Document:

exv10w4

Exhibit 10.4

EMPLOYMENT AGREEMENT

COINSTAR, INC.

and

GREGG KAPLAN

Dated as of April 1, 2009

 

 

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”), dated as of April 1, 2009, between Coinstar,
Inc., a Delaware corporation (“Employer”), and Gregg Kaplan (“Employee”);

W I T N E S S E T H:

     WHEREAS, Employer and Employee wish to document certain understandings and agreements; and

     WHEREAS, Employer desires to employ Employee upon the terms and conditions set forth herein;
and

     WHEREAS, Employee is willing to provide services to Employer upon the terms and conditions set
forth herein;

A G R E E M E N T S:

     NOW, THEREFORE, for and in consideration of the foregoing premises and for other good and
valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Employer and
Employee hereby agree as follows:

1. PRESIDENT AND CHIEF OPERATING OFFICER

     1.1 Employment

     Employer will employ Employee and Employee will provide services to Employer as its President
and Chief Operating Officer (“COO”).

     1.2 Attention and Effort

     Employee will devote all of his productive time, ability, attention and effort to Employer’s
business and will skillfully serve its interests during the Term (as defined below).

     1.3 Term

     Employee’s term of employment as COO under this Agreement shall begin as of the effective date
of this Agreement and shall continue until terminated pursuant to Section 2 of this Agreement (the
“Term”).

			
	 	 	 
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     1.4 Compensation

     During the Term, Employer agrees to pay or cause to be paid to Employee, and Employee agrees
to accept in exchange for the services rendered hereunder by him, the following compensation:

     (a) Base Salary

     Employee’s compensation as COO shall consist, in part, of an annual base salary of
four hundred thirty thousand dollars ($430,000) before all customary payroll deductions.
Such annual base salary shall be paid in substantially equal installments and at the same
intervals as other officers of Employer are paid. Employee’s salary shall be reviewed by
Employer’s Compensation Committee as appropriate to determine in its discretion whether it
is appropriate to increase the base salary.

     (b) Bonus

     Employee shall be eligible for cash bonuses consistent with the existing program for
executive officers, provided performance targets applicable to such bonuses are met, and,
provided further, any such bonus shall be pro-rated in the event of a termination without
Cause.

     1.5 Benefits

     During the Term, Employee will be entitled to participate, subject to and in accordance with
applicable eligibility requirements, in fringe benefit programs as shall be provided from time to
time by, to the extent required, action of Employer’s Board of Directors.

2. TERMINATION

     Employment of Employee pursuant to this Agreement may be terminated as follows, but in any
case, the provisions of Section 4 hereof shall survive the termination of this Agreement and the
termination of Employee’s employment hereunder:

     2.1 By Employer

     With or without Cause (as defined below), Employer may terminate the employment of Employee at
any time during the term of employment upon giving Notice of Termination (as defined below).

     2.2 By Employee

     Employee may terminate his employment at any time, for any reason, upon giving Notice of
Termination.

			
	 	 	 
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     2.3 Automatic Termination

     This Agreement and Employee’s employment hereunder shall terminate automatically upon the
death or total disability of Employee. The term “total disability” as used herein shall
mean Employee’s inability to perform the duties set forth in Section 1 hereof for a period or
periods aggregating 180 calendar days in any 12-month period as a result of physical or mental
illness, loss of legal capacity or any other cause beyond Employee’s control, unless Employee is
granted a leave of absence by the Employer. Employee and Employer hereby acknowledge that
Employee’s ability to perform the duties specified in Section 1 hereof is of the essence of this
Agreement. Termination hereunder shall be deemed to be effective (a) at the end of the calendar
month in which Employee’s death occurs or (b) immediately upon a determination by the Employer of
Employee’s total disability, as defined herein.

     2.4 Termination in Connection With a Change in Control

     Concurrent with the commencement of Employee’s employment hereunder as COO, Employee and the
Company shall enter into a Change of Control Agreement, in the form attached hereto as Exhibit A.
Notwithstanding Sections 3.1 and 3.2 of this Agreement and in full substitution therefor, if
Employee’s employment terminates under circumstances described in the Change of Control Agreement,
Employee’s rights upon termination will be governed by the terms of the Change of Control Agreement
and his right to termination payments under this Employment Agreement shall cease.

     2.5 Notice

     The term “Notice of Termination” shall mean at least 30 days’ written notice of
termination of Employee’s employment, during which period Employee’s employment and performance of
services will continue; provided, however, that Employer may, upon notice to
Employee and without reducing Employee’s compensation during such period, excuse Employee from any
or all of his duties during such period. The effective date of the termination of Employee’s
employment hereunder shall be the date on which such 30-day period expires.

3. TERMINATION PAYMENTS

     In the event of termination of the employment of Employee during the Term, all compensation
and benefits set forth in this Agreement shall terminate except as specifically provided in this
Section 3:

     3.1 Termination by Employer

     If Employer terminates Employee’s employment without Cause during the Term, Employee shall be
entitled to receive (a) termination payments equal to twelve (12) months’ annual base salary,
(b) any unpaid annual base salary which has accrued for services already performed as of the date
termination of Employee’s employment becomes effective and (c) a

			
	 	 	 
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pro-rated cash bonus consistent
with Section 1.4(b). All amounts payable pursuant to this
Section 3.1 (or pursuant to Section 3.2) shall be reduced for applicable deductions and tax
withholding. If, as a result of the termination of Employee’s employment without Cause, Employee
and Employee’s spouse and dependent children are eligible for and timely (and properly) elect to
continue coverage under Employer’s group health plan(s) in accordance with Code Section 4980B(f)
(“COBRA”), Employer shall pay the premium for such coverage for a period of twelve (12) months
following the date of Employee’s termination or until Employee is no longer entitled to COBRA
continuation coverage under Employer’s group health plan(s), whichever period is the shorter. All
other Employer benefits cease on the date of termination without Cause. If Employee is terminated
by Employer for Cause during the Term, Employee shall not be entitled to receive any of the
foregoing benefits, other than those set forth in Section 3.1(b) above.

     3.2 Termination by Employee

     In the case of the termination of Employee’s employment by Employee, Employee shall not be
entitled to any payments hereunder, other than those set forth in Section 3.1(b) hereof if such
termination occurs during the Term.

     3.3 Payment Schedule

     All amounts payable pursuant to Section 3.1(b) and 3.2 hereof shall be paid to Employee at the
same time such amounts would have been paid to Employee had Employee’s employment not been
terminated (or at such earlier time as is required by law). All amounts payable pursuant to
Section 3.1(a) hereof shall be paid to Employee in twelve (12) equal monthly installments,
beginning with the month following the month containing the date of Employee’s termination and
continuing for eleven (11) consecutive months thereafter. For purposes of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), each such installment shall be treated as a
separate payment.

     3.4 Cause

     Wherever reference is made in this Agreement to termination being with or without Cause,
“Cause” is limited to the occurrence of one or more of the following events:

     (a) Failure or refusal to carry out the lawful duties of Employee described in Section 1
hereof or any directions of the Board of Directors of Employer, which directions are reasonably
consistent with the duties herein set forth to be performed by Employee;

     (b) Violation by Employee of a state or federal criminal law involving the commission of a
crime against Employer or a felony;

     (c) Current use by Employee of illegal substances; deception, fraud, misrepresentation or
dishonesty by Employee; any act or omission by Employee which substantially impairs Employer’s
business, good will or reputation; or

     (d) Any other material violation of any provision of this Agreement.

			
	 	 	 
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     3.5 Code Section 409A

     The Employer makes no representations or warranties to Employee with respect to any tax,
economic or legal consequences of this Agreement or any payments or other benefits provided
hereunder, including without limitation under Code Section 409A, and no provision of this Agreement
shall be interpreted or construed to transfer any liability for failure to comply with Code
Section 409A or any other legal requirement from Employee or any other person to the Employer, any
of its affiliates or any other person. Employee, by executing this Agreement, shall be deemed to
have waived any claim against the Employer, its affiliates and any other person with respect to any
such tax, economic or legal consequences. However, the parties intend that this Agreement and the
payments and other benefits provided hereunder shall be exempt from the requirements of Code
Section 409A to the maximum extent possible, whether pursuant to the short-term deferral exception
described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan
exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the
extent Code Section 409A is applicable to this Agreement (and such payments and benefits), the
parties intend that this Agreement (and such payments and benefits) shall comply with the deferral,
payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding any
other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated
and administered in a manner consistent with such intentions. Without limiting the generality of
the foregoing, and notwithstanding any other provision of this Agreement to the contrary, with
respect to any payments and benefits under this Agreement to which Code Section 409A applies, all
references in this Agreement to termination of Employee’s employment are intended to mean
Employee’s “separation from service,” within the meaning of Code Section 409A(a)(2)(A)(i). In
addition, if Employee is a “specified employee,” within the meaning of Code
Section 409A(a)(2)(B)(i), when he/she separates from service, within the meaning of Code
Section 409A(a)(2)(A)(i), then to the extent necessary to avoid subjecting Employee to the
imposition of any additional tax under Code Section 409A, amounts that would otherwise be payable
under this Agreement during the six-month period immediately following Employee’s separation from
service shall not be paid to Employee during such period, but shall instead be accumulated and paid
to Employee (or, in the event of Employee’s death, Employee’s estate) in a lump sum on the first
business day following the earlier of (a) the date that is six months after Employee’s separation
from service or (b) Employee’s death.

4. NONCOMPETITION, NONDISCLOSURE AND 

    NONDISPARAGEMENT

     (a) The nature of Employee’s employment with Employer has given Employee access to trade
secrets and confidential information, including information about its technology and customers.
Therefore, during the one (1) year following termination of employment for whatever reason,
Employee will not engage in, be employed by, perform services for, participate in the ownership,
management, control or operation of, or otherwise be connected with, either directly or indirectly,
any business or activity whose efforts are in

			
	 	 	 
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competition with (i) the products or services
manufactured or marketed by Employer at the
time of this Agreement, or (ii) the products or services which have been under research or
development by Employer during the term of Employee’s employment, and which Employer has
demonstrably considered for further development or commercialization. The geographic scope of this
restriction shall extend to anywhere Employer is doing business, has done business or intends to do
business. Employee acknowledges that the restrictions are reasonable and necessary for protection
of the business and goodwill of Employer.

     If, within one year of the date of termination, Employee violates this Section 4, Employee
shall forfeit any remaining termination payments provided under Section 3.

     (b) Employee further agrees that he will not at any time disclose confidential information
about Employer relating to its business, technology, practices, products, marketing, sales,
services, finances or legal affairs.

     (c) Following termination of Employee for any reason, Employee and Employer shall refrain from
making any derogatory comment in the future to the press or any individual or entity regarding the
other that relates to their activities or relationship prior to the date of termination, which
comment would likely cause material damage or harm to the business interests or reputation of
Employee or Employer. Employee acknowledges that the non-disparagement provisions of this Section
4(c) are essential to Employer, that Employer would not enter into this Agreement if it did not
include this Section 4(c), and that damages sustained by Employer as a result of a breach of this
Section 4(c) cannot be adequately quantified or remedied by damages alone. Accordingly, Employer
shall be entitled to injunctive and other equitable relief to prevent or curtail any breach of this
Section 4(c).

5. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE

     Employee represents and warrants that neither the execution nor the performance of this
Agreement nor the Proprietary Information and Invention Agreement by Employee will violate or
conflict in any way with any other agreement by which Employee may be bound, or with any other
duties imposed upon Employee by corporate or other statutory or common law.

6. FORM OF NOTICE

     All notices given hereunder shall be given in writing, shall specifically refer to this
Agreement and shall be personally delivered or sent by registered or certified mail, return receipt
requested, at the address set forth below or at such other address as may hereafter be designated
by notice given in compliance with the terms hereof:

			
	 	 	 
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	 	6

 

 

	 	 	 	 	 
	 

	 	If to Employee:
	 	Gregg Kaplan
	 
	 	 	 	 
	 

	 	 	 	[ADDRESS]
	 
	 	 	 	 
	 

	 	If to Employer:
	 	Coinstar, Inc.

1800 114th Avenue SE

Bellevue, WA 98004

Attn:  Chairman of the Board of Directors

cc:      General Counsel
	 
	 	 	 	 
	 

	 	Copy to:
	 	Perkins Coie LLP

Attn: Lynn E. Hvalsoe

1201 Third Ave., 48th Floor

Seattle, WA 98101-3099

     If notice is mailed, such notice shall be effective upon mailing, or if notice is personally
delivered, it shall be effective upon receipt.

7. ASSIGNMENT

     This Agreement is personal to Employee and shall not be assignable by Employee. Employer may
assign its rights hereunder to (a) any corporation or other entity resulting from any merger,
consolidation or other reorganization to which Employer is a party or (b) any corporation,
partnership, association or other person to which Employer may transfer all or substantially all of
the assets and business of Employer existing at such time. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.

8. WAIVERS

     No delay or failure by any party hereto in exercising, protecting or enforcing any of its
rights, titles, interests or remedies hereunder, and no course of dealing or performance with
respect thereto, shall constitute a waiver thereof. The express waiver by a party hereto of any
right, title, interest or remedy in a particular instance or circumstance shall not constitute a
waiver thereof in any other instance or circumstance. All rights and remedies shall be cumulative
and not exclusive of any other rights or remedies.

9. ARBITRATION

     Any controversies or claims arising out of or relating to this Agreement shall be fully and
finally settled by arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect (the “AAA Rules”), conducted by one arbitrator
either mutually agreed upon by Employer and Employee or chosen in accordance with the AAA Rules,
except that the parties thereto shall have any right to discovery as

			
	 	 	 
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would be permitted by the Federal Rules of Civil Procedure for a period of 90 days following the
commencement of such arbitration and the arbitrator thereof shall resolve any dispute which arises
in connection with such discovery. The prevailing party shall be entitled to costs, expenses and
reasonable attorneys’ fees, and judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. This provision shall not preclude Employer from seeking
court enforcement or relief based upon an alleged violation of Employee’s obligations under any
noncompetition or non-disclosure agreement.

10. AVAILABILITY AND CONSULTATION

     If Employee’s employment with Employer terminates for any reason, Employee will thereafter
make himself reasonably available to Employer and counsel for Employer for the purpose of enabling
Employer to defend against any legal claims in which Employer determines he may have knowledge or
information. Employer will reimburse Employee for reasonable out-of-pocket expenses incurred in
connection with any consultations under this Section 10.

11. AMENDMENTS IN WRITING

     No amendment, modification, waiver, termination or discharge of any provision of this
Agreement, nor consent to any departure therefrom by either party hereto, shall in any event be
effective unless the same shall be in writing, specifically identifying this Agreement and the
provision intended to be amended, modified, waived, terminated or discharged and signed by Employer
and Employee, and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which given. No provision
of this Agreement shall be varied, contradicted or explained by any oral agreement, course of
dealing or performance or any other matter not set forth in an agreement in writing and signed by
Employer and Employee.

12. APPLICABLE LAW

     This Agreement shall in all respects, including all matters of construction, validity and
performance, be governed by, and construed and enforced in accordance with, the laws of the state
of Washington, without regard to any rules governing conflicts of laws.

13. SEVERABILITY

     If any provision of this Agreement shall be held invalid, illegal or unenforceable in any
jurisdiction, for any reason, including, without limitation, the duration of such provision, its
geographical scope or the extent of the activities prohibited or required by it, then, to the full
extent permitted by law (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the intent of the parties
hereto as nearly as may be possible, (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to

			
	 	 	 
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reform such provision to the extent necessary for such provision to be enforceable under
applicable law.

14. HEADINGS

     All headings used herein are for convenience only and shall not in any way affect the
construction of, or be taken into consideration in interpreting, this Agreement.

15. COUNTERPARTS

     This Agreement, and any amendment or modification entered into pursuant to Section 11 hereof,
may be executed in any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts, taken together, shall
constitute one and the same instrument.

16. ENTIRE AGREEMENT

     Except for (a) the Proprietary Information and Invention Agreement entered into by the
Employee dated as of  April 1, 2009, (b) the Change of Control Agreement entered into by the Employee
dated as of April 1, 2009, and (c) any letter agreement previously executed by Employee and
Employer with respect to retention arrangements and related matters, this Agreement sets forth the
entire understanding between Employee and Employer, superseding any prior agreements or
understandings, express or implied, pertaining to the terms of Employee’s employment with Employer.
Employee acknowledges that in executing this Agreement, he does not rely upon any representation
or statement by any representative or agent of Employer concerning the subject matter of this
Agreement.

     IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the date
set forth above.

	 	 	 	 	 	 	 
	 	 	 	 	COINSTAR, INC.
	 
	 	 	 	 	 	 
	/s/
Gregg Kaplan

	 	 	 	By	 	/s/ Paul D. Davis
	 

	 	 	 	 	 	 
	Gregg Kaplan
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Its	 	Chief Executive Officer
	 

	 	 	 	 	 	 

			
	 	 	 
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EXHIBIT A

CHANGE OF CONTROL AGREEMENT

			
	 	 	 
	GREGG KAPLAN EMPLOYMENT AGREEMENT 4-1-09
	 	10exv10w5

Exhibit 10.5

CHANGE OF CONTROL AGREEMENT

     This Change of Control Agreement (this “Agreement”), dated as of April 1, 2009 is between
Coinstar, Inc. (the “Employer”), and Gregg Kaplan (the “Employee”). This Agreement is an exhibit
to that certain Employment Agreement dated as of April 1, 2009 between the Employer and the
Employee (the “Employment Agreement”).

     The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of the
Employer has determined that it is in the best interests of the Employer and its stockholders to
ensure that the Employer will have the continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Appendix A to this
Agreement, which is incorporated herein by this reference) of the Employer. The Committee believes
it is imperative to diminish the inevitable distraction of the Employee arising from the personal
uncertainties and risks created by a pending or threatened Change of Control, to encourage the
Employee’s full attention and dedication to the Employer currently and in the event of any
threatened or pending Change of Control, to encourage the Employee’s willingness to serve a
successor in an equivalent capacity, and to provide the Employee with reasonable compensation and
benefits arrangements in the event that a Change of Control results in the Employee’s loss of
equivalent employment.

     In order to accomplish these objectives, the Committee has caused the Employer to enter into
this Agreement.

1. EMPLOYMENT

     1.1 Certain Definitions

          (a) “Effective Date” shall mean the first date during the Change of Control Period (as
defined in Section 1.1(b)) on which a Change of Control occurs.

          (b) “Change of Control Period” shall mean the period commencing on the date of this
Agreement and ending on the second anniversary of the date the Employer gives notice to the
Employee that the Change of Control Period shall be terminated.

     1.2 Employment Period

     The Employer hereby agrees to continue the Employee in its employ or in the employ of its
affiliated companies, and the Employee hereby agrees to remain in the employ of the Employer or its
affiliated companies, in accordance with the terms and provisions of this Agreement, for the period
commencing on the Effective Date and continuing until terminated pursuant to Section 4 of this
Agreement (the “Employment Period”).

GREGG KAPLAN CHANGE OF CONTROL AGREEMENT 4-1-09

 

 

     1.3 Authority, Duties and Responsibilities

     During the Employment Period, the Employee’s authority, duties and responsibilities shall be
at least reasonably commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period immediately preceding the Effective
Date.

     1.4 Employment Status

     If prior to the Effective Date the Employee’s employment with the Employer or its affiliated
companies terminates, then the Employee shall have no further rights under this Agreement.

2. ATTENTION AND EFFORT

     During the Employment Period, and excluding any periods of vacation and sick leave to which
the Employee is entitled, the Employee will devote all of his professional productive time,
ability, attention and effort to the business and affairs of the Employer and the discharge of the
responsibilities assigned to him hereunder, and will use his best efforts to perform faithfully and
efficiently such responsibilities.

3. COMPENSATION

     During the Employment Period, the Employer agrees to pay or cause to be paid to the Employee,
and the Employee agrees to accept in exchange for the services rendered hereunder by him, the
following compensation:

     3.1 Salary

     The Employee shall receive an annual base salary (the “Annual Base Salary”), at least equal to
the annual salary established by the Board prior to the Effective Date for the fiscal year in which
the Effective Date occurs. The Annual Base Salary shall be paid in substantially equal
installments and at the same intervals as the salaries of other officers of the Employer are paid.

     3.2 Bonus

     Employee may be entitled to receive, in addition to the Annual Base Salary, an annual bonus in
an amount to be determined by the Board of Directors of the Employer in its sole discretion.

     3.3 Benefits

     During the Employment Period, the Employee shall be entitled to participate, subject to and in
accordance with applicable eligibility requirements, in such fringe benefit programs as shall be
provided to other executive employees of the Employer and its affiliated companies from time to
time during the Employment Period by action of the Board (or any

			
	 	 	 
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person or committee appointed by the Board to determine fringe benefit programs and other emoluments).

     3.4 Expenses

     During the Employment Period, the Employee shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by him in accordance with the policies, practices
and procedures of the Employer and its affiliated companies in effect for the employees of the
Employer and its affiliated companies during the Employment Period or pursuant to an applicable
travel policy.

4. TERMINATION

     Employment of the Employee during the Employment Period may be terminated as follows but, in
any case, the nondisclosure and noncompetition provisions set forth in Section 4 of the Employment
Agreement shall survive the termination of this Agreement and the termination of the Employee’s
employment with the Employer:

     4.1 By the Employer or the Employee

     Upon giving Notice of Termination (as defined below), the Employer may terminate the
employment of the Employee with or without Cause (as defined in the Employment Agreement), and the
Employee may terminate his employment for Good Reason (as defined below) or for any reason, at any
time during the Employment Period.

     4.2 Automatic Termination

     This Agreement and the Employee’s employment during the Employment Period shall terminate
automatically pursuant to Section 2.3 of the Employment Agreement upon the death or total
disability of the Employee. The Employee and the Employer hereby acknowledge that the Employee’s
presence and ability to perform the duties specified in Section 1.3 hereof is of the essence of
this Agreement.

     4.3 Notice of Termination

     Any termination by the Employer or by the Employee during the Employment Period shall be
communicated by Notice of Termination to the other party given within 30 days in accordance with
Section 2.5 of the Employment Agreement. The term “Notice of Termination” shall mean a written
notice which (a) indicates the specific termination provision in this Agreement relied upon and (b)
to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee’s employment under the provision so indicated. The
failure by the Employer to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Cause shall not waive any right of the Employer hereunder or preclude
the Employer from asserting such fact or circumstance in enforcing the Employer’s rights hereunder.

			
	 	 	 
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     4.4 Date of Termination

     During the Employment Period, “Date of Termination” means (a) if the Employee’s employment is
terminated by reason of death, at the end of the calendar month in which the Employee’s death
occurs, and (b) in all other cases, the later of (i) five days after the date of personal delivery
of or mailing of, as applicable, the Notice of Termination, and (ii) the date on which the Employee
separates from service, within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code
of 1986, as amended (the “Code”). The Employee’s employment and performance of services will
continue during such five-day period; provided, however, that the Employer may,
upon notice to the Employee and without reducing the Employee’s compensation during such period,
excuse the Employee from any or all of his duties during such period.

5. TERMINATION PAYMENTS

     In the event of termination of the Employee’s employment during the Employment Period, all
compensation and benefits set forth in this Agreement shall terminate except as specifically
provided in this Section 5.

     5.1 Termination by the Employer for Other Than Cause or by the Employee
for Good Reason

     If the Employer terminates the Employee’s employment other than for Cause or the Employee
terminates his employment for Good Reason prior to the end of the Employment Period, the Employee
shall be entitled to:

          (a) Receive payment of the following accrued obligations (the “Accrued Obligations”):

          (i) the Employee’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid;

          (ii) the product of (x) the Annual Bonus payable with respect to the fiscal year in
which the Date of Termination occurs and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination, and the
denominator of which is 365; and

          (iii) any compensation previously deferred by the Employee (together with accrued
interest or earnings thereon, if any) as such deferred compensation becomes payable under
the deferral plan, and any accrued vacation pay, in each case to the extent not theretofore
paid; and

          (b) an amount as separation pay equal to the Employee’s Annual Base Salary.

			
	 	 	 
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     5.2 Termination for Cause or Other Than for Good Reason

     If the Employee’s employment shall be terminated by the Employer for Cause as defined in the
Employment Agreement or by the Employee for other than Good Reason during the Employment Period,
this Agreement shall terminate without further obligation to the Employee other than the obligation
to pay to the Employee his Annual Base Salary through the Date of Termination plus the amount of
any compensation previously deferred by the Employee (as such deferred compensation becomes payable
under the deferral plan), in each case to the extent theretofore unpaid.

     5.3 Termination Because of Death or Total Disability

     If the Employee’s employment is terminated by reason of the Employee’s death or total
disability during the Employment Period, this Agreement shall terminate automatically without
further obligations to the Employee or his legal representatives under this Agreement, other than
for payment of Accrued Obligations (which shall be paid to the Employee’s estate or beneficiary, as
applicable in the case of the Employee’s death).

     5.4 Payment Schedule

          Payments under Section 5.1(a), 5.2 and 5.3 (other than payments of deferred compensation,
which shall be paid in accordance with the provisions of the plan under which such compensation was
deferred) shall be paid to the Employee in a lump sum in cash within 30 days of the Date of
Termination. Payments under Section 5.1(b) shall be paid to Employee in twelve (12) equal monthly
installments, beginning with the month following the month containing the Date of Termination and
continuing for eleven (11) consecutive months thereafter. For purposes of Code Section 409A, each
installment payable pursuant to Section 5.1(b) and this Section 5.4 shall be treated as a separate
payment.

     5.5 Good Reason

          (a) For purposes of this Agreement, subject to Section 5.5(b), “Good Reason” means the
occurrence or existence of any of the following events or conditions without the Employee’s express
written consent:

          (i) A diminution in the Employee’s Annual Base Salary;

          (ii) A diminution in the Employee’s authority, duties or responsibilities as
contemplated by Section 1.3 hereof, excluding for this purpose reasonable changes in
particular duties and reporting responsibilities which may result from the Employer
becoming part of a larger business organization at some future time provided that such
changes in the aggregate do not result in a material alteration in the Employee’s
authority, duties or responsibilities;

          (iii) Any failure by the Employer to comply with and satisfy Section 7 of the
Employment Agreement, provided that the Employer’s successor has

			
	 	 	 
	GREGG KAPLAN CHANGE OF CONTROL AGREEMENT 4-1-09
	 	-5-

 

 

received at least ten days’ prior written notice from the Employer or the Employee of the
requirements of Section 7 thereof;

          (iv) A relocation of the Employee’s principal place of employment to a location more
than 50 miles from the Seattle metropolitan area, except for required travel on the
Employer’s business to an extent substantially consistent with the Employee’s duties and
responsibilities; or

          (v) Any other action or inaction by the Employer that constitutes a material breach by
the Employer of this Agreement or the Employment Agreement.

          (b) Notwithstanding any provision in this Agreement to the contrary, termination of employment
by the Employee will not be for Good Reason unless (i) the Employee notifies the Employer in
writing of the occurrence or existence of the event or condition which the Employee believes
constitutes Good Reason within 90 days of the occurrence or initial existence of such event or
condition (which notice specifically identifies such event or condition), (ii) the Employer fails
to remedy such event or condition within 30 days after the date on which it receives such notice
(the “Remedial Period”), and (iii) the Employee actually terminates employment within 90 days after
the expiration of the Remedial Period and before the Employer remedies such event or condition. If
the Employee terminates employment before the expiration of the Remedial Period or after the
Employer remedies the event or condition (even if after the end of the Remedial Period), then the
Employee’s termination will not be considered to be for Good Reason.

     6. REPRESENTATIONS, WARRANTIES AND OTHER CONDITIONS

     In order to induce the Employer to enter into this Agreement, the Employee represents and
warrants to the Employer as follows:

     6.1 No Violation of Other Agreements

     The Employee represents that neither the execution nor the performance of this Agreement by
the Employee will violate or conflict in any way with any other agreement by which the Employee may
be bound.

     6.2 Reaffirmation of Obligations

     The Employee hereby acknowledges and reaffirms the Employee Proprietary Information and
Inventions Agreement previously executed by Employee on the date hereof and Employee’s obligations
under Section 4 of the Employment Agreement.

     7. CODE SECTION 409A

     The Employer makes no representations or warranties to Employee with respect to any tax,
economic or legal consequences of this Agreement or any payments or other benefits provided
hereunder, including without limitation under Code Section 409A, and no provision

			
	 	 	 
	GREGG KAPLAN CHANGE OF CONTROL AGREEMENT 4-1-09
	 	-6-

 

 

of this Agreement shall be interpreted or construed to transfer any liability for failure to
comply with Code Section 409A or any other legal requirement from Employee or any other person to
the Employer, any of its affiliates or any other person. Employee, by executing this Agreement,
shall be deemed to have waived any claim against the Employer, its affiliates and any other person
with respect to any such tax, economic or legal consequences. However, the parties intend that
this Agreement and the payments and other benefits provided hereunder shall be exempt from the
requirements of Code Section 409A to the maximum extent possible, whether pursuant to the
short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the
involuntary separation pay plan exception described in Treasury Regulation Section
1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section 409A is applicable to this Agreement
(and such payments and benefits), the parties intend that this Agreement (and such payments and
benefits) shall comply with the deferral, payout and other limitations and restrictions imposed
under Code Section 409A. Notwithstanding any other provision of this Agreement to the contrary,
this Agreement shall be interpreted, operated and administered in a manner consistent with such
intentions. Without limiting the generality of the foregoing, and notwithstanding any other
provision of this Agreement to the contrary, with respect to any payments and benefits under this
Agreement to which Code Section 409A applies, all references in this Agreement to termination of
Employee’s employment are intended to mean Employee’s “separation from service,” within the meaning
of Code Section 409A(a)(2)(A)(i). In addition, if Employee is a “specified employee,” within the
meaning of Code Section 409A(a)(2)(B)(i), when Employee separates from service, within the meaning
of Code Section 409A(a)(2)(A)(i), then to the extent necessary to avoid subjecting Employee to the
imposition of any additional tax under Code Section 409A, amounts that would otherwise be payable
under this Agreement during the six-month period immediately following Employee’s separation from
service shall not be paid to Employee during such period, but shall instead be accumulated and paid
to Employee (or, in the event of Employee’s death, Employee’s estate) in a lump sum on the first
business day following the earlier of (a) the date that is six months after Employee’s separation
from service or (b) Employee’s death.

     IN WITNESS WHEREOF, the parties have executed and entered into this Agreement on the date set
forth above.

	 	 	 	 	 	 	 	 	 
	 	 	EMPLOYEE	 	 
	 
	 	/s/ Gregg Kaplan
	 	 	 	 	 
	 	 	Gregg Kaplan	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	COINSTAR, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	/s/ Paul D. Davis	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its	 	Chief Executive Officer	 	 
	 

	 	 	 	 	 	 

	 	 

			
	 	 	 
	GREGG KAPLAN CHANGE OF CONTROL AGREEMENT 4-1-09
	 	-7-

 

 

APPENDIX A TO

CHANGE OF CONTROL AGREEMENT

     For purposes of this Agreement, a “Change of Control” shall mean:

     (a) A “Board Change” which, for purposes of this Agreement, shall have occurred if individuals
who, as of the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination for election by the
Employer’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person (as hereinafter defined) other than the Board; or

     (b) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of (i) 20% or more of either (A) the then outstanding
shares of Common Stock of the Employer (the “Outstanding Employer Common Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Employer entitled to vote
generally in the election of directors (the “Outstanding Employer Voting Securities”), in the case
of either (A) or (B) of this clause (i), which acquisition is not approved in advance by a majority
of the Incumbent Directors, or (ii) 33% or more of either (A) the Outstanding Employer Common Stock
or (B) the Outstanding Employer Voting Securities, in the case of either (A) or (B) of this clause
(ii), which acquisition is approved in advance by a majority of the Incumbent Directors;
provided, however, that the following acquisitions shall not constitute a Change of
Control: (w) any acquisition directly from the Employer or in connection with an offering of the
Employer pursuant to a registration statement filed with and declared effective by the Securities
and Exchange Commission, (x) any acquisition by the Employer, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Employer or any corporation
controlled by the Employer or (z) any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of this Appendix A are satisfied; or

     (c) Consummation of a reorganization, merger or consolidation approved by the stockholders of
the Employer, in each case, unless, immediately following such reorganization, merger or
consolidation, (i) more than 60% of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all the individuals and

GREGG KAPLAN CHANGE OF CONTROL AGREEMENT 4-1-09

 

 

entities who were the beneficial owners, respectively, of the Outstanding Employer Common Stock and
the Outstanding Employer Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportion as their ownership immediately prior to such
reorganization, merger or consolidation of the Outstanding Employer Common Stock and the
Outstanding Employer Voting Securities, as the case may be, (ii) no Person (excluding the Employer,
any employee benefit plan (or related trust) of the Employer or such corporation resulting from
such reorganization, merger or consolidation and any Person beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or indirectly, 33% or more of the
Outstanding Employer Common Stock or the Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (iii) at least a majority
of the members of the board of directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation; or

     (d) Consummation of the following events approved by the stockholders of the Employer (i) a
complete liquidation or dissolution of the Employer or (ii) the sale or other disposition of all or
substantially all the assets of the Employer, other than to a corporation with respect to which
immediately following such sale or other disposition, (A) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or substantially all the
individuals and entities who were the beneficial owners, respectively, of the Outstanding Employer
Common Stock and the Outstanding Employer Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately prior to such sale
or other disposition, of the Outstanding Employer Common Stock and the Outstanding Employer Voting
Securities, as the case may be, (B) no Person (excluding the Employer, any employee benefit plan
(or related trust) of the Employer or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly, 33% or more of the
Outstanding Employer Common Stock or the Outstanding Employer Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election of directors and
(C) at least a majority of the members of the board of directors of such corporation were approved
by a majority of the members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of assets of the
Employer.

     Notwithstanding the foregoing, there shall not be a Change of Control if, in advance of such
event, the Employee agrees in writing that such event shall not constitute a Change of Control.

			
	 	 	 
	GREGG KAPLAN CHANGE OF CONTROL AGREEMENT 4-1-09
	 	-2-

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