AMENDED AND RESTATED EMPLOYMENT AGREEMENT COINSTAR, INC. and PAUL DAVIS Dated as of April 1, 2009
Exhibit 10.3
AMENDED AND RESTATED
COINSTAR, INC.
and
XXXX XXXXX
and
XXXX XXXXX
Dated as of April 1, 2009
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this “Agreement”), dated as of April 1, 2009,
between Coinstar, Inc., a Delaware corporation (“Employer”), and Xxxx Xxxxx (“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. CHIEF EXECUTIVE OFFICER
1.1 Employment
Employer will employ Employee and Employee will provide services to Employer as its Chief
Executive Officer (“CEO”).
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 CEO 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 CEO shall consist, in part, of an annual base salary of six
hundred thousand dollars ($600,000) 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 CEO, Employee and the
Company shall enter into an Amended and Restated 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
Amended and Restated Change of Control Agreement, Employee’s rights upon termination will be
governed by the terms of the Amended and Restated 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
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(d) Any other material violation of any provision of this Agreement.
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
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be connected with, either directly or indirectly, any business or activity whose efforts are
in 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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| If to Employee: | Xxxx Xxxxx | |||||
| [ADDRESS] | ||||||
| If to Employer: | Coinstar, Inc. | |||||
| 0000 000xx Xxxxxx XX | ||||||
| Xxxxxxxx, XX 00000 | ||||||
| Attn:Chairman of the Board of Directors | ||||||
| cc: General Counsel | ||||||
| Copy to: | Xxxxxxx Coie LLP | |||||
| Attn: Xxxx X. Xxxxxxx | ||||||
| 0000 Xxxxx Xxx., 00xx Xxxxx | ||||||
| Xxxxxxx, XX 00000-0000 |
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
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with the AAA Rules,
except that the parties thereto shall have any right to discovery as 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
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hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to 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 the Proprietary Information and Invention Agreement executed by Employee on April
1, 2008, and the Amended and Restated Change of Control Agreement executed by the Employee on
April 1, 2009, 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 on the date set
forth above.
| COINSTAR, INC. | ||||||||
/s/ Xxxx Xxxxx
|
By | /s/ Xxxxxx X. Xxxxx
|
||||||
Xxxx Xxxxx |
||||||||
| Its | General Counsel |
|||||||
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EXHIBIT A
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
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