Exhibit 10.1
EXECUTION COPY
AGREEMENT
     This Agreement (the “Agreement”), dated as of May 28, 2008, is by and among
certain entities listed on Schedule A hereto (collectively, the “Shamrock
Group”, and each individually a “member” of the Shamrock Group) and Coinstar,
Inc. (the “Company”).
     WHEREAS, the members of the Shamrock Group are the beneficial owners (as
defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) of, in the aggregate, 3,712,755 shares of common
stock, par value $0.001 per share, of the Company (the “Common Stock”);
     WHEREAS, on April 4, 2008, a representative of certain members of the
Shamrock Group delivered to the Company a “Notice of Director Nominations to be
Brought Before the 2008 Annual Meeting of Coinstar, Inc. Stockholders” (the
“Nomination Letter”), and on April 25, 2008, members of the Shamrock Group filed
a definitive Proxy Statement on Schedule 14A (together with the proxy card and
other solicitation materials filed in connection therewith pursuant to the rules
promulgated under Section 14(a) of the Exchange Act, the “Shamrock Proxy
Statement”) with the Securities and Exchange Commission (the “SEC”); and
     WHEREAS, the Company and the Board of Directors of the Company (the
“Board”), on the one hand, and the Shamrock Group, on the other hand, wish to
enter into certain agreements relating to the composition of the Board, the
termination of the pending proxy contest for the election of directors at the
Company’s 2008 Annual Meeting of Stockholders (the “2008 Annual Meeting”) and
other matters as more fully set forth herein.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
     1. Certain Defined Terms. As used herein, the following terms have the
following meanings:
“2008 Annual Meeting” shall have the meaning set forth in the Recitals.
“2009 Annual Meeting” shall have the meaning set forth in Section 3.
“2010 Annual Meeting” shall have the meaning set forth in Section 2(c).
“Additional Director” shall have the meaning set forth in Section 3.
“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the
Exchange Act.
“Agreement” shall have the meaning set forth in the Introductory Paragraph.
“Applicable Meetings” shall have the meaning set forth in Section 4(c).

 

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“Associate” shall have the meaning set forth in Rule 12b-2 promulgated under the
Exchange Act.
“Board” shall have the meaning set forth in the Recitals.
“Bylaws” shall have the meaning set forth in Section 2(c).
“Common Stock” shall have the meaning set forth in the Recitals.
“Company” shall have the meaning set forth in the Introductory Paragraph.
“Deadline” shall have the meaning set forth in Section 2(c).
“Director Selection Process” shall have the meaning set forth in Section 3.
“Director Termination Date” shall mean the earliest of: (i) the date on which
those directors elected at the 2010 Annual Meeting are duly elected and
qualified to the Board in accordance with the Bylaws; (ii) the first date on
which any member of the Shamrock Group violates or engages in any of the
activities prohibited by Section 4 hereof; (iii) the first date on which the
members of the Shamrock Group sell, transfer or otherwise dispose of any or all
of the Common Stock such that the Shamrock Group’s aggregate beneficial
ownership (as defined in Rule 13d-3 promulgated under the Exchange Act) of
Common Stock is reduced to 1,856,377 or fewer shares of Common Stock (as
adjusted for any dividends of Common Stock, stock splits, stock combinations,
reclassifications, recapitalizations or the like); or (iv) the first date on
which the Selected Shamrock Director shall no longer be in office as a member of
the Board and the Shamrock Group shall not have the right to name a successor to
such Selected Shamrock Director (or designate a pool of three candidates) as
provided in Section 2(d) hereof.
“Exchange Act” shall have the meaning set forth in the Recitals.
“Nominating and Governance Committee” shall have the meaning set forth in
Section 2(a).
“Nomination Letter” shall have the meaning set forth in the Recitals.
“person” shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability or unlimited liability
company, joint venture, estate, trust, association, organization or other entity
of any kind or nature.
“SEC” shall have the meaning set forth in the Recitals.
“Selected Shamrock Director” shall have the meaning set forth in Section 2(b).
“Shamrock Affiliates” shall have the meaning set forth in Section 4(a).
“Shamrock Expense Notice” shall have the meaning set forth in Section 6.
“Shamrock Group” shall have the meaning set forth in the Introductory Paragraph.

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“Shamrock Nominee” shall have the meaning set forth in Section 2(a).
“Shamrock Proxy Statement” shall have the meaning set forth in the Recitals.
     2. Selected Shamrock Director.
          (a) On or promptly after the date hereof, one or more members of the
Company’s Nominating and Governance Committee (the “Nominating and Governance
Committee”) will interview Eugene I. Krieger, John M. Panettiere and Arik Ahitov
(each, a “Shamrock Nominee”). Following such interviews, the Nominating and
Governance Committee will evaluate the overall qualifications, background and
experience of each Shamrock Nominee and recommend one of them for appointment to
the Board.
          (b) Promptly after receiving the recommendation of the Nominating and
Governance Committee, the Board will evaluate the Shamrock Nominees and, taking
into consideration the recommendation of the Nominating and Governance
Committee, select one Shamrock Nominee for appointment to the Board (the
“Selected Shamrock Director”).
          (c) No later than 5:00 pm Pacific Time on May 29, 2008 (the
“Deadline”), the Board shall, pursuant to the powers granted to it under the
Amended and Restated Bylaws of the Company (the “Bylaws”), increase the size of
the Board by one (with such newly created directorship to be a member of the
class of directors whose terms expire at the Company’s 2010 Annual Meeting of
Stockholders (the “2010 Annual Meeting”)) and appoint the Selected Shamrock
Director to fill the new directorship so created on the Board, to serve in such
capacity from such date of appointment through the Director Termination Date. If
the Shamrock Selected Director is not appointed to the Board by the Deadline,
then the Shamrock Group shall be entitled to specific performance of the
Company’s obligations hereunder, in addition to any other rights or remedies
available to the Shamrock Group or any member thereof at law or in equity.
          (d) In the event of the death or incapacity of the Selected Shamrock
Director prior to the 2010 Annual Meeting, the Shamrock Group shall be entitled
to designate a person to replace the Selected Shamrock Director to serve on the
Board by delivery of a written notice to the Company within thirty (30) days
after the Selected Shamrock Director dies or becomes incapacitated. Such
person’s credentials shall be promptly reviewed by and he or she shall be
promptly interviewed by the Nominating and Governance Committee and, subject to
such Committee’s and the Board’s approval, such person shall be promptly
appointed to the Board to serve until the Director Termination Date; provided,
such approval of the Nominating and Governance Committee and of the Board shall
not be unreasonably conditioned, withheld or delayed. In the event that either
the Nominating and Governance Committee or the Board shall in good faith
reasonably withhold approval of a person so designated by the Shamrock Group to
replace the Selected Shamrock Director, the Shamrock Group shall have the right
to designate additional persons for appointment as the Selected Shamrock
Director in accordance with the provisions of this Section 2(d) until one of the
Shamrock Group’s designees is approved and appointed to serve as the replacement
Selected Shamrock Director. In addition, in the event that prior to the 2010
Annual Meeting any Selected Shamrock Director is no longer willing to serve in
such capacity, the Shamrock Group shall have the right to designate a pool of
three

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individuals from which the Nominating and Governance Committee and the Board
shall select a replacement for the Selected Shamrock Director who is no longer
willing to so serve. The credentials of each of the three persons designated by
the Shamrock Group shall be promptly reviewed, and each shall be promptly
interviewed, by the Nominating and Governance Committee. The person selected as
the replacement Selected Shamrock Director by the Nominating and Governance
Committee and the Board from the three individuals designated by the Shamrock
Group shall be appointed to the Board as promptly as reasonably practicable (and
in no event later than thirty (30) days after the date the Shamrock Group
designates its three proposed replacements), to serve until the Director
Termination Date. Any person appointed to the Board pursuant to this Section
2(d) shall thereafter be the “Selected Shamrock Director” for all purposes of
this Agreement. For the avoidance of doubt, except as set forth in this
Section 2(d), the Shamrock Group shall not be entitled to remove or otherwise
replace the Selected Shamrock Director.
          (e) While serving on the Board and any committee thereof, the Selected
Shamrock Director shall be entitled to all the rights and privileges of the
other directors and committee members, including, without limitation, access to
the Company’s outside advisors; provided, that the Selected Shamrock Director
shall not be entitled to participate in or observe, and shall upon the good
faith request of the Board or any such committee recuse himself from, any
meeting or portion thereof at which the Board or any such committee is
evaluating and/or taking action with respect to (x) the exercise of any of the
Company’s rights or enforcement of any of the obligations of any member of the
Shamrock Group under this Agreement, or (y) any transaction proposed by, or
with, or affecting any member of the Shamrock Group in a manner materially
different than the effect on other stockholders. The Board or any such committee
shall be entitled to take such actions as it shall in good faith deem reasonably
necessary or appropriate to carry out the provisions of the preceding sentence.
          (f) The Selected Shamrock Director shall be entitled to receive the
identical compensation and benefits being paid to the other non-employee
directors of the Company. It shall be a precondition to the right of the
Selected Shamrock Director to attend any meeting of the Board or committee
thereof that such individual shall have entered into any non-disclosure or
confidentiality agreement entered into by the other members of the Board and
shall have agreed, in the same manner as each other member of the Board, to
abide by the written policies of the Board and the committees thereof
(including, without limitation, the Code of Conduct and the Code of Ethics) and
the written policies of the Company applicable to members of the Board
(including, without limitation, the Company’s insider trading policy).
          (g) The Shamrock Group shall not be entitled to have the Selected
Shamrock Director serve on the Board from and after the Director Termination
Date, nor shall the Company have any obligation to nominate the Selected
Shamrock Director for re-election to the Board after the Director Termination
Date.
          (h) If the Director Termination Date arises as a result of clause
(ii) or clause (iii) of the definition thereof, the Shamrock Group shall use
good faith efforts to cause the Selected Shamrock Director to promptly resign
from the Board, and the Company shall promptly thereafter commence a director
selection process in accordance with the procedures

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set forth on Schedule B hereto to select a replacement for the Selected Shamrock
Director who, upon appointment to the Board, shall serve until the Director
Termination Date.
          (i) If the Company destaggers the Board at any time prior to the
Director Termination Date, the Company shall include the Selected Shamrock
Director in its slate of nominees at every meeting of stockholders at which
directors are elected prior to the Director Termination Date.
     3. Additional Board Seat. In addition to the appointment of the Selected
Shamrock Director contemplated by Section 2, the Board shall commence, prior to
the end of 2008, a director selection process (the “Director Selection Process”)
in accordance with the procedures set forth on Schedule B hereto, and in
connection therewith shall increase the size of the Board by one (with such
newly created directorship to be a member of the class of directors whose terms
expire at the Company’s 2009 Annual Meeting of Stockholders (the “2009 Annual
Meeting”)) and appoint the director selected by the Board pursuant to the
Director Selection Process (the “Additional Director”) to fill the new
directorship so created on the Board no later than March 1, 2009. The Board
shall nominate and support the Additional Director for re-election to the Board
at the 2009 Annual Meeting as a director whose term shall expire at the
Company’s 2012 Annual Meeting of Stockholders (or if the Company destaggers the
Board at any time prior to the 2012 Annual Meeting, the Company shall include
the Additional Director in its slate of nominees at every meeting of
stockholders at which directors are elected prior to the 2012 Annual Meeting).
     4. Proxy Contest and Other Matters.
          (a) Each member of the Shamrock Group agrees that the members of the
Shamrock Group shall, and shall cause their Affiliates and Associates (such
Affiliates and Associates, collectively and individually, the “Shamrock
Affiliates”) to (i) immediately cease all efforts, direct or indirect, to elect
the Shamrock Nominees at the 2008 Annual Meeting and (ii) not vote, deliver or
otherwise use any proxies obtained in connection with such solicitation for use
at the 2008 Annual Meeting.
          (b) Each member of the Shamrock Group agrees that, until the
conclusion of the 2010 Annual Meeting, no member of the Shamrock Group shall
(and the members of the Shamrock Group shall cause the Shamrock Affiliates not
to), except as otherwise set forth on Schedule B hereto:
          (i) solicit proxies or written consents of stockholders or conduct any
other type of referendum (binding or non-binding) with respect to, or make or in
any way participate in any solicitation of any proxy, consent or other authority
to vote any shares of Common Stock with respect to, or otherwise become a
participant in any contested solicitation with respect to, any matter involving
the Company, including, without limitation, the removal or the election of
directors;
          (ii) form or join in a partnership, limited partnership, syndicate or
other group (as defined under Section 13(d) of the Exchange Act) with respect to
the

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Common Stock, in support of any effort by a third party with respect to the
matters described in subparagraph (i), (iv) and (v) of this Section 4(b);
          (iii) deposit any shares of Common Stock in a voting trust or subject
any shares of Common Stock to any voting agreement, in each case other than
solely with other members of the Shamrock Group or other Shamrock Affiliates
with respect to the shares of Common Stock now or hereafter owned by them, or
pursuant to this Agreement;
          (iv) submit any proposal (including nominations of director
candidates, except as provided herein) for consideration at any annual or
special meeting of the stockholders of the Company (including pursuant to
Rule 14a-8 promulgated under the Exchange Act); provided, that the foregoing
shall not prevent the Selected Shamrock Director or members of the Shamrock
Group or other Shamrock Affiliates from submitting such matters directly to the
Board for its consideration;
          (v) support or participate in any “withhold the vote” or similar
campaign with respect to the Company or the Board, or support any other nominees
for the Board other than the Selected Shamrock Director or other directors
nominated by the Board; provided, that if the Selected Shamrock Director is not
nominated by the Board for election at the 2010 Annual Meeting, the Shamrock
Group and any applicable Shamrock Affiliates shall not be obligated to vote
their shares for the directors nominated by the Board, so long as the Shamrock
Group otherwise complies with subparagraphs (i), (ii), (iii) and this
subparagraph (v) of this Section 4(b); or
          (vi) make, or cause to be made, any statement or announcement that
constitutes an ad hominem attack on the Company, its officers or its directors:
(A) in any document or report filed with or furnished to the SEC or any other
governmental or regulatory authority, (B) in any press release or other public
communication , or (C) to any journalist or member of the media (including,
without limitation, in a television, radio, newspaper or magazine interview);
provided, that the Company acknowledges that members of the Shamrock Group or
Shamrock Affiliates have had communications and may in the future communicate
with the Company, management, the Board and the stockholders and such
communications shall not in and of themselves be deemed a violation of this
clause so long as such communication does not reasonably constitute an ad
hominem attack on the Company, its officers or its directors.
          (c) Each member of the Shamrock Group shall cause all shares of Common
Stock held of record or beneficially owned (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, by it or by any Shamrock Affiliate, as of
the record date for the 2008 Annual Meeting, the 2009 Annual Meeting and,
provided the Selected Shamrock Director is included in the Company’s slate of
director nominees for the 2010 Annual Meeting, as of the record date for the
2010 Annual Meeting (the “Applicable Meetings”), to be present for quorum
purposes and to be voted, at each Applicable Meeting or at any adjournments or
postponements thereof, in favor of the slate of directors nominated by the Board
(including the Selected Shamrock Director) for election at each Applicable
Meeting.

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          (d) Upon the appointment of the Selected Shamrock Director to the
Board, the members of the Shamrock Group shall be deemed to have withdrawn the
Nomination Letter, the Shamrock Proxy Statement and the letter dated April 14,
2008 to the Company requesting inspection of certain records and documents of
the Company.
          (e) Until the conclusion of the 2010 Annual Meeting, none of the
Company nor any of its officers or directors shall make, or cause to be made,
any statement or announcement that constitutes an ad hominem attack on any
current or former Selected Shamrock Director, any member of the Shamrock Group,
any Shamrock Affiliate, or their respective principals, officers or directors:
(A) in any document or report filed with or furnished to the SEC or any other
governmental or regulatory authority, (B) in any press release or other public
communication , or (C) to any journalist or member of the media (including,
without limitation, in a television, radio, newspaper or magazine interview).
     5. Public Announcement and SEC Filing. The Company and the Shamrock Group
shall announce this Agreement and the material terms hereof by means of a joint
press release in the form attached as Schedule C hereto as soon as practicable
on the date hereof. The Shamrock Group shall promptly file an amendment to the
Schedule 13D regarding the Common Stock filed with the SEC on May 30, 2006, and
as amended to date, reporting the entry into this Agreement and amending any
applicable items under Schedule 13D.
     6. Reimbursement of Expenses. The Company shall reimburse the Shamrock
Group in an aggregate amount not to exceed $350,000 for its reasonable
out-of-pocket expenses incurred through the date the Selected Shamrock Director
is appointed to the Board in connection with (i) the preparation of the Shamrock
Proxy Statement and solicitation of proxies thereunder and (ii) the negotiation
and preparation of this Agreement, including, without limitation, legal and
accounting fees and the fees of the proxy solicitor retained by the Shamrock
Group, within thirty (30) days after the receipt by the Company of a written
notice from the Shamrock Group (the “Shamrock Expense Notice”) itemizing such
expenses in reasonable detail together with appropriate documentation therefor.
The Shamrock Group shall collectively send one Shamrock Expense Notice to the
Company, and shall only receive reimbursement for the documented reasonable
expenses set forth in such single Shamrock Expense Notice.
     7. Representations and Warranties of the Company. The Company hereby
represents and warrants that this Agreement and the performance by the Company
of its obligations hereunder (i) has been duly authorized, executed and
delivered by it, and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (ii) does not
require the approval of the stockholders of the Company and (iii) does not and
will not violate any law, any order of any court or other agency of government,
the Certificate of Incorporation of the Company or the Bylaws or any provision
of any material agreement or other instrument to which the Company or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
material agreement or other instrument.

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     8. Representations and Warranties of the Shamrock Group. Each member of the
Shamrock Group hereby represents and warrants, severally and not jointly, that:
          (a) this Agreement and the performance by such member of its
obligations hereunder (i) has been duly authorized, executed and delivered by
such member, and is a valid and binding obligation of such member, enforceable
against such member in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law), (ii) does not require approval
by any owners or holders of any equity interest in such member (except as has
already been obtained) and (iii) does not and will not violate any law, any
order of any court or other agency of government, the organizational documents
of such member or any provision of any material agreement or other instrument to
which such member or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such material agreement or other instrument; and
          (b) except for the shares of Common Stock listed on Schedule A hereto,
the members of the Shamrock Group do not beneficially own (as defined in
Rule 13d-3 promulgated under the Exchange Act) any shares of Common Stock.
     9. Miscellaneous. The parties hereto acknowledge and agree that irreparable
harm would occur in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached and,
accordingly, the parties hereto shall be entitled to an injunction or
injunctions to prevent or to cure breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement exclusively in the Court
of Chancery or other state courts of the State of Delaware, in addition to any
other remedy to which they are entitled at law or in equity. Furthermore, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of the Court of Chancery or other state courts of the State of Delaware in the
event any dispute arises out of this Agreement or the transactions contemplated
by this Agreement, (b) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it shall not commence any action or assert any claim against any
other party to this Agreement relating to this Agreement or the transactions
contemplated by this Agreement in any court other than the Court of Chancery or
other state courts of the State of Delaware, (d) irrevocably waives the right to
trial by jury, (e) agrees to waive any bonding requirement under any applicable
law, in the case any other party seeks to enforce the terms of this Agreement by
way of equitable relief and (f) irrevocably consents to service of process by a
reputable overnight mail delivery service, signature requested, to the address
of such party as provided in Section 11. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING WITHOUT LIMITATION VALIDITY, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES OF SUCH STATE THAT WOULD CAUSE THE LAWS OF ANOTHER JURISDICTION TO
APPLY.

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     10. Entire Agreement; Amendments; Waiver. This Agreement (and the Schedules
hereto, which are incorporated herein) contains the entire understanding of the
parties with respect to the subject matter hereof and may be amended only by an
agreement in writing executed by each of the parties hereto. Any term or
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.
     11. Notices. All notices, consents, requests, instructions, approvals and
other communications provided for herein and all legal process in regard hereto
shall be in writing and shall be deemed validly given, made or served, if
(a) given by telecopy, when such telecopy is transmitted to the telecopy number
set forth below and the appropriate confirmation is received or (b) if given by
any other means, when actually received during normal business hours at the
address specified in this subsection:

     
if to the Company:
  Coinstar, Inc.
 
  1800 114th Avenue SE
 
  Bellevue, Washington 98004
 
  Attention: Don Rench, Esq.
 
  Facsimile: (425) 943-8090
 
   
with copies (which shall
   
not constitute notice) to:
  Latham & Watkins, LLP
 
  885 Third Avenue
 
  New York, New York 10024
 
  Attention: Charles M. Nathan, Esq.
 
  Facsimile. (212) 751-4864
 
   
 
  and
 
   
 
  Perkins Coie LLP
 
  1201 Third Avenue, Suite 4800
 
  Seattle, Washington 98101
 
  Attention: Andrew Bor, Esq.
 
  Facsimile. (206) 359-9577
 
   
if to the Shamrock Group:
  Shamrock Activist Value Fund, L.P.
 
  4444 Lakeside Drive
 
  Burbank, California 91505
 
  Attention: Greg S. Martin
 
  Facsimile. (818) 845-4675

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with a copy (which shall
   
not constitute notice) to:
  Bingham McCutchen LLP
 
  355 South Grand Avenue
 
  Los Angeles, California 90071-3106
 
  Attention: David K. Robbins, Esq.
 
  Facsimile. (213) 830-8660

     12. Severability. If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall have no
effect upon the legality or enforceability of any other provision of this
Agreement.
     13. Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
     14. No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and is not enforceable by any other person.
     15. No Assignment; Binding Effect. Neither this Agreement, nor any right,
interest or obligation hereunder, may be assigned by any party hereto without
the prior written consent of the other parties hereto and any attempt to do so
will be void. Subject to the preceding sentence, this Agreement is binding upon,
inures to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns and legal representatives.
     16. Interpretation and Construction. Each of the parties hereto
acknowledges that it has been represented by counsel of its choice throughout
all negotiations that have preceded the execution of this Agreement, and that it
has executed the same with the advice of said independent counsel. Each party
and its counsel cooperated and participated in the drafting and preparation of
this Agreement, and any and all drafts relating thereto exchanged among the
parties shall be deemed the work product of all of the parties and may not be
construed against any party by reason of its drafting or preparation.
Accordingly, any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against any party that
drafted or prepared it is of no application and is hereby expressly waived by
each of the parties hereto, and any controversy over interpretations of this
Agreement shall be decided without regards to events of drafting or preparation.
     17. Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
[Signature Pages Follow]

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     IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or caused the same to be executed by its duly authorized representative as of
the date first above written.

            COINSTAR, INC.
      By:   /s/ David W. Cole         Name:   David W. Cole        Title:  
Chief Executive Officer     

                      SHAMROCK ACTIVIST VALUE FUND, L.P.    
 
                        By: Shamrock Activist Value Fund GP, L.L.C., its general
partner    
 
                        By: Shamrock Partners Activist Value Fund, L.L.C., its
       managing member    
 
               
 
      By:   /s/ Michael J. McConnell
 
   
 
          Name: Michael J. McConnell    
 
          Title: Vice President    
 
                    SHAMROCK ACTIVIST VALUE FUND II, L.P.    
 
                        By: Shamrock Activist Value Fund GP, L.L.C., its general
partner    
 
                        By: Shamrock Partners Activist Value Fund, L.L.C., its
       managing member    
 
               
 
      By:   /s/ Michael J. McConnell    
 
               
 
          Name: Michael J. McConnell    
 
          Title: Vice President    

[Signature Page to Settlement Agreement]

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                      SHAMROCK ACTIVIST VALUE FUND III, L.P.    
 
                        By: Shamrock Activist Value Fund GP, L.L.C., its general
partner    
 
                        By: Shamrock Partners Activist Value Fund, L.L.C., its
       managing member    
 
               
 
      By:   /s/ Michael J. McConnell    
 
               
 
          Name: Michael J. McConnell    
 
          Title: Vice President    
 
                    SHAMROCK ACTIVIST VALUE FUND GP, L.L.C.    
 
                        By: Shamrock Partners Activist Value Fund, L.L.C., its
       managing member    
 
               
 
      By:   /s/ Michael J. McConnell    
 
               
 
          Name: Michael J. McConnell    
 
          Title: Vice President    
 
                    SHAMROCK PARTNERS ACTIVIST VALUE FUND, L.L.C.    
 
               
 
      By:   /s/ Michael J. McConnell    
 
               
 
          Name: Michael J. McConnell    
 
          Title: Vice President    

[Signature Page to Settlement Agreement]

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SCHEDULE A

              NUMBER OF SHARES OF COMMON                          NAME   STOCK
BENEFICIALLY OWNED
Shamrock Activist Value Fund, L.P.
    2,521,213  
 
       
Shamrock Activist Value Fund II, L.P.
    1,041,863  
 
       
Shamrock Activist Value Fund III, L.P.
    149,679  
 
       
Shamrock Activist Value Fund GP, L.L.C.*
    3,712,755  
 
       
Shamrock Partners Activist Value Fund, L.L.C.*
    3,712,755  

 

*   The indicated members of the Shamrock Group may be deemed to beneficially
own the shares of Common Stock indicated above by virtue of their control of the
other members of the Shamrock Group.

Schedule A-1

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SCHEDULE B
INDEPENDENT DIRECTOR SELECTION PROCESS
     In connection with Section 3 of the Agreement (and if required by Section
2(h) of the Agreement), the Company will commence a process to add an
independent director to the Board from a group of candidates submitted for
nomination exclusively by major stockholders of the Company.

  •   The Company will solicit its major stockholders for submissions of, and
input regarding, candidates to be considered for nomination as a new independent
director on the Board. Such person must satisfy the applicable independence
requirements of the SEC and each national securities exchange on which the
Company’s common stock is listed.     •   The Shamrock Group will be included in
the process and invited to submit candidates for nomination and otherwise
participate in the search and selection process on an equal footing with the
Company’s other major stockholders.     •   The Nominating and Governance
Committee, which is comprised solely of independent directors, will review the
resumes and qualifications of all candidates submitted for nomination.     •  
The Nominating and Governance Committee will consider, among other things, the
director candidates’ overall qualifications and background, as well as any
specialized experience serving as an independent director of a public company or
having executive or board positions in the chain retail store environment, other
significant areas of the Company’s customer base, electronic money transfer, or
other businesses that are part of, or complementary with, the Company’s 4th
Wall™ businesses.     •   A candidate’s affiliation with a large shareholder
will not be a negative consideration in the evaluation by the Nominating and
Governance Committee, although may be considered regarding meeting applicable
independence requirements.     •   The Nominating and Governance Committee will
select one person from the pool of candidates who will be presented to the Board
for consideration for appointment as a new independent director.     •   The
Board will evaluate the person selected for appointment and, taking into
consideration the recommendation of the Nominating and Governance Committee,
either appoint the person to the Board or direct the Nominating and Governance
Committee to identify another candidate from the same pool submitted by the
major stockholders for appointment in accordance with this Schedule B.

Schedule B-1

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SCHEDULE C
FORM OF JOINT PRESS RELEASE

     
Contacts:
   
Coinstar, Inc.
  Shamrock Activist Value Fund:
 
   
Investors
  Media
Brian Turner, Chief Financial Officer
  Clifford A. Miller
425-943-8000
  818-973-4297
 
   
Media
   
Marci Maule, Director Public Relations
   
425-943-8277
   
 
   
Tom Ryan
   
ICR, Inc.
   
203-682-8200
   
 
   
Matthew Sherman / Barrett Golden
   
Joele Frank, Wilkinson Brimmer Katcher
   
212-355-4449
   

FOR IMMEDIATE RELEASE
COINSTAR AND SHAMROCK ACTIVIST VALUE FUND
REACH AGREEMENT TO RESOLVE PROXY CONTEST
AT 2008 ANNUAL MEETING OF STOCKHOLDERS
BELLEVUE, Wash.– May 28, 2008 – Coinstar, Inc. (NASDAQ: CSTR) and The Shamrock
Activist Value Fund (“SAVF” or “Shamrock”), which currently owns approximately
13.3% of Coinstar’s outstanding shares, today announced that they have reached
an agreement that will resolve the proxy contest related to the Company’s 2008
Annual Meeting of Stockholders.
Under the terms of the agreement, the Company’s Board of Directors today
appointed Arik Ahitov, one of the three director candidates previously nominated
by SAVF for election to Coinstar’s Board, as a Coinstar director in the class of
directors whose term expires in 2010. SAVF, in turn, will terminate its proxy
contest and will not nominate any candidates for election as directors at the
Coinstar 2008 Annual Meeting on June 3, 2008. With the addition of the SAVF
Board designee, Coinstar’s Board will be expanded to eight directors.
In addition, Coinstar has agreed to proceed with its previously announced plan
to add an additional independent director to its Board by March 1, 2009. The new
director will be selected from a group of candidates submitted for nomination by
Coinstar’s major stockholders, including SAVF. The Board’s Nominating and
Governance Committee will consider, among other things, the director candidates’
overall qualifications and background, as well as any specialized experience
serving as an independent director of a public company or having executive or
board positions in the chain retail store environment, other significant areas
of Coinstar’s customer base, electronic money transfer, or other businesses that
are part of, or complementary with, Coinstar’s 4th WallTM businesses. The new
director, who will be appointed to the class of directors whose term expires in
2009, will be included on the Board’s slate of nominees for election for a new
three-year term at the 2009 Annual Meeting. With the addition of the second new
director, Coinstar’s Board will be expanded to nine directors.

 

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In connection with the appointment of the two new directors to Coinstar’s Board,
SAVF has agreed to not solicit proxies in connection with the 2008 Annual
Meeting, and to vote its shares in support of all of the Board’s director
nominees to be presented at the 2008 Annual Meeting. Additionally, SAVF has
agreed to abide by certain standstill provisions, including, among other things,
not soliciting proxies for or otherwise participating in any contested election
relating to Coinstar directors or submitting any proposal at Coinstar
stockholder meetings through the completion of the 2010 Annual Meeting of
Stockholders, with certain exceptions specified in the agreement.
Keith D. Grinstein, Coinstar’s Chairman of the Board, said, “We are pleased to
have reached this agreement with Shamrock, our largest investor, which we
believe is in the best interests of the Company and all Coinstar stockholders.
During the past few months, we have met with a large number of our major
stockholders, and we value their insights regarding the future of our Company.
We believe our stockholders support the addition of new independent directors to
our Board. Our Board is committed to enhancing value for all Coinstar
stockholders and we look forward to working with our new directors to continue
executing our successful 4th Wall strategy.”
“As Coinstar’s largest stockholder, we are pleased to have reached an amicable
resolution which we believe is in the best interest of all Coinstar
stockholders,” Michael McConnell of the Shamrock Activist Value Fund stated. 
“The addition of two new independent directors, including Arik Ahitov, one of
our director candidates, to Coinstar’s Board is a positive, stockholder friendly
step that, we believe, will bring additional perspectives and skills beneficial
to the Company and its stockholders.  Our Board designee will work diligently
and constructively with his fellow board members.”
Mr. McConnell added, “We endorse the Company’s 4th Wall strategy and look
forward to working with management as it executes against that strategy to drive
improved returns on invested capital and stockholder value.”  
Arik Ahitov joined Shamrock Capital Advisors, Inc. in September 2004, where he
currently serves as a Vice President, a position he has held since
September 2006. Mr. Ahitov has also served as a portfolio manager for the
Shamrock Activist Value Fund since September 2004 and is a CFA Level 3
candidate. Prior to obtaining his Masters in Business Administration from the
University of California, Los Angeles Anderson School of Management, Mr. Ahitov
served as a consultant for Mitchell Madison Group, a management consulting firm,
a business strategy analyst for FreeDecision, a technology start-up company, and
as an investment banker at both Salomon Smith Barney, a financial advisory
services firm, and Royal Management, an investment services firm. Mr. Ahitov
graduated from Northwestern University with a Bachelor of Arts degree.
Additional information relating to the agreement with SAVF will be contained in
a Form 8-K to be filed by the Company.
About The Shamrock Activist Value Fund
The Shamrock Activist Value fund was formed by Shamrock Holdings, Inc. to make
equity investments in small-cap, publicly-traded companies.  The Shamrock
Activist Value fund combines a deep value focus with a strategy of responsible
stockholder activism.  The Shamrock Activist Value Fund’s theory of activist
investing relies on the ability of engaged stockholders to advocate for
corporate changes designed to unlock value for all stakeholders.
Founded in 1978, Shamrock Holdings has been an investor in a wide range of
domestic and international private equity transactions, marketable securities
and real estate. Shamrock Holding’s foundation as the private investment firm
for a distinguished family — the Roy E. Disney family — has helped to build a
strong tradition of integrity, service and responsibility to our investors and
portfolio companies. 

 

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About Coinstar, Inc.
Coinstar, Inc. (NASDAQ: CSTR) is a multi-national company offering a range of
4th Wall™ solutions for the retailers’ front of store consisting of self-service
coin counting, money transfer, electronic payment solutions, entertainment
services and self-service DVD rental. The Company’s products and services can be
found at more than 50,000 retail locations including supermarkets, drug stores,
mass merchants, financial institutions, convenience stores and restaurants.
Important Additional Information
On April 30, 2008, Coinstar began mailing to its stockholders a definitive proxy
statement with a WHITE Proxy Card and other materials in connection with
Coinstar’s 2008 Annual Meeting of Stockholders. STOCKHOLDERS ARE URGED TO READ
COINSTAR’S DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS BECAUSE
THEY CONTAIN IMPORTANT INFORMATION. The definitive proxy statement and other
documents relating to the 2008 Annual Meeting and Coinstar can be obtained free
of charge from the SEC’s website at http://www.sec.gov. These documents can also
be obtained free of charge from Coinstar at its website, www.coinstar.com,
under: About Us – Investor Relations – SEC Filings. The contents of the websites
above are not deemed to be incorporated by reference into the definitive proxy
statement or other materials. In addition, copies of the definitive proxy
statement, WHITE Proxy Card and other materials may be requested by contacting
our proxy solicitor, Georgeson Inc. by phone, toll-free, at 1-(888) 605-7543.
Detailed information regarding the names, affiliations and interests of
individuals who are participants, including Coinstar directors and certain
executive officers and other employees, in the solicitation of proxies of
Coinstar’s stockholders is available in Coinstar’s definitive proxy statement.
Safe Harbor for Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995. The words
“will,” “believe,” “estimate,” “expect,” “intend,” “anticipate,” “goals,”
“prospects,” variations of such words, and similar expressions identify
forward-looking statements, but their absence does not mean that the statement
is not forward-looking. The forward-looking statements in this press release
include statements regarding Coinstar, Inc.’s anticipated performance and Board
actions. Forward-looking statements are not guarantees of future performance and
actions, and they may vary materially from those expressed or implied in such
statements. Differences may result from actions taken by Coinstar, including its
Board, as well as from risks and uncertainties beyond Coinstar’s control. Such
risks and uncertainties include, but are not limited to, actions taken by
Coinstar’s stockholders, the termination, non-renewal or renegotiation on
materially adverse terms of our contracts with our significant retailers,
payment of increased service fees to retailers, fewer than expected
installations, the ability to attract new retailers, penetrate new markets and
distribution channels, cross-sell our products and services and react to
changing consumer demands, the ability to achieve the strategic and financial
objectives for our entry into or expansion of new businesses, the ability to
adequately protect our intellectual property, and the application of substantial
federal, state, local and foreign laws and regulations specific to our business.
The foregoing list of risks and uncertainties is illustrative, but by no means
exhaustive. For more information on factors that may affect future performance,
please review “Risk Factors” described in our most recent Annual Report on Form
10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission. These forward-looking statements reflect Coinstar’s expectations as
of the date of this press release. Coinstar undertakes no obligation to update
the information provided herein.
# # #

Schedule C-1