall Inc. Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Outerwall’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (File No. 000-22555))
3.2		Amended and Restated Bylaws of Outerwall Inc. (incorporated by reference to Exhibit 3.2 to Outerwall’s Current Report on Form 8-K filed on July 2, 2013 (File No. 000-22555))
3.3		Clover One, LLC Certificate of Formation (incorporated by reference to Exhibit 3.3 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.4		Limited Liability Company Agreement of Clover One, LLC dated November 27, 2012 (incorporated by reference to Exhibit 3.4 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.5		Coinstar International, Inc. Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.6		By-Laws of Coinstar International, Inc. adopted on March 16, 1998 (incorporated by reference to Exhibit 3.6 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.7		Coinstar Procurement, LLC Certificate of Formation (incorporated by reference to Exhibit 3.7 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.8		Limited Liability Company Agreement of Coinstar Procurement, LLC dated August 16, 2011 (incorporated by reference to Exhibit 3.8 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.9		CUHL Foods, LLC Certificate of Formation (incorporated by reference to Exhibit 3.9 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.10		Limited Liability Company Agreement of CUHL Foods, LLC dated February 14, 2011 (incorporated by reference to Exhibit 3.10 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.11		CUHL Holdings, LLC Certificate of Formation, as amended
3.12		Limited Liability Company Agreement of CUHL, LLC (n/k/a CUHL Holdings, LLC) dated December 2, 2013
3.13		Restated Certificate of Incorporation of ecoATM, Inc. (incorporated by reference to Exhibit 3.13 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.14		Bylaws of ecoATM, Inc. (incorporated by reference to Exhibit 3.14 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.15		RAR Ventures, LLC Certificate of Formation (incorporated by reference to Exhibit 3.15 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.16		Limited Liability Company Agreement of RAR Ventures, LLC effective as of July 8, 2011 (incorporated by reference to Exhibit 3.16 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.17		Redbox Automated Retail, LLC Certificate of Formation (incorporated by reference to Exhibit 3.3 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.18		Fifth Amended and Restated Limited Liability Company Agreement of Redbox Automated Retail, LLC dated June 5, 2013

 

E-1

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Table of Contents

Number		Description
3.19		Redbox Incentives LLC Articles of Organization (incorporated by reference to Exhibit 3.3 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.20		Limited Liability Company Agreement of Redbox Incentives LLC dated December 2, 2011 (incorporated by reference to Exhibit 3.20 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.21		Sesame Holdings, LLC Certificate of Formation (incorporated by reference to Exhibit 3.21 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
3.22		Limited Liability Company Agreement of Sesame Holdings, LLC dated February 8, 2013 (incorporated by reference to Exhibit 3.22 to Outerwall’s Registration Statement on Form S-4 filed on September 6, 2013 (File No. 333-191044))
4.1		Indenture, dated as of June 9, 2014, among Outerwall, the Subsidiary Guarantors and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Outerwall’s Current Report on Form 8-K filed on June 9, 2014 (File No. 000-22555))
4.2		Registration Rights Agreement, dated as of June 9, 2014, among Outerwall, the Subsidiary Guarantors and HSBC Securities (USA) Inc., as representative of the Initial Purchasers (incorporated by reference to Exhibit 4.2 to Outerwall’s Current Report on Form 8-K filed on June 9, 2014 (File No. 000-22555))
4.3		Form of Outerwall Inc. 5.875% Exchange Note due 2021
5.1		Opinion of Perkins Coie LLP as to the legality of the Exchange Notes issued by Outerwall Inc.
12.1		Computation of ratio of earnings to fixed charges
23.1		Consent of Independent Registered Public Accounting Firm
23.2		Consent of Perkins Coie LLP (included in Exhibit 5.1)
25.1		Form T-1 Statement of Eligibility of U.S. Bank National Association
99.1		Form of Letter of Transmittal
99.2		Form of Notice of Guaranteed Delivery
99.3		Form of Notice of Letter to DTC Participants
99.4		Form of Letter to Clients

 

E-2

Exhibit 3.11

CERTIFICATE OF FORMATION

OF

CUHL, LLC

The undersigned, for the purpose of forming a limited liability company under Title 25 of the Revised Code of Washington, hereby executes the following Certificate of Formation.

ARTICLE 1. NAME

The name of the limited liability company is CUHL, LLC (the “Company”).

ARTICLE 2. REGISTERED AGENT AND OFFICE

The name of the initial registered agent of the Company, and the address of the initial registered office of the Company and the registered agent, are as follows:

CT Corporation System

1801 West Bay Drive NW, Suite 206

Olympia, WA 98502

ARTICLE 3. PRINCIPAL PLACE OF BUSINESS

The address of the principal place of business of the Company is 1800-114th Avenue SE, Bellevue, WA 98004.

ARTICLE 4. DURATION

The duration of the limited liability company shall be perpetual.

ARTICLE 5. MANAGEMENT

The management of the limited liability company shall be vested in a manager or managers.

ARTICLE 6. SIGNATURE

The name and address of the person executing this Certificate of Formation are as follows:

Lance W. Bass

Perkins Coie LLP

1201 Third Avenue, Suite 4900

Seattle, WA 98101

 

Dated: December 2, 2013				/s/ Lance W. Bass
				Lance W. Bass, Authorized Person

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ARTICLES OF MERGER

CUHL HOLDINGS, INC.

and

CUHL, LLC

Pursuant to RCW 23B.11.090 and RCW 25.15.405 the following Articles of Merger are executed for the purpose of merging CUHL Holdings, Inc., a Washington corporation (the “Disappearing Entity”), into CUHL, LLC, a Washington limited liability company (the “Surviving Entity”).

1. The Agreement and Plan of Merger is attached hereto as Exhibit A.

2. The Agreement and Plan of Merger was duly approved by the sole shareholder of the Disappearing Entity pursuant to RCW 23B.11.030.

3. The Agreement and Plan of Merger was duly approved by the sole member of the Surviving Entity pursuant to RCW 25.15.400.

4. Article 1 of the Certificate of Formation of the Surviving Entity is hereby amended in its entirety to read as follows:

“ARTICLE 1. NAME

The name of the limited liability company is CUHL Holdings, LLC.”

Dated: December 5, 2013

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (“Agreement”) is entered into as of December 5, 2013 by and between CUHL Holdings, Inc., a Washington corporation (“Holdings”), and CUHL, LLC, a Washington limited liability company (“LLC”). Holdings and LLC are sometimes collectively referred to in this Agreement as the “Constituent Entities.”

RECITALS

A. Holdings is a corporation organized and existing under the laws of the State of Washington and, on the date hereof, 100% of the outstanding shares of Holdings’ capital stock are held of record by Outerwall Inc.

B. LLC is a limited liability company organized and existing under the laws of the State of Washington and, on the date hereof, 100% of its outstanding interests are held of record by Outerwall Inc.

C. The sole shareholder of Holdings and the sole member of LLC deem it advisable and in the best interests of the Constituent Entities that Holdings be merged into LLC (the “Merger”) as authorized by the laws of the State of Washington.

AGREEMENT

In consideration of the foregoing recitals and of the covenants and agreements hereinafter set forth and for the purpose of prescribing the terms and conditions of the Merger, the parties agree as follows:

 

1.

Merger; Effectiveness

Upon the terms and subject to the conditions hereof, on the Effective Date (as hereinafter defined), Holdings shall be merged with and into LLC (the “Merger”) in accordance with the applicable provisions of the Washington Business Corporation Act (the “Corporation Act”) and the Washington Limited Liability Company Act (the “Company Act”). Upon consummation of the Merger, the following shall occur: (a) the Constituent Entities shall become a single entity; (b) the separate existence of Holdings shall cease; and (c) LLC shall be the surviving entity (the “Surviving Entity”) and continue its existence under the Company Act.

The Merger shall become effective as of the date of filing of the Articles of Merger of Holdings and LLC with the Secretary of State of the State of Washington (the “Effective Date”), all after satisfaction of the requirements of the applicable laws of such state prerequisite to such filing.

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2.

Certificate of Formation

Article 1 of the Certificate of Formation of the Surviving Entity is hereby amended in its entirety to read as follows:

“ARTICLE 1. NAME

The name of the limited liability company is CUHL Holdings, LLC.”

As so amended, the Certificate of Formation of the Surviving Entity shall, at the Effective Time of the Merger, be the Certificate of Formation of the Surviving Entity until the same shall be further altered, amended or repealed.

 

3.

Limited Liability Company Agreement

The Limited Liability Company Agreement of the Surviving Entity shall be amended to reflect the new name of the Surviving Entity as set forth in Section 2 above and shall otherwise remain the operating agreement of the Surviving Entity.

 

4.

Manager and Officers

The manager and officers of the Surviving Entity in office at the Effective Time of the Merger shall, at the Effective Time of the Merger, continue as the manager and officers of the Surviving Entity and shall hold such position and offices in accordance with and subject to the Certificate of Formation and Limited Liability Company Agreement of the Surviving Entity, as in effect immediately after the Effective Time of the Merger.

 

5.

Effect on Outstanding Securities of Holdings and LLC

Upon the Effective Date, by virtue of the Merger and without any action on the part of the holder thereof:

(a) Each share of capital stock of Holdings issued and outstanding immediately prior to the Effective Date shall be cancelled, and no consideration shall be delivered in exchange therefor; and

(b) The outstanding ownership interest of LLC shall remain issued and outstanding upon the Effective Date.

 

6.

Rights, Duties, Powers, Liabilities, Etc.

On the Effective Date, the Surviving Entity, without further act, deed or other transfer, shall retain or succeed to, as the case may be, and possess and be vested with all the rights, privileges, immunities, powers, franchises and authority, of a public as well as of a private nature, of Holdings and LLC; all property of every description and every interest therein, and all debts and other obligations of or belonging to or due to each of Holdings and

 

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LLC on whatever account, shall thereafter be taken and deemed to be held by or transferred to, as the case may be, or invested in the Surviving Entity without further act or deed; title to any real estate, or any interest therein vested in Holdings or LLC, shall not revert or in any way be impaired by reason of the Merger; and all the rights of creditors of Holdings and LLC shall be preserved unimpaired, and all liens upon the property of Holdings or LLC shall be preserved unimpaired, and all debts, liabilities, obligations and duties of Holdings or LLC shall thenceforth remain with or be attached to, as the case may be, the Surviving Entity and may be enforced against it to the same extent as if all of said debts, liabilities, obligations and duties had been incurred or contracted by it.

 

7.

Implementation.

(a) Each of the Constituent Entities hereby agrees that at any time or from time to time as and when requested by the Surviving Entity, or by its successors or assigns, it will so far as it is legally able, execute and deliver, or cause to be executed and delivered in its name by its last acting officers, or by the corresponding officers of the Surviving Entity, each of whom is hereby irrevocably appointed as attorney-in-fact for such purposes, all such conveyances, assignments, transfers, deeds or other instruments, and will take or cause to be taken such further or other actions as the Surviving Entity, its successors or assigns, may deem necessary or desirable in order to evidence the transfer, vesting and devolution of any property, right, privilege, power, immunity or franchise to vest or perfect in or confirm to the Surviving Entity, its successors or assigns, title to and possession of all the property, rights, privileges, powers, immunities, franchises and interests referred to in this Agreement and otherwise to carry out the intent and purposes hereof.

(b) Each of the Constituent Entities shall take, or cause to be taken, all action or do, or cause to be done, all things necessary, proper or advisable under the laws of the State of Washington to consummate and make effective the Merger.

 

8.

Termination

This Agreement may be terminated for any reason at any time before the filing of Articles of Merger with the Secretary of State of the State of Washington (whether before or after approval by the sole shareholders or sole member of the Constituent Entities, or either of them) by resolution of the Board of Directors or Manager of each of the Constituent Entities, as applicable.

 

-3-

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9.

Amendment

This Agreement may, to the extent permitted by law, be amended, supplemented or interpreted at any time by action taken by the Board of Directors or Manager of each of the Constituent Entities, as applicable; provided, however, that this Agreement may not be amended or supplemented after having been approved by the sole shareholder of Holdings except by a vote or consent of such sole shareholder in accordance with applicable law.

 

 

-4-

Exhibit 3.12

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

CUHL, LLC

dated December 2, 2013

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CONTENTS

 

Agreement							1
1.		Organization of the Company					1
		1.1		Name			1
		1.2		Formation			1
		1.3		Certificate of Formation			1
		1.4		Registered Agent			1
2.		Definitions; Rules of Construction					2
3.		Purpose					2
4.		Principal Office					2
5.		The Member					2
6.		Management of the Company					2
		6.1		Manager			2
		6.2		Appointment and Removal of Manager			2
		6.3		Authority of Manager; Designation of Officers			2
		6.4		Limitation on Authority of Manager			3
		6.5		Execution of Company Documents			3
7.		Capital Contributions					3
8.		Distributions; Allocations of Income and Loss					3
9.		Books and Records					3
10.		Assignments of Company Interest					3
11.		Withdrawal					4
12.		Dissolution					4
13.		Winding Up					4
		13.1		Responsibility for Winding Up			4
		13.2		Distribution of Assets upon Winding Up			4
14.		Limitation on Liability					4
15.		Indemnification					4
16.		Reliance by Third Parties					5
17.		No Corporation or Partnership Intended for Nontax Purposes					5
18.		Amendments					5
19.		Governing Law					5
EXHIBIT A

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LIMITED LIABILITY COMPANY AGREEMENT

OF

CUHL, LLC

This Limited Liability Company Agreement of CUHL, LLC (the “Company”) is effective as of December 2, 2013 by and between the Company and Outerwall Inc. (the “Member”) for the purpose of forming a limited liability company pursuant to the provisions of the Chapter 25.15 of the Revised Code of Washington (the “Washington Act”).

Agreement

For and in consideration of the mutual covenants contained in this Agreement, the Company and the Member agree as follows:

 

1.	Organization of the Company

 

1.1

Name

The name of the Company is CUHL, LLC or such other name as the Member may from time to time hereafter designate.

 

1.2

Formation

The Member has formed the Company as a limited liability company under the Washington Act.

 

1.3

Certificate of Formation

The term of the Company commenced upon the filing of the Certificate of Formation with the Secretary of State of the State of Washington and shall be perpetual unless earlier terminated and dissolved pursuant to Section 12.

 

1.4

Registered Agent

The registered office of the Company in the State of Washington shall be at 1801 West Bay Drive NW, Suite 206, Olympia, WA 98502. The registered agent of the Company to accept service of process is CT Corporation System. The registered office and registered agent of the Company may be changed by the Member from time to time by filing an amendment to the Certificate of Formation in accordance with the Washington Act.

 

2.	Definitions; Rules of Construction

In addition to terms otherwise defined herein, the following terms are used herein as defined below:

“Agreement” means this Limited Liability Company Agreement as originally executed and as amended or restated from time to time.

---

“Manager” means the Manager designated in Section 6.

“Member” means the Member identified in Section 5.

“Washington Act” means Chapter 25.15 of the Revised Code of Washington, and any successor statute, as amended from time to time.

Words used herein, regardless of the number and gender used, shall be deemed and construed to include any other number, singular or plural, and other gender, masculine, feminine or neuter, as the context requires, and, as used herein, unless the context clearly requires otherwise, the words “hereof,” “herein” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provisions hereof.

 

3.

Purpose

The purpose of the Company shall be to engage in any lawful business that may be engaged in by a limited liability company organized under the Washington Act, as such business activities may be determined by the Manager from time to time.

 

4.	Principal Office

The principal office of the Company and such additional offices as the Member may establish, shall be located at such place or places inside or outside the State of Washington as the Manager may designate from time to time.

 

5.	The Member

The sole Member is Outerwall Inc., a Delaware corporation.

 

6.	Management of the Company

 

6.1

Manager

The initial Manager shall be Outerwall Inc., a Delaware corporation.

 

6.2

Appointment and Removal of Manager

The Member may elect one or more persons to serve as Manager. The Member may remove any Manager at any time with or without cause.

 

6.3

Authority of Manager; Designation of Officers

The Manager shall have the sole and exclusive right to manage the business and affairs of the Company and shall have all powers and rights necessary, appropriate or

 

2

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advisable to effectuate and carry out the purposes and business of the Company. The Manager may, from time to time, designate one or more persons to be officers of the Company. Any officer so designated shall have such authority and shall perform such duties as the Manager may, from time to time, delegate to him or her. No officer need be a Member, a Delaware resident or a United States citizen.

 

6.4

Limitation on Authority of Manager

The Manager shall not have the authority to perform any act in contravention of this Agreement.

 

6.5

Execution of Company Documents

When the taking of such action has been authorized by the Manager, any officer of the Company or any other person specifically authorized by the Manager may execute any contract or other agreement or document on behalf of the Company and may execute and file on behalf of the Company with the Secretary of State of the State of Washington any certificates of amendment to the Certificate of Formation, one or more restated certificates of formation and certificates of merger or consolidation and, upon the dissolution and completion of winding up of the Company, a certificate of cancellation canceling the Certificate of Formation.

 

7.	Capital Contributions

The Member shall make capital contributions at such times and in such amounts as shall be determined by the Member.

 

8.	Distributions; Allocations of Income and Loss

Distributions of cash or other assets of the Company to the Member shall be made at such times and in such amounts as the Member may determine. All distributions and allocations of taxable net income or net loss shall be made to the Member.

 

9.	Books and Records

The Manager shall maintain records and accounts of all operations and expenditures of the Company in such manner as it deems appropriate in compliance with the Washington Act.

 

10.	Assignments of Company Interest

The Member’s interest in the Company shall be transferable in whole or in part without the consent of any other person, and the assignee shall be admitted as a Member and admitted to all the rights of the transferring Member upon execution of a counterpart to this Agreement and upon the books and records of the Company being updated to reflect the transfer of the transferring Member’s Company interest to the new Member.

 

3

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11.	Withdrawal

The withdrawal of the Member shall result in the dissolution of the Company pursuant to Section 12.

 

12.	Dissolution

Subject to the provisions of Section 13, the Company shall be dissolved and its affairs wound up and terminated upon the determination of the Member to dissolve the Company.

 

13.	Winding Up

 

13.1

Responsibility for Winding Up

Upon dissolution of the Company pursuant to Section 12, the Manager may wind up the Company’s affairs; however, any competent court, upon cause shown, may wind up the Company’s affairs upon application of a legal representative or assignee of the Member, and in connection therewith may appoint a liquidating trustee.

 

13.2

Distribution of Assets upon Winding Up

Upon the winding up of the Company, the assets shall be distributed as follows: (a) to creditors, including the Member should it be a creditor, in satisfaction of liabilities of the Company other than liabilities for which reasonable provision for payment has been made and liabilities for distributions to the Member; and (b) the remainder, if any, to the Member.

 

14.	Limitation on Liability

The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Member and the Manager of the Company shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being the Member or Manager.

 

15.	Indemnification

To the fullest extent not prohibited by law, the Company shall indemnify and hold harmless the Member and the Manager from and against any and all losses, claims, demands, costs, damages, liabilities (joint and several), expenses of any nature (including attorneys’ fees and disbursements), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Member or the Manager may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to any business of the Company transacted or occurring while the Member was a Member or a Manager was a Manager, as the case may be, regardless of whether the Member or the Manager continues to be a Member or the Manager of the Company at the time any such liability or expense is paid or incurred.

 

4

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16.	Reliance by Third Parties

This Agreement is entered into between the Company and the Member for the exclusive benefit of the Company, its Member, and their successors and assigns. Specifically (but not by way of limitation), this Agreement is not intended for the benefit of any creditor of the Company or any other person. Except to the extent provided by applicable statute, and then only to that extent, no such creditor or third party shall have any rights under this Agreement or under any other agreement between the Company and the Member, either with respect to any contribution to the Company or otherwise.

 

17.	No Corporation or Partnership Intended for Nontax Purposes

The Member has formed the Company under the Washington Act, and expressly denies any intent hereby to form a partnership or a corporation under the laws of the State of Washington. For federal income tax purposes, the Member intends to treat this entity as a disregarded entity.

 

18.	Amendments

This Agreement may be amended only upon the written consent of the Member.

 

19.	Governing Law

This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Washington without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Washington or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Washington.

[remainder of page intentionally blank]

 

5

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IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the date first above written.

 

 

6

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EXHIBIT A

 

Member Name & Address		Date		% Interest Owned/ Transferred
Outerwall Inc. 1800 114th Avenue SE Bellevue, WA 98004		December 2, 2013			100	%

Exhibit 3.18

FIFTH AMENDED AND RESTATED LIMITED LIABILITY

COMPANY AGREEMENT

OF

REDBOX AUTOMATED RETAIL, LLC

dated June 5, 2013

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CONTENTS

 

						Page
1.		Organization of the Company					1
		1.1		Name			1
		1.2		Certificate of Formation			1
		1.3		Registered Agent			2
2.		Definitions; Rules of Construction					2
3.		Purpose					2
4.		Principal Office					2
5.		The Member					2
6.		Management of the Company					3
		6.1		Manager			3
		6.2		Appointment and Removal of Manager			3
		6.3		Authority of Manager			3
		6.4		Limitation on Authority of Manager			3
		6.5		Officers			3
		6.6		Execution of Company Documents			4
7.		Capital Contributions					4
8.		Distributions; Allocations of Income and Loss					4
9.		Books and Records					4
10.		Company Interests					4
11.		Assignments of Company Interest					4
12.		Withdrawal					5
13.		Dissolution					5

 

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						Page
14.		Winding Up					5
		14.1		Responsibility for Winding Up			5
		14.2		Distribution of Assets upon Winding Up			5
15.		Limitation on Liability					5
16.		Indemnification					5
17.		Reliance by Third Parties					6
18.		Amendments					6
19.		Governing Law					6

 

-ii-

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FIFTH AMENDED AND RESTATED LIMITED LIABILITY

COMPANY AGREEMENT

OF

REDBOX AUTOMATED RETAIL, LLC

This Fifth Amended and Restated Limited Liability Company Agreement of Redbox Automated Retail, LLC, a Delaware limited liability company (the “Company”) (this “Agreement”), dated as of June 5, 2013, is between the Company and Coinstar, Inc., a Delaware corporation (“Coinstar”).

Recitals

A. WHEREAS, Coinstar owns 100% of the interests of the Company;

B. WHEREAS, the Fourth Amended and Restated Limited Liability Company Agreement was entered into in 2009 by and among the Company, Coinstar and Sesame Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of Coinstar (f/k/a Sesame Holdings, Inc., a Delaware corporation and wholly owned subsidiary of Coinstar ) (“Sesame”) (the “Prior Agreement”);

C. WHEREAS, Sesame no longer owns any interests of the Company and is therefore no longer a member of the Company; and

D. WHEREAS, Coinstar wishes to modify certain provisions of the Prior Agreement and to amend and restate in its entirety the Prior Agreement, with the agreed-upon amendments, and such restated agreement reads as set forth herein, now therefore, be it

E. RESOLVED, in consideration of the mutual covenants and agreements contained herein, the Company and Coinstar agree as follows:

Agreement

 

1.	Organization of the Company

 

1.1

Name

The name of the Company is Redbox Automated Retail, LLC or such other name as the Member (as defined below) may from time to time hereafter designate.

 

1.2

Certificate of Formation

The term of the Company commenced upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware on November 16, 2004, and shall be perpetual unless earlier terminated and dissolved pursuant to Section 12.

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1.3

Registered Agent

The registered office of the Company in the State of Delaware shall be at Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The registered agent of the Company to accept service of process is the Corporation Trust Company. The registered office and registered agent of the Company may be changed by the Member from time to time by filing an amendment to the Certificate of Formation in accordance with the Delaware Act.

 

2.	Definitions; Rules of Construction

In addition to terms otherwise defined herein, the following terms are used herein as defined below:

“Agreement” means this Fifth Amended and Restated Limited Liability Company Agreement as originally executed and as amended or restated from time to time.

“Delaware Act” means the Delaware Limited Liability Company Act, and any successor statute, as amended from time to time.

“Manager” means the Manager designated in Section 6.

“Member” means the Member identified in Section 5.

Words used herein, regardless of the number and gender used, shall be deemed and construed to include any other number, singular or plural, and other gender, masculine, feminine or neuter, as the context requires, and, as used herein, unless the context clearly requires otherwise, the words “hereof,” “herein” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provisions hereof.

 

3.

Purpose

The purpose of the Company shall be to engage in any lawful business that may be engaged in by a limited liability company organized under the Delaware Act, as such business activities may be determined by the Manager from time to time.

 

4.	Principal Office

The principal office of the Company and such additional offices as the Member may establish, shall be located at such place or places inside or outside the State of Delaware as the Manager may designate from time to time.

 

5.	The Member

The sole Member is Coinstar, Inc., a Delaware corporation.

 

2

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6.	Management of the Company

 

6.1

Manager

The Manager of the Company shall be Coinstar, Inc., a Delaware corporation.

 

6.2

Appointment and Removal of Manager

The Member may elect one or more persons to serve as Manager. The Member may remove any manager at any time with or without cause.

 

6.3

Authority of Manager

The Company shall be managed by the Manager, which shall have the sole and exclusive right to manage the business and affairs of the Company and shall have all powers and rights necessary, appropriate or advisable to effectuate and carry out the purposes and business of the Company.

 

6.4

Limitation on Authority of Manager

The Manager shall not have the authority to perform any act in contravention of this Agreement.

 

6.5

Officers

(a) The Manager may, from time to time, designate one or more persons to be officers of the Company until his or her successor shall be duly designated and shall qualify, or until his or her death, resignation or removal as provided in this Agreement. Any officer so designated has such authority and shall perform such duties as the Manager may, from time to time, delegate to them. The Manager may assign titles to particular officers, and, unless the Manager decides otherwise, the assignment of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office, subject to any specific delegation of authority and duties made to such officer by the Managers pursuant to this Section 6.5. Any officer of the Company may be removed as such, with or without cause, by the Manager whenever in its judgment the best interests of the Company will be served thereby. Any Officer may hold any number of offices. No officer need be a Member, a Delaware resident or a United States citizen. Designation of a person as an officer of the Company shall not of itself create any contract rights and such officers shall be employees at will, unless otherwise expressly provided by written contracts between such persons and the Company.

(b) Any officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Manager. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

 

3

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(c) Any vacancy occurring in any office of the Company may be filled by the Manager.

 

6.6

Execution of Company Documents

When the taking of such action has been authorized by the Manager, any officer of the Company or any other person specifically authorized by the Manager may execute any contract or other agreement or document on behalf of the Company and may execute and file on behalf of the Company with the Secretary of State of the State of Delaware any certificates of amendment to the Certificate of Formation, one or more restated certificates of formation and certificates of merger or consolidation and, upon the dissolution and completion of winding up of the Company, a certificate of cancellation canceling the Certificate of Formation.

 

7.	Capital Contributions

The Member shall make capital contributions at such times and in such amounts as shall be determined by the Member.

 

8.	Distributions; Allocations of Income and Loss

Distributions of cash or other assets of the Company to the Member shall be made at such times and in such amounts as the Manager may determine. All distributions and allocations of profits and losses shall be made to the Member.

 

9.	Books and Records

The Manager shall maintain records and accounts of all operations and expenditures of the Company in such manner as it deems appropriate in compliance with the Delaware Act.

 

10.	Company Interests

Of the 9,000,000 Class A Interests the Company had authorized for issuance as of February 26, 2009, 8,589,789 Class A Interests have been issued and are outstanding, are fully-paid and are not subject to further assessment, are held by the Member, and represent 100% of the issued and outstanding interests of the Company as of the date of this Agreement. The Class A Interests represent the sole class of outstanding interests of the Company as of the date of this Agreement.

 

11.	Assignments of Company Interest

The Member’s interests in the Company shall be transferable in whole or in part without the consent of any other person, and the assignee shall be admitted as a Member and admitted to all the rights of the transferring Member upon execution of a counterpart to this Agreement and upon the books and records of the Company being updated to reflect the transfer of the transferring Member’s Company interests to the new Member.

 

4

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12.	Withdrawal

The withdrawal of the Member shall result in the dissolution of the Company pursuant to Section 12.

 

13.	Dissolution

Subject to the provisions of Section 12, the Company shall be dissolved and its affairs wound up and terminated upon the determination of the Member to dissolve the Company.

 

14.	Winding Up

 

14.1

Responsibility for Winding Up

Upon dissolution of the Company, the Manager may wind up the Company’s affairs; however, any competent court, upon cause shown, may wind up the Company’s affairs upon application of a legal representative or assignee of the Member, and in connection therewith may appoint a liquidating trustee.

 

14.2

Distribution of Assets upon Winding Up

Upon the winding up of the Company, the assets shall be distributed as follows: (a) to creditors, including the Member should it be a creditor, in satisfaction of liabilities of the Company other than liabilities for which reasonable provision for payment has been made and liabilities for distributions to the Member; and (b) the remainder, if any, to the Member.

 

15.	Limitation on Liability

The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Member and the Manager of the Company shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or Manager.

 

16.	Indemnification

To the fullest extent not prohibited by law, the Company shall indemnify and hold harmless the Member and the Manager from and against any and all losses, claims, demands, costs, damages, liabilities (joint and several), expenses of any nature (including attorneys’ fees and disbursements), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Member or the Manager may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to any business of the Company

 

5

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transacted or occurring while the Member was a Member or the Manager was the Manager, as the case may be, regardless of whether the Member or the Manager continues to be a Member or the Manager of the Company at the time any such liability or expense is paid or incurred.

 

17.	Reliance by Third Parties

This Agreement is entered into between the Company and the Member for the exclusive benefit of the Company, its Member, and their successors and assigns. Specifically (but not by way of limitation), this Agreement is not intended for the benefit of any creditor of the Company or any other person. Except to the extent provided by applicable statute, and then only to that extent, no such creditor or third party shall have any rights under this Agreement or under any other agreement between the Company and the Member, either with respect to any contribution to the Company or otherwise.

 

18.	Amendments

This Agreement may be amended only upon the written consent of the Member.

 

19.	Governing Law

This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

[remainder of page intentionally blank]

 

6

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IN WITNESS WHEREOF, the Company and the Member have executed this Fifth Amended and Restated Limited Liability Company Agreement as of the date first herein written above.

 

Exhibit 4.3

[FORM OF FACE OF EXCHANGE NOTE]

OUTERWALL INC.

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h) OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

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CUSIP                  

ISIN                  

5.875% Senior Notes due 2021

 

No.		$

Outerwall Inc.

promises to pay to Cede & Co. or registered assigns,

the principal sum of                                                                                                                                                                                                                                

                                     UNITED STATES DOLLARS [as such amount may be increased or decreased in the attached Schedule of Exchanges of Interests in the Global Note pursuant to the terms of the Indenture referred to herein]¹

on June 15, 2021.

Interest Payment Dates: June 15 and December 15, commencing on December 15, 2014

Record Dates: June 1 and December 1

 

 

1	For global notes.

 

- 2 -

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Dated:                             

 

 

- 3 -

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This is one of the Notes referred to

in the within-mentioned Indenture:

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
		Authorized Signatory
Dated:

 

- 4 -

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[Back of Note]

5.875% Senior Notes due 2021

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

(1) INTEREST. Outerwall Inc., a Delaware corporation (the “Company”), promises to pay interest on the principal amount of this Note at 5.875% per annum from June 9, 2014, the date of initial issuance of this Note, until maturity and shall pay the Additional Interest, if any, payable pursuant to Section 6 of the Registration Rights Agreement dated as of June 9, 2014 among the Company, the Guarantors and the Trustee (the “Registration Rights Agreement”). The Company will pay interest and Additional Interest, if any, semi-annually in arrears on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided, that if an Interest Payment Date falls on a day that is not a Business Day, and payment is made on the next succeeding Business Day, no interest shall accrue on such payment for the intervening period; provided, further, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding June 15 or December 15 (whichever is earlier), interest shall accrue from such next succeeding June 15 or December 15. The first Interest Payment Date shall be December 15, 2014. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law if and to the extent allowed) on overdue principal and premium, if any, from time to time on demand at the rate borne by the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law if and to the extent allowed) on overdue installments of interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Defaulted interest will be paid at the times and in the manner provided in the Indenture.

(2) METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders at the close of business on the June 1 or December 1 next preceding each Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Additional Interest, if any, and interest at the office or agency of the Company maintained for such purpose in the United States, or, at the option of the Company, payment of interest and Additional Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided, that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Additional Interest, if any, on, all Global Notes. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

(3) PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.

 

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(4) INDENTURE. The Company issued the Notes under an Indenture dated as of June 9, 2014 (the “Indenture”) between the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company in the initial aggregate principal amount of $300 million. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

(5) OPTIONAL REDEMPTION.

(a) Except as set forth in subparagraph (b) of this Paragraph 5, the Company will not have the option to redeem the Notes prior to June 15, 2017. On or after June 15, 2017, the Company will have the option to redeem some or all of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Additional Interest), if any, on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on June 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date:

 

Year		Percentage
2017			104.406	%
2018			102.938	%
2019			101.469	%
2020			100.000	%

Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(a) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5:

(i) at any time prior to June 15, 2017, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium, plus accrued and unpaid interest (including Additional Interest), if any, to, but excluding, the redemption date; and

(ii) at any time prior to June 15, 2017, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 105.875% of the aggregate principal amount thereof, plus accrued and unpaid interest (including Additional Interest), if any, to the redemption date; provided, that (1) at least 65% in aggregate principal amount of the Notes originally issued under the Indenture

 

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(excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and (2) such redemption occurs within 90 days of the date of the closing of such Equity Offering.

(6) MANDATORY REDEMPTION.

The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

(7) REPURCHASE AT THE OPTION OF HOLDER.

(a) If there is a Change of Control, the Company will be required to make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of each Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest (including Additional Interest, if any), thereon to the date of purchase, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date (the “Change of Control Payment”). Within 30 days following any Change of Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture.

(b) If the Company or a Restricted Subsidiary of the Company consummates any Asset Sales, within 30 days of each date on which the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will make an offer to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an “Asset Sale Offer”) pursuant to Sections 3.09 and 4.10 of the Indenture to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount of the Notes being purchased plus accrued and unpaid interest and Additional Interest, if any, thereon to the date of purchase in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes and other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Restricted Subsidiary) may use the remaining Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other pari passu Indebtedness shall be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. Holders that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have their Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

(8) NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture. Notes in denominations larger than $2,000 may be redeemed in part but only in amounts equal to $2,000 or integral multiples of $1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed.

 

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(9) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered, and Notes may be exchanged, as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any transfer taxes and fees required by law. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, neither the Company nor the Trustee need exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of notes to be redeemed.

(10) PERSONS DEEMED OWNERS. The registered Holder shall be treated as its owner for all purposes.

(11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions set forth in the Indenture, the Indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes, including Additional Notes, if any, voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture, the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class. Without the consent of any Holder, the Indenture, the Notes or the Note Guarantees may be amended or supplemented: to cure any ambiguity, defect or inconsistency; to provide for uncertificated Notes in addition to or in place of certificated Notes, or otherwise alter the provisions of Article 2 of the Indenture in a manner that does not materially adversely affect any Holder; to provide for the assumption of the Company’s or a Guarantor’s obligations to holders of the Notes and Note Guarantees in case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s assets, as applicable; to make any change that would provide any additional rights or benefits to the Holders or that does not, in the good faith opinion of the Company’s Board of Directors, adversely affect the legal rights under the Indenture of any such Holder; to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; to conform the text of the Indenture, the Note Guarantees or the Notes to any provision of the “Description of Notes” section of the Company’s Offering Memorandum dated June 4, 2014, relating to the initial offering of the Notes; to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture as of the Issue Date; to allow any Guarantor to execute a Note Guarantee and/or a supplemental indenture to the Indenture with respect to the Notes; to release any Guarantor in accordance with Section 10.05 of the Indenture; or to evidence or provide for the acceptance of the appointment under the Indenture of a successor trustee.

(12) DEFAULTS AND REMEDIES. The Events of Default are set forth in the Indenture. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from

 

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certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest or premium or Additional Interest, if any) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture (except a continuing Default or Event of Default in the payment of principal, interest or premium or Additional Interest, if any, arising other than solely because of such acceleration). The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

(13) GUARANTEES. The Notes may be entitled to the benefits of certain Note Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Guarantors, if any, the Trustee and the Holders.

(14) UNCLAIMED MONEY. Reference is hereby made to the Indenture for the provisions concerning unclaimed money.

(15) TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

(16) NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder of the Company or any of the Guarantors, as such, will not have any liability for any obligations of the Company or the Guarantors under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

(17) AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

(18) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

(19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.

 

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(20) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

Outerwall Inc.

1800 114^th Avenue SE

Bellevue, Washington 9804

Attention: Corporate Secretary

Facsimile No.: (425) 943-8090

 

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to:
		(Insert assignee’s legal name)

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

 

 

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint                                                                                                    to transfer this Note on the books of the Company. The agent may substitute another to act for him.

 

Date:

 

 

Signature Guarantee*:

 

 

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

 

¨ Section 4.10		¨ Section 4.14

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, state the amount you elect to have purchased:

$                             

 

Date:

 

 

 

Signature Guarantee*:

 

 

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE^*

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

Date of Exchange		Amount of decrease in Principal Amount [at maturity] of this Global Note		Amount of increase in Principal Amount [at maturity] of this Global Note		Principal Amount [at maturity] of this Global Note following such decrease or increase		Signature of authorized signatory of Trustee or Custodian

 

 

*	This schedule should be included only if the Note is issued in global form.

 

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Exhibit 5.1

 

March 5, 2015

Outerwall Inc.

1800 114th Avenue S.E.

Bellevue, Washington 98004

 

Re:

Exchange Offer Relating to 5.875% Exchange Notes Due 2021

Ladies and Gentlemen:

We have acted as counsel to you and the additional registrants listed in the Registration Statement (as defined below) (the “Guarantors”) in connection with certain matters related to the offer by Outerwall Inc., a Delaware corporation (the “Company”), and the Guarantors, to exchange (the “Exchange Offer”) up to $300 million in aggregate principal amount of the Company’s 5.875% Senior Notes Due 2021 (the “Exchange Notes”) and the associated guarantees (the “Exchange Guarantees”) of the Exchange Notes by the Guarantors, which are being registered under the Securities Act of 1933, as amended (the “Act”), pursuant to a Registration Statement on Form S-4 (the “Registration Statement”), for an equal principal amount of the Company’s outstanding 5.875% Senior Notes Due 2021 (the “Original Notes”) and the associated guarantees of the Original Notes by the Guarantors. Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Registration Statement.

In the course of our representation as described above, we have examined, among other things, the Indenture (the “Indenture”) dated as of June 9, 2014, between the Company, the Guarantors and U.S. Bank National Association, as trustee (the “Trustee”). We have also examined and relied on originals or photocopies, certified or otherwise identified to our satisfaction, of all such corporate books and records of the Company and the Guarantors and such other instruments, records, certificates or other documents as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth. In our examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as copies. As to facts material to the opinions, statements and assumptions expressed herein, we have, with your consent, relied upon oral or written statements and representations of officers and other representatives of the Company, the Guarantors and others. In addition, we have assumed, the accuracy of which we have not independently verified, the Trustee has satisfied those legal requirements applicable to it that are necessary to make the Indenture and the notes, certificates, instruments or documents required to be executed and delivered by it in connection with the Exchange Offer enforceable against the Trustee in accordance with their respective terms.

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Based on the foregoing, and subject to the assumptions, limitations and qualifications set forth herein, we are of the opinion that when:

A.(i) the Registration Statement has become effective under the Act and the Indenture is qualified under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”); and (ii) the Exchange Notes have been duly executed, authenticated and delivered in accordance with the provisions of the Indenture and issued in exchange for Original Notes pursuant to, and in accordance with the terms of, the Exchange Offer as contemplated in the Registration Statement, the Exchange Notes will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms; and

B.(i) the Registration Statement has become effective under the Act and the Indenture is qualified under the Trust Indenture Act; and (ii) the Exchange Guarantees have been executed in accordance with the Indenture and the Exchange Notes have been duly executed, authenticated and delivered in accordance with the provisions of the Indenture and issued in exchange for Original Notes pursuant to, and in accordance with the terms of, the Exchange Offer as contemplated in the Registration Statement, the Exchange Guarantees will constitute legal, valid and binding obligations of the respective Guarantor, enforceable against such Guarantor in accordance with their terms.

The opinions expressed above are subject to the following exclusions and qualifications:

a. We express no opinion as to enforceability of any right or obligation to the extent such right or obligation is subject to and limited by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium, fraudulent transfer or other laws affecting or relating to the rights of creditors generally; or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether arising prior to, or after, the date hereof or considered in a proceeding in equity or at law.

b. We do not express any opinions herein concerning any laws other than the laws in their current forms of the States of Washington, Illinois and New York, the Delaware General Corporation Law and reported judicial decisions interpreting such Delaware laws, and the federal securities laws of the United States of America, and we express no opinion with respect to the laws of any other jurisdiction and expressly disclaim responsibility for advising you as to the effect, if any, that the laws of any other jurisdiction may have on the opinions set forth herein.

c. Our opinions are based on the accuracy of the facts and the representations set forth in, among other things, the Registration Statement. In the event any of the facts, representations or assumptions upon which we have relied to issue these opinions are incorrect, our opinions might be adversely affected and may not be relied upon.

d. We express no opinions concerning (i) the validity or enforceability of any provisions contained in the Indenture, the Exchange Notes or the Exchange Guarantees that purport to waive or not give effect to rights to notices, defenses, subrogation or other rights or benefits that cannot be effectively waived or rendered ineffective under applicable law or (ii) the enforceability of indemnification or contribution provisions to the extent they purport to relate to liabilities resulting from or based upon negligence or any violation of federal or state securities or blue sky laws.

 

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We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm in the prospectus made part of the Registration Statement under the heading “Legal Matters.” In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the related rules and regulations promulgated under the Act nor do we admit that we are experts with respect to any part of such Registration Statement within the meaning of the term “expert” as used in the Act or the related rules and regulations promulgated under the Act.

Very truly yours,

/s/ PERKINS COIE LLP

 

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Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

(unaudited)

(in thousands of dollars, except ratios)

 

		Year Ended December 31,
		2014				2013				2012				2011				2010
Pre-tax income from continuing operations before adjustment for income or loss from equity investees		$	195,868			$	291,016			$	283,077			$	199,448			$	118,783
Fixed charges:
Interest expenses including amortization of deferred financing costs and debt discounts			47,696				37,146				20,321				25,983				34,864
Assumed interest component of rental expenses (1)			3,998				3,026				3,000				2,932				2,737
Total fixed charges			51,694				40,172				23,321				28,915				37,601
Earnings		$	247,562			$	331,188			$	306,398			$	228,363			$	156,384
Ratio of earnings to fixed charges (2)			4.79				8.24				13.14				7.90				4.16
Deficiency of earnings to fixed charges			—				—				—				—				—

 

(1)	Estimated as 33% of operating lease expense for buildings and equipment and 10% of operating lease expense for ecoATM kiosk locations.

(2)	During the periods covered by this table, we did not have any shares of preferred stock outstanding.

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Outerwall Inc:

We consent to the use of our reports with respect to the consolidated financial statements and the effectiveness of internal control over financial reporting incorporated by reference herein and to the reference to our firm under the heading “Experts” in the prospectus. Our report on the consolidated financial statements refers to a change to the method of accounting for content library amortization.

/s/ KPMG LLP

Seattle, Washington

March 5, 2015

Exhibit 25.1

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM T-1

 

 

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939

OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

 

¨	Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)

 

 

U.S. BANK NATIONAL ASSOCIATION

(Exact name of Trustee as specified in its charter)

 

 

31-0841368

I.R.S. Employer Identification No.

 

800 Nicollet Mall Minneapolis, Minnesota		55402
(Address of principal executive offices)		(Zip Code)

Carolyn Morrison

U.S. Bank National Association

1420 Fifth Avenue, 7^th Floor

Seattle, WA 98101

(206) 344-4678

(Name, address and telephone number of agent for service)

 

 

Outerwall Inc.

(Issuer with respect to the Securities)

 

 

 

Delaware		94-3156448
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1800 114th Avenue SE Bellevue, WA		98004
(Address of Principal Executive Offices)		(Zip Code)

 

 

5.875% Senior Notes Due 2021

(Title of the Indenture Securities)

 

 

 

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FORM T-1

 

Item 1.

GENERAL INFORMATION. Furnish the following information as to the Trustee.

 

a)

Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency

Washington, D.C.

 

b)

Whether it is authorized to exercise corporate trust powers.

Yes

 

Item 2.

AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation.

None

 

Items 3-15

Items 3-15 are not applicable because to the best of the Trustee’s knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.

 

Item 16.

LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification.

 

1.

A copy of the Articles of Association of the Trustee.*

 

2.

A copy of the certificate of authority of the Trustee to commence business, attached as Exhibit 2.

 

3.

A copy of the certificate of authority of the Trustee to exercise corporate trust powers, attached as Exhibit 3.

 

4.

A copy of the existing bylaws of the Trustee.**

 

5.

A copy of each Indenture referred to in Item 4. Not applicable.

 

6.

The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6.

 

7.

Report of Condition of the Trustee as of December 31, 2014 published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7.

* Incorporated by reference to Exhibit 25.1 to Amendment No. 2 to registration statement on S-4, Registration Number 333-128217 filed on November 15, 2005.

** Incorporated by reference to Exhibit 25.1 to registration statement on form S-3ASR, Registration Number 333-199863 filed on November 5, 2014.

 

2

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SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Seattle, State of Washington on the 20th of February, 2015.

 

 

3

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Exhibit 2

 

		Office of the Comptroller of the Currency
				Washington, DC 20219

CERTIFICATE OF CORPORATE EXISTENCE

I, Thomas J. Curry, Comptroller of the Currency, do hereby certify that:

1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq, as amended, and 12 USC 1, et seq, as amended, has possession, custody, and control of all records pertaining to the chartering, regulation, and supervision of all national banking associations.

2. “U.S. Bank National Association,” Cincinnati, Ohio (Charter No. 24), is a national banking association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this certificate.

 

				IN TESTIMONY WHEREOF, today,
				January 21, 2015, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the U.S. Department of the Treasury, in the City of Washington, District of Columbia.
				Comptroller of the Currency

 

4

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Exhibit 3

 

		Office of the Comptroller of the Currency
				Washington, DC 20219

CERTIFICATION OF FIDUCIARY POWERS

I, Thomas J. Curry, Comptroller of the Currency, do hereby certify that:

1. The Office of the Comptroller of the Currency, pursuant to Revised Statutes 324, et seq, as amended, and 12 USC 1, et seq, as amended, has possession, custody, and control of all records pertaining to the chartering, regulation, and supervision of all national banking associations.

2. “U.S. Bank National Association,” Cincinnati, Ohio (Charter No. 24), was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of the Act of Congress approved September 28, 1962, 76 Stat. 668, 12 USC 92a, and that the authority so granted remains in full force and effect on the date of this certificate.

 

				IN TESTIMONY WHEREOF, today,
				January 21, 2015, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the U.S. Department of the Treasury, in the City of Washington, District of Columbia.
				Comptroller of the Currency

 

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Exhibit 6

CONSENT

In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Dated: February 20, 2015

 

 

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Exhibit 7

U.S. Bank National Association

Statement of Financial Condition

As of 12/31/2014

($000’s)

 

 

		12/31/2014
Assets
Cash and Balances Due From Depository Institutions		$	10,622,022
Securities			100,557,832
Federal Funds			79,987
Loans & Lease Financing Receivables			247,427,720
Fixed Assets			4,246,071
Intangible Assets			13,078,376
Other Assets			22,967,351
Total Assets		$	398,978,359
Liabilities
Deposits		$	294,158,985
Fed Funds			1,722,932
Treasury Demand Notes			0
Trading Liabilities			734,026
Other Borrowed Money			45,457,856
Acceptances			0
Subordinated Notes and Debentures			3,650,000
Other Liabilities			11,857,789
Total Liabilities		$	357,581,588
Equity
Common and Preferred Stock			18,200
Surplus			14,266,400
Undivided Profits			26,256,268
Minority Interest in Subsidiaries			855,903
Total Equity Capital		$	41,396,771
Total Liabilities and Equity Capital		$	398,978,359

 

7

Exhibit 99.1

OUTERWALL INC.

LETTER OF TRANSMITTAL

FOR TENDER OF ALL OUTSTANDING

$300,000,000 5.875% SENIOR NOTES DUE 2021

IN EXCHANGE FOR

REGISTERED

$300,000,000 5.875% SENIOR NOTES DUE 2021

 

Deliver to the Exchange Agent:

U.S. Bank National Association

 

By Mail (Registered or Certified Mail Recommended), Overnight Courier or Hand:		By Facsimile Transmission (for Eligible Institutions Only):		Information or Confirm by Telephone
U.S. Bank Corporate Trust Services Specialized Finance 111 Fillmore Ave E EP-MN-WS2N St. Paul, MN 55107		(651) 466-7367 Attention: Specialized Finance		(800) 934-6802

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AS WELL AS THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.

The undersigned hereby acknowledges receipt of the prospectus dated                    , 2015 of Outerwall Inc. (the “Company”) and this letter of transmittal. These two documents together constitute the Company’s offer to exchange up to $300,000,000 in aggregate principal amount of its 5.875% Senior Notes due 2021 and the associated guarantees (together, the “Exchange Notes”), the issuance of which has been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of its outstanding 5.875% Senior Notes due 2021 and the associated guarantees (together, the “Original Notes”) (the “Exchange Offer”).

The Company reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer for the Original Notes is open, at its discretion, in which event the term “Expiration Date” shall mean the latest date to which such Exchange Offer is extended. The Company shall notify U.S. Bank National Association (the “Exchange Agent”) of any extension by oral or written notice (such notice if oral to be promptly confirmed in writing) and shall make a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.

This letter of transmittal is to be used by a holder of Original Notes (i) if certificates of Original Notes are to be forwarded herewith or (ii) if delivery of Original Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in the prospectus under the caption “The Exchange Offer—Procedures for Tendering.” Tenders by book-entry transfer may also be made by delivering an agent’s message in lieu of this letter of transmittal. Holders of Original Notes whose Original Notes are not immediately available, or who are unable to deliver their Original Notes, this letter of transmittal and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date for the Exchange Offer, or who are unable to complete the procedure for book-entry transfer on a timely basis, must tender their Original Notes according to the guaranteed delivery procedures set forth in the prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures.” See Instruction 2.

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DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO

THE EXCHANGE AGENT.

The term “holder” with respect to the Exchange Offer for Original Notes means any person in whose name such Original Notes are registered on the books of the Company, any person who holds such Original Notes and has obtained a properly completed bond power from the registered holder or any participant in the DTC system whose name appears on a security position listing as the holder of such Original Notes and who desires to deliver such Original Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this letter of transmittal to indicate the action the undersigned desires to take with respect to such Exchange Offer. Holders who wish to tender their Original Notes must complete this letter of transmittal in its entirety (unless such Original Notes are to be tendered by book-entry transfer and an agent’s message is delivered in lieu hereof) or in accordance with DTC’s Applicable Procedures.

PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW.

THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

List below the Original Notes to which this letter of transmittal relates. If the space below is inadequate, list the registered numbers and principal amounts on a separate signed schedule and affix the list to this letter of transmittal.

 

DESCRIPTION OF ORIGINAL NOTES TENDERED
Name(s) and Address(es) of Registered Holder(s) Exactly as Name(s) Appear(s) on Original Notes (Please Fill In)		Registered Number(s)*		Aggregate Principal Amount Represented by Note(s)		Principal Amount Tendered**
		Total
*     Need not be completed by book-entry holders.
**  Unless otherwise indicated, any tendering holder of Original Notes will be deemed to have tendered the entire aggregate principal amount represented by such Original Notes. All tenders must be in integral multiples of $1,000, subject to a $2,000 minimum, and untendered original notes may only be in a minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof.

 

¨	CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.

 

¨	CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DTC (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):

 

 

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¨	CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY EITHER ENCLOSED HEREWITH OR PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT (COPY ATTACHED) (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):

 

 

¨	CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO:

 

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

 

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SIGNATURES MUST BE PROVIDED BELOW; PLEASE READ

THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Company for exchange the principal amount of Original Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Original Notes tendered in accordance with this letter of transmittal, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Original Notes tendered for exchange hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact for the undersigned (with full knowledge that said Exchange Agent also acts as the agent for the Company in connection with the Exchange Offer) with respect to the tendered Original Notes with full power of substitution to (i) deliver such Original Notes, or transfer ownership of such Original Notes on the account books maintained by the DTC, to the Company and deliver all accompanying evidences of transfer and authenticity, and (ii) present such Original Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Original Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Original Notes tendered hereby and to acquire the Exchange Notes issuable upon the exchange of such tendered Original Notes, and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are accepted for exchange by the Company.

The undersigned acknowledges that the Exchange Offer is being made in reliance upon interpretations set forth in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the “SEC”), including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc. (available June 5, 1991) and similar no-action letters (the “Prior No-Action Letters”), that the Exchange Notes issued in exchange for the Original Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, PROVIDED that such Exchange Notes are acquired in the ordinary course of such holders’ business and such holders are not engaging in, do not intend to engage in and have no arrangement or understanding with any person to participate in a distribution of such Exchange Notes. The SEC has not, however, considered the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances.

The undersigned hereby further represents to the Company that (i) any Exchange Notes received are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not the undersigned, (ii) the undersigned is not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, the distribution of the Original Notes or the Exchange Notes and (iii) the undersigned is not an “affiliate,” as defined in Rule 405 under the Securities Act, of the Company.

If the undersigned is a broker-dealer, the undersigned further represents to the Company that it will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. The undersigned acknowledges that if the undersigned is tendering Original Notes in the Exchange Offer with the intention of participating in any manner in a distribution of the Exchange Notes (i) the undersigned cannot rely on the position of the staff of the SEC set forth in the Prior No-Action Letters and, in the absence of an

 

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exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the Exchange Notes, in which case the registration statement must contain the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the SEC, and (ii) failure to comply with such requirements in such instance could result in the undersigned incurring liability under the Securities Act for which the undersigned is not indemnified by the Company.

The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Original Notes tendered hereby, including the transfer of such Original Notes on the account books maintained by the DTC.

For purposes of the Exchange Offer, the Company shall be deemed to have accepted for exchange validly tendered Original Notes when, as and if the Company gives oral or written notice (if oral to be promptly confirmed in writing) thereof to the Exchange Agent. Any tendered Original Notes that are not accepted for exchange pursuant to such Exchange Offer for any reason will be returned, without expense, to the undersigned as promptly as practicable after the Expiration Date for such Exchange Offer.

All authority conferred or agreed to be conferred by this letter of transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this letter of transmittal shall be binding upon the undersigned’s successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives.

The undersigned acknowledges that the Company’s acceptance of properly tendered Original Notes pursuant to the procedures described under the caption “The Exchange Offer—Procedures for Tendering” in the prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer.

The Exchange Offer is subject to certain conditions set forth in the prospectus under the caption “The Exchange Offer—Conditions to the Exchange Offer.” The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Company), the Company may not be required to exchange any of the Original Notes tendered hereby.

Unless otherwise indicated under “Special Issuance Instructions,” please issue the Exchange Notes issued in exchange for the Original Notes accepted for exchange, and return any Original Notes not tendered or not exchanged, in the name(s) of the undersigned (or, in the case of a book-entry delivery of Original Notes, please credit the account indicated above maintained at the DTC). Similarly, unless otherwise indicated under “Special Delivery Instructions,” please mail or deliver the Exchange Notes issued in exchange for the Original Notes accepted for exchange and any Original Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned’s signature(s). In the event that both “Special Issuance Instructions” and “Special Delivery Instructions” are completed, please issue the Exchange Notes issued in exchange for the Original Notes accepted for exchange in the name(s) of, and return any Original Notes not tendered or not exchanged to, the person(s) (or account(s)) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the “Special Issuance Instructions” and “Special Delivery Instructions” to transfer any Original Notes from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Original Notes so tendered for exchange.

 

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SPECIAL ISSUANCE INSTRUCTIONS (See Instructions 5 and 6)   To be completed ONLY (i) if Original Notes in a principal amount not tendered, or Exchange Notes issued in exchange for Original Notes accepted for exchange, are to be issued in the name of someone other than the undersigned, or (ii) if Original Notes tendered by book-entry transfer which are not exchanged are to be returned by credit to an account maintained at the DTC other than the DTC Account Number set forth above. Issue Exchange Notes and/or Original Notes to:   Name:                                                                                 (Please Type or Print)   Address:                                                                                                                                                                             (Include Zip Code)                                                                                                 (Tax Identification or Social Security Number)				SPECIAL DELIVERY INSTRUCTIONS (See Instructions 5 and 6)   To be completed ONLY if Original Notes in a principal amount not tendered, or Exchange Notes issued in exchange for Original Notes accepted for exchange, are to be mailed or delivered to someone other than the undersigned, or to the undersigned at an address other than that shown below the under -signed’s signature. Mail or deliver Exchange Notes and/or Original Notes to:   Name:                                                                                 (Please Type or Print)   Address:                                                                                                                                                                             (Include Zip Code)                                                                                                 (Tax Identification or Social Security Number)   ¨       Credit unexchanged Original Notes delivered by book-entry transfer to the DTC account set forth below.   DTC Account Number:

 

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BROKER-DEALER STATUS
To be completed ONLY if the Beneficial Owner is a participating Broker-Dealer who holds securities acquired as a result of market-making or other trading activities and wishes to receive 10 additional copies of the Prospectus and 10 copies of any amendments or supplements thereto for use in connection with resales of new securities received in exchange for such securities:
Name:
Address:
(Including Zip Code)

Area Code and Telephone Number of Contact Person:

(Tax Identification or Social Security Number)

 

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IMPORTANT   PLEASE SIGN HERE WHETHER OR NOT ORIGINAL NOTES ARE BEING PHYSICALLY TENDERED HEREBY (Complete Enclosed Form W-9)
(Signature(s) of Registered Holder(s) of Original Notes)
Dated                     , 2015
(The above lines must be signed by the registered holder(s) of Original Notes as your name(s) appear(s) on the Original Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this letter of transmittal. If Original Notes to which this letter of transmittal relate are held of record by two or more joint holders, then all such holders must sign this letter of transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence satisfactory to the Company of such person’s authority so to act. See Instruction 5 regarding the completion of this letter of transmittal, printed below.)

Name(s):
		(Please Type or Print)
Capacity:
Address:
		(Including Zip Code)

Area Code and Telephone Number:
(Taxpayer Identification or Social Security Number)

 

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MEDALLION SIGNATURE GUARANTEE (If Required by Instruction 5)   Certain signatures must be guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an Eligible Institution:
		(Authorized Signature)
(Title)
(Name of Firm)
(Address, Include Zip Code)
(Area Code and Telephone Number)
Dated                     , 2015

 

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INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. Delivery of this Letter of Transmittal and Original Notes or Agent’s Message and Book-Entry Confirmations.    All physically delivered Original Notes or any confirmation of a book-entry transfer to the Exchange Agent’s account at the DTC of Original Notes tendered by book-entry transfer (a “Book-Entry Confirmation”), as well as a properly completed and duly executed copy of this letter of transmittal or facsimile hereof (or an agent’s message in lieu hereof), and any other documents required by this letter of transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the ultimate Expiration Date for the Exchange Offer, or the tendering holder must comply with the guaranteed delivery procedures set forth below. THE METHOD OF DELIVERY OF THE TENDERED ORIGINAL NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY.

2. Guaranteed Delivery Procedures.    Holders who wish to tender their Original Notes and (a) whose Original Notes are not immediately available, (b) who cannot deliver their Original Notes, this letter of transmittal or any other documents required hereby to the Exchange Agent prior to the applicable Expiration Date or (c) who are unable to comply with the applicable procedures under the DTC’s Automated Tender Offer Program on a timely basis, must tender their Original Notes according to the guaranteed delivery procedures set forth in the prospectus. Pursuant to such procedures: (i) such tender must be made by or through a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or a trust company having an office or correspondent in the United States or an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Exchange Act (an “Eligible Institution”); (ii) prior to the applicable Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed notice of guaranteed delivery (by facsimile transmission, mail or hand delivery) or a properly transmitted agent’s message and notice of guaranteed delivery setting forth the name and address of the holder of the Original Notes, the registration number(s) of such Original Notes and the total principal amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after such Expiration Date, this letter of transmittal (or facsimile hereof or an agent’s message in lieu hereof) together with the Original Notes in proper form for transfer (or a Book-Entry Confirmation) and any other documents required hereby, will be deposited by the Eligible Institution with the Exchange Agent; and (iii) this letter of transmittal (or facsimile hereof or an agent’s message in lieu hereof) together with the certificates for all physically tendered Original Notes in proper form for transfer (or Book-Entry Confirmation, as the case may be) and all other documents required hereby are received by the Exchange Agent within three New York Stock Exchange trading days after such Expiration Date.

Any holder of Original Notes who wishes to tender Original Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the notice of guaranteed delivery prior to 5:00 p.m., New York City time, on the applicable Expiration Date. Upon request of the Exchange Agent, a notice of guaranteed delivery will be sent to holders who wish to tender their Original Notes according to the guaranteed delivery procedures set forth above.

See “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures” section of the prospectus.

3. Tender by Holder.    Only a holder of Original Notes may tender such Original Notes in the Exchange Offer. Any beneficial holder of Original Notes who is not the registered holder and who wishes to tender should

 

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arrange with the registered holder to execute and deliver this letter of transmittal on his behalf or must, prior to completing and executing this letter of transmittal and delivering his Original Notes, either make appropriate arrangements to register ownership of the Original Notes in such holder’s name or obtain a properly completed bond power from the registered holder.

4. Partial Tenders.    Tenders of Original Notes will be accepted only in integral multiples of $1,000, subject to a $2,000 minimum, and untendered original notes may only be in a minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof. If less than the entire principal amount of any Original Notes is tendered, the tendering holder should fill in the principal amount tendered in the fourth column of the box entitled “Description of Original Notes Tendered” above. The entire principal amount of Original Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Original Notes is not tendered, then Original Notes for the principal amount of Original Notes not tendered and Exchange Notes issued in exchange for any Original Notes accepted will be returned to the holder as promptly as practicable after the Original Notes are accepted for exchange, subject to applicable terms.

5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Medallion Guarantee of Signatures.    If this letter of transmittal (or facsimile hereof) is signed by the record holder(s) of the Original Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Original Notes without alteration, enlargement or any change whatsoever. If this letter of transmittal (or facsimile hereof) is signed by a participant in the DTC, the signature must correspond with the name as it appears on the security position listing as the holder of the Original Notes.

If this letter of transmittal (or facsimile hereof) is signed by the registered holder(s) of Original Notes listed and tendered hereby and the Exchange Notes issued in exchange therefor are to be issued (or any untendered principal amount of Original Notes is to be reissued) to the registered holder(s), the said holder(s) need not and should not endorse any tendered Original Notes, nor provide a separate bond power. In any other case, such holder(s) must either properly endorse the Original Notes tendered or transmit a properly completed separate bond power with this letter of transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution.

If this letter of transmittal (or facsimile hereof) or any Original Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority to act must be submitted with this letter of transmittal.

NO SIGNATURE GUARANTEE IS REQUIRED IF (i) THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) IS SIGNED BY THE REGISTERED HOLDER(S) OF THE ORIGINAL NOTES TENDERED HEREIN (OR BY A PARTICIPANT IN THE DTC WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF THE TENDERED ORIGINAL NOTES) AND THE EXCHANGE NOTES ARE TO BE ISSUED DIRECTLY TO SUCH REGISTERED HOLDER(S) (OR, IF SIGNED BY A PARTICIPANT IN THE DTC, DEPOSITED TO SUCH PARTICIPANT’S ACCOUNT AT THE DTC) AND NEITHER THE BOX ENTITLED “SPECIAL DELIVERY INSTRUCTIONS” NOR THE BOX ENTITLED “SPECIAL ISSUANCE INSTRUCTIONS” HAS BEEN COMPLETED, OR (ii) SUCH ORIGINAL NOTES ARE TENDERED FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION. IN ALL OTHER CASES, ALL SIGNATURES ON THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.

6. Special Issuance and Delivery Instructions.    Tendering holders should indicate, in the applicable box or boxes, the name and address to which Exchange Notes or substitute Original Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this letter of transmittal. In the case of issuance in a different name, the taxpayer identification or

 

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social security number of the person named must also be indicated. Holders tendering Original Notes by book-entry transfer may request that Original Notes not exchanged be credited to such account maintained at the DTC as such noteholder may designate hereon. If no such instructions are given, such Original Notes not exchanged will be returned to the name and address (or account number) of the person signing this letter of transmittal.

7. Transfer Taxes.    The Company will pay all transfer taxes, if any, applicable to the exchange of Original Notes pursuant to the Exchange Offer. If, however, Exchange Notes or Original Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Original Notes tendered hereby, or if tendered Original Notes are registered in the name of any person other than the person signing this letter of transmittal, or if a transfer tax is imposed for any reason other than the exchange of Original Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this letter of transmittal, the amount of such transfer taxes will be billed directly to such tendering holder and the Exchange Agent will retain possession of an amount of Exchange Notes with a face amount at least equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes.

8. Tax Identification Number.    Federal income tax law requires a holder of any Original Notes or Exchange Notes to provide the Company (as payor) with its correct taxpayer identification number (“TIN”), which, in the case of a holder who is an individual, is his or her social security number. If the Company is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding of 28% on interest payments on the Exchange Notes.

To prevent backup withholding, each tendering holder must provide such holder’s correct TIN by completing the Internal Revenue Service Form W-9 enclosed herewith, certifying that the holder is a U.S. person (including a U.S. resident alien), that the TIN provided is correct (or that such holder has applied for and is awaiting a TIN), and that (i) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends or the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding or (ii) the holder is otherwise exempt from backup withholding. If the Exchange Notes will be registered in more than one name or will not be in the name of the actual owner, consult the General Instructions to the Form W-9 for information on which TIN to report.

If a tendering holder does not have a TIN, that holder should consult the General Instructions to the enclosed Internal Revenue Service Form W-9 concerning applying for a TIN.

Certain foreign individuals and entities will not be subject to backup withholding or information reporting if they submit an Internal Revenue Service Form W-8BEN or Form W-8BEN-E (or such other applicable Internal Revenue Service Form W-8) signed under penalties of perjury, attesting to, among other things, their foreign status. An appropriate Internal Revenue Service Form W-8 can be obtained from the Exchange Agent or by accessing the Internal Revenue Service’s website at www.irs.gov.

Additional information is provided in the General Instructions to the enclosed Internal Revenue Service Form W-9. The Company reserves the right in its sole discretion to take whatever steps are necessary to comply with the Company’s obligations regarding backup withholding.

9. Validity of Tenders.    All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of tendered Original Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes the Company’s acceptance of which might, in the opinion of the Company’s counsel, be unlawful. The Company also reserves the absolute right to waive any conditions of

 

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the Exchange Offer or defects or irregularities of tenders as to particular Original Notes. The Company’s interpretation of the terms and conditions of the Exchange Offer (including this letter of transmittal and the instructions hereto) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Original Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Notes nor shall any of them incur any liability for failure to give such notification.

10. Waiver of Conditions.    The Company reserves the absolute right to waive, in whole or part, any of the conditions to the Exchange Offer set forth in the prospectus.

11. No Conditional Tender.    No alternative, conditional, irregular or contingent tender of Original Notes will be accepted.

12. Mutilated, Lost, Stolen or Destroyed Original Notes.    Any holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. This letter of transmittal and related documents cannot be processed until the procedures for replacing lost, stolen or destroyed Original Notes have been followed.

13. Requests for Assistance or Additional Copies.    Requests for assistance or for additional copies of the prospectus or this letter of transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this letter of transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

14. Withdrawal.    Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the prospectus under the caption “The Exchange Offer—Procedures for Tendering—Withdrawal of Tenders.”

IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF OR AN AGENT’S MESSAGE IN LIEU HEREOF (TOGETHER WITH THE ORIGINAL NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

 

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Form W-9 (Rev. December 2014) Department of the Treasury Internal Revenue Service		Request for Taxpayer Identification Number and Certification		Give Form to the requester. Do not send to the IRS.

Part I		Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid backup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN on page 3.   Note. If the account is in more than one name, see the instructions for line 1 and the chart on page 4 for guidelines on whose number to enter.

Social security number

–

–

or

Employer identification number

–

Part II		Certification

Under penalties of perjury, I certify that:

 

1.

The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and

 

2.

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

 

3.

I am a U.S. citizen or other U.S. person (defined below); and

 

4.

The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions on page 3.

 

Sign Here		Signature of U.S. person  u		Date  u

 

 

 

		Cat. No. 10231X		Form W-9 (Rev. 12-2014)

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Form W-9 (Rev. 12-2014)

Page 2

 

 

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Form W-9 (Rev. 12-2014)

Page 3

 

 

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Form W-9 (Rev. 12-2014)

Page 4

 

 

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Form W-9 (Rev. 12-2014)

Page 5

 

 

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Form W-9 (Rev. 12-2014)

Page 6

 

 

Exhibit 99.2

OUTERWALL INC.

NOTICE OF GUARANTEED DELIVERY

FOR TENDER OF ALL OUTSTANDING

$300,000,000 5.875% SENIOR NOTES DUE 2021

IN EXCHANGE FOR

REGISTERED

$300,000,000 5.875% SENIOR NOTES DUE 2021

Registered holders of $300,000,000 5.875% Senior Notes due 2021 (the “Original Notes”) must use this form, or one substantially equivalent hereto in accordance with DTC’s Applicable Procedures, to accept the Exchange Offer of Outerwall Inc. (the “Company”) and to tender to the Exchange Agent pursuant to the guaranteed delivery procedures described in “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures” of the Company’s prospectus dated                     , 2015 and in Instruction 2 of the related letter of transmittal, if (i) certificates for the Original Notes are not immediately available or (ii) time will not permit the letter of transmittal or other required documents to reach the Exchange Agent (as defined below), or comply with applicable procedures under DTC’s automated tender offer program on or prior to the Expiration Date (as defined below) of the Exchange Offer. Any holder who wishes to tender Original Notes pursuant to such guaranteed delivery procedures must do so in accordance with DTC’s Applicable Procedures, properly completed and duly executed, prior to the Expiration Date of the Exchange Offer. Capitalized terms used but not defined herein have the meanings ascribed to them in the letter of transmittal.

 

The Exchange Agent for the Exchange Offer is:

U.S. Bank National Association

 

By Mail (Registered or Certified Mail Recommended), Overnight Courier or Hand:		By Facsimile Transmission (for Eligible Institutions Only):		Information or Confirm by Telephone
U.S. Bank Corporate Trust Services Specialized Finance 111 Fillmore Ave E EP-MN-WS2N St. Paul, MN 55107		(651) 466-7367 Attention: Specialized Finance		(800) 934-6802

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS NOTICE OF GUARANTEED DELIVERY SHOULD BE READ CAREFULLY BEFORE THE NOTICE OF GUARANTEED DELIVERY IS COMPLETED.

This notice of guaranteed delivery is not to be used to guarantee signatures. If a signature on a letter of transmittal is required to be guaranteed by an “Eligible Institution” under the instructions thereto, such signature guarantee must appear in the applicable space in the box provided on the letter of transmittal for guarantee of signatures.

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Ladies and Gentlemen:

The undersigned hereby tenders to the Company, in accordance with the Company’s offer, upon the terms and subject to the conditions set forth in the prospectus and the related letter of transmittal, receipt of which is hereby acknowledged, the principal amount of Original Notes set forth below pursuant to the guaranteed delivery procedures set forth in the prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures” and in Instruction 2 of the letter of transmittal.

The undersigned hereby tenders the Original Notes listed below:

 

Certificate Number(s) (if known) of Original Notes or Account Number at the DTC		Aggregate Principal Amount Represented		Aggregate Principal Amount Tendered*

 

PLEASE SIGN AND COMPLETE
Name of Record Holder(s):		Signature(s):
Address:
(Including Zip Code)
Area Code and Telephone Number:
Dated                     , 2015
*         Unless otherwise indicated, any tendering holder of the Original Notes will be deemed to have tendered the entire aggregate principal amount represented by such Original Notes. All tenders must be in integral multiples of $1,000, subject to a $2,000 minimum, and untendered original notes may only be in a minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof.
THIS NOTICE OF GUARANTEED DELIVERY MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF ORIGINAL NOTES EXACTLY AS THE NAME(S) OF SUCH PERSONS(S) APPEAR(S) ON CERTIFICATES FOR ORIGINAL NOTES OR ON A SECURITY POSITION LISTING AS THE OWNER OF ORIGINAL NOTES, OR BY PERSON(S) AUTHORIZED TO BECOME HOLDER(S) BY ENDORSEMENT AND DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST PROVIDE THE FOLLOWING INFORMATION
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
Capacity:
Address(es):

 

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GUARANTEE   (Not to be used for signature guarantee)   The undersigned, a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or a trust company having an office or correspondent in the United States, or an “eligible guarantor institution” within the meaning of Rule 17(A)(d)-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees deposit with the Exchange Agent of the letter of transmittal (or facsimile thereof or agent’s message in lieu thereof), together with the Original Notes of the series tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Original Notes into the Exchange Agent’s account at the DTC described in the prospectus under the caption “The Exchange Offer—Procedures for Tendering—Book-Entry Transfer” and in the letter of transmittal) and any other required documents, all by 5:00 p.m., New York City time, within three New York Stock Exchange trading days following the Expiration Date.
Name of Firm:
						(Authorized Signature)
Address:						Name:
		(Include Zip Code)				Title:
						(Please Type or Print)
Area Code and Telephone Number:
						Dated:                     , 2015
DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ACTUAL SURRENDER OF ORIGINAL NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.

 

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INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

1. Delivery of this Notice of Guaranteed Delivery.    A properly completed and duly executed copy of this notice of guaranteed delivery (or facsimile hereof or an agent’s message and notice of guaranteed delivery in lieu hereof) and any other documents required by this notice of guaranteed delivery with respect to the Original Notes must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date of the Exchange Offer. Delivery of such notice of guaranteed delivery may be made by facsimile transmission, mail or hand delivery. THE METHOD OF DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY AND ANY OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, the holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 2 of the letter of transmittal.

2. Signatures on this Notice of Guaranteed Delivery.    If this notice of guaranteed delivery (or facsimile hereof) is signed by the registered holder(s) of the Original Notes referred to herein, the signature(s) must correspond exactly with the name(s) as written on the face of the Original Notes without alteration, enlargement or any change whatsoever. If this notice of guaranteed delivery (or facsimile hereof) is signed by a participant in the DTC whose name appears on a security position listing as the owner of the Original Notes, the signature must correspond with the name as it appears on the security position listing as the owner of the Original Notes.

If this notice of guaranteed delivery (or facsimile hereof) is signed by a person other than the registered holder(s) of any Original Notes listed or a participant of the DTC, this notice of guaranteed delivery must be accompanied by appropriate bond powers, signed as the name(s) of the registered holder(s) appear(s) on the Original Notes or signed as the name(s) of the participant appears on the DTC’s security position listing.

If this notice of guaranteed delivery (or facsimile hereof) is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and submit herewith evidence satisfactory to the Exchange Agent of such person’s authority to so act.

3. Requests for Assistance or Additional Copies.    Questions and requests for assistance and requests for additional copies of the prospectus and this notice of guaranteed delivery may be directed to the Exchange Agent at the address set forth on the cover page hereof. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

 

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Exhibit 99.3

OUTERWALL INC.

LETTER TO DEPOSITORY TRUST COMPANY PARTICIPANTS

FOR TENDER OF ALL OUTSTANDING

$300,000,000 5.875% SENIOR NOTES DUE 2021

IN EXCHANGE FOR

REGISTERED

$300,000,000 5.875% SENIOR NOTES DUE 2021

 

To Depository Trust Company Participants:

We are enclosing a prospectus dated                     , 2015 of Outerwall Inc. (the “Company”) and the related letter of transmittal. These two documents constitute the Company’s offer to exchange its $300,000,000 5.875% Senior Notes due 2021 and the associated guarantees (together, the “Exchange Notes”), the issuance of which has been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of its issued and outstanding $300,000,000 5.875% Senior Notes due 2021 and the associated guarantees (together, the “Original Notes”) (the “Exchange Offer”). Additionally, we have included a notice of guaranteed delivery and a letter that may be sent to your clients for whose account you hold Original Notes in your name or in the name of your nominee, with space provided for obtaining such client’s instruction with regard to the Exchange Offer.

We urge you to contact your clients promptly. Please note that the Exchange Offer will expire on the Expiration Date unless extended.

The Exchange Offer for Original Notes is not conditioned upon any minimum aggregate principal amount of Original Notes being tendered for exchange.

Pursuant to the letter of transmittal, each holder of Original Notes will represent to the Company that (i) any Exchange Notes received are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such holder of Original Notes, (ii) such person is not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, the distribution of the Original Notes or the Exchange Notes and (iii) such person is not an “affiliate,” as defined in Rule 405 under the Securities Act, of the Company. In addition, each holder of Original Notes who is a broker-dealer will represent to the Company that it will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, and it will acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, it will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

The enclosed Letter to Clients contains an authorization by the beneficial owners of the Original Notes for you to make the foregoing representations.

The Company will not pay any fee or commission to any broker or dealer or to any other persons (other than the Exchange Agent) in connection with the solicitation of tenders of Original Notes pursuant to the Exchange Offer. The Company will pay or cause to be paid any transfer taxes payable on the transfer of Original Notes to it, except as otherwise provided in Instruction 7 of the enclosed letter of transmittal.

Additional copies of the enclosed material may be obtained by contacting the Exchange Agent.

Exhibit 99.4

OUTERWALL INC.

LETTER TO CLIENTS

FOR TENDER OF ALL OUTSTANDING

$300,000,000 5.875% SENIOR NOTES DUE 2021

IN EXCHANGE FOR

REGISTERED

$300,000,000 5.875% SENIOR NOTES DUE 2021

 

To Our Clients:

We are enclosing a prospectus dated                     , 2015 of Outerwall Inc. (the “Company”) and the related letter of transmittal. These two documents constitute the Company’s offer to exchange its $300,000,000 5.875% Senior Notes due 2021 and the associated guarantees (together, the “Exchange Notes”), the issuance of which has been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of its issued and outstanding $300,000,000 5.875% Senior Notes due 2021 and the associated guarantees (together, the “Original Notes”) (the “Exchange Offer”).

The Exchange Offer for Original Notes is not conditioned upon any minimum aggregate principal amount of Original Notes being tendered for exchange.

We are the holder of record of Original Notes held by us for your own account. A tender of such Original Notes can be made only by us as the record holder and pursuant to your instructions. The accompanying letter of transmittal is furnished to you for your information only and cannot be used by you to tender Original Notes held by us for your account.

We request instructions as to whether you wish to tender any or all of the Original Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. We also request that you confirm that we may on your behalf make the representations contained in the letter of transmittal.

Pursuant to the letter of transmittal, each holder of Original Notes will represent to the Company that (i) any Exchange Notes received are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such holder of Original Notes, (ii) such person is not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, the distribution of the Original Notes or the Exchange Notes and (iii) such person is not an “affiliate,” as defined in Rule 405 under the Securities Act, of the Company. In addition, each holder of Original Notes who is a broker-dealer will (i) represent to the Company that it will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities and acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, it will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act, and (ii) acknowledge and agree that it cannot rely on the position of the staff of the Securities and Exchange Commission set forth in certain no-action letters and it must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any distribution, including a secondary resale transaction, and that failure to comply with such requirements in such instance could result in the holder of Original Notes who is a broker-dealer incurring liability under the Securities Act for which such person is not indemnified by the Company.

Very truly yours,

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PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE APPLICABLE EXPIRATION DATE.

 

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INSTRUCTION TO REGISTERED HOLDER AND/OR

BOOK-ENTRY TRANSFER FACILITY PARTICIPANT

To Registered Holder and/or Participant of the DTC:

The undersigned hereby acknowledges receipt and review of the prospectus dated                     , 2015 of Outerwall Inc. (the “Company”) and the related letter of transmittal. These two documents together constitute the Company’s offer to exchange its $300,000,000 5.875% Senior Notes due 2021 and the associated guarantees (the “Exchange Notes”), the issuance of which has been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of its issued and outstanding $300,000,000 5.875% Senior Notes due 2021 and the associated guarantees (the “Original Notes”) (the “Exchange Offer”).

This will instruct you, the registered holder and/or DTC participant, as to the action to be taken by you relating to the Exchange Offer for the Original Notes held by you for the account of the undersigned.

The aggregate principal amount of the Original Notes held by you for the account of the undersigned is:

 

Titles of Series		Principal Amount (FILL IN AMOUNT)
5.875% Senior Notes due 2021		$

WITH RESPECT TO THE EXCHANGE OFFER, THE UNDERSIGNED HEREBY INSTRUCTS YOU (CHECK APPROPRIATE BOX):

 

¨	TO TENDER ALL ORIGINAL NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED.

 

¨	TO TENDER THE FOLLOWING AMOUNT OF ORIGINAL NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED:

 

Titles of Series		Principal Amount (FILL IN AMOUNT) (minimum $2,000 and integral multiples of $1,000 in excess thereof)
5.875% Senior Notes due 2021		$

 

¨	NOT TO TENDER ANY ORIGINAL NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED.

IF NO BOX IS CHECKED, A SIGNED AND RETURNED INSTRUCTION TO BOOK-ENTRY TRANSFER PARTICIPANT WILL BE DEEMED TO INSTRUCT YOU TO TENDER ALL ORIGINAL NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED. PLEASE NOTE THAT ANY UNTENDERED ORIGINAL BONDS MUST BE IN MINIMUM DENOMINATIONS OF $2,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.

If the undersigned instructs you to tender the Original Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations contained in the letter of transmittal that are to be made with respect to the undersigned as a beneficial owner, including, but not limited to, the representations that (i) any Exchange Notes received are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not the undersigned, (ii) the undersigned is not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, the distribution of the Original Notes or the Exchange Notes, (iii) the undersigned is not an “affiliate,” as defined in Rule 405 under the Securities Act of the Company, and (iv) if the undersigned is a broker-dealer, that it will receive Exchange Notes

 

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for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, and it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

 

SIGN HERE
Name of beneficial owner(s):

Signature(s):

Name(s) (please print):

Address:

Telephone Number:

Taxpayer Identification or Social Security Number:

Date:

 

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