Exhibit 10.1

COOPERATION AGREEMENT

This Cooperation Agreement (this “Agreement”) is made and entered into as of
April 11, 2016 by and among Outerwall Inc., a Delaware corporation (the
“Company”), the persons and entities listed on Annex A (collectively, the
“Engaged Group” and, for clarity and as applicable, including each member
thereof acting individually), and Jeffrey J. Brown (“Mr. Brown”) in his capacity
as the Initial Independent Director (as defined below) (each of the Company, the
Engaged Group, and Mr. Brown, a “Party” to this Agreement, and collectively, the
“Parties”).

RECITALS

WHEREAS, the Company and Engaged Capital, LLC, a member of the Engaged Group,
have engaged in various discussions and communications concerning the Company’s
business, financial performance and strategic plans;

WHEREAS, as of the date hereof, the Engaged Group is deemed to beneficially own
shares of Common Stock of the Company (the “Common Stock”) totaling, in the
aggregate, 2,431,170 shares (the “Shares”) (and no more), or approximately
14.6%, of the Common Stock issued and outstanding on the date hereof;

WHEREAS, as of the date hereof, the Nominating and Governance Committee of the
Board of Directors of the Company (the “Nominating and Governance Committee”)
and the Board of Directors of the Company (the “Board”) have considered the
qualifications of the Initial Independent Director and conducted such review as
they have deemed appropriate, including reviewing materials provided by the
Initial Independent Director and the Engaged Group; and

WHEREAS, as of the date hereof, the Company and the Engaged Group have
determined to come to an agreement with respect to certain matters relating to
the composition of the Board and certain other matters, as provided in this
Agreement.

NOW, THEREFORE, in consideration of and reliance on the foregoing premises and
the mutual covenants, representations, warranties and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto, intending to
be legally bound hereby, agree as follows:

 

  1. Nomination and Election of Directors and Related Agreements.

(a) Nomination and Election of Directors. Immediately upon the execution of this
Agreement, the Board and all applicable committees of the Board shall take all
necessary actions to: (1) set the size of the Board at eight (8) members; (2)
appoint Mr. Brown (the “Initial Independent Director”) as a director of the
Company as a member of the class of directors with a term expiring at the
Company’s 2017 annual meeting of stockholders (the “2017 Annual Meeting”), which
appointment will be effective immediately; and (3) (x) appoint two (2)
additional directors to be submitted in good faith by the Engaged Group by July
1, 2016 and reviewed, approved and appointed by the Board in accordance with the
procedures set forth in Section 1(a)(ii) (each, an “Additional Independent
Director” and, together with the Initial Independent Director, the “New
Nominees”) as of August 1, 2016 (provided, however, that the 2016 annual meeting
of stockholders (the “2016 Annual Meeting”) shall be held on or prior to July
29, 2016, and such appointments shall take place on the first day of the next
month following such annual meeting), one such director being in the class of
directors with a term expiring at the Company’s 2018 annual meeting of
stockholders (the “2018 Annual Meeting”) and the other such director being in
the class of directors with a term expiring at the Company’s 2019 annual meeting
of stockholders (the “2019 Annual Meeting”), and (y) increase the Board to up to
nine (9) members as necessary to accommodate such appointments at such
applicable time. After the appointment of the Initial Independent Director in
accordance with this Section 1(a) and before the reduction of the Board in
accordance with the next sentence, the Board and all applicable committees

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of the Board shall not (A) increase the size of the Board to more than eight (8)
directors or (B) seek to change the classes on which the Board members serve, in
each case without the unanimous approval of the Board. In connection with the
2016 Annual Meeting, the Board and all applicable committees of the Board shall
take all necessary actions to decrease the size of the Board to seven (7)
members as may be allowed for under applicable law. After the reduction of the
Board size in accordance with the preceding sentence and until the appointment
of the Additional Independent Directors, the Board and all applicable committees
of the Board shall not (A) increase the size of the Board to more than seven (7)
directors or (B) seek to change the classes on which the Board members serve, in
each case without the unanimous approval of the Board. After the appointment of
the Additional Independent Directors in accordance with this Section 1(a), the
Board and all applicable committees of the Board shall not (A) increase the size
of the Board to more than nine (9) directors or (B) seek to change the classes
on which the Board members serve, in each case without the unanimous approval of
the Board. In no event shall the Engaged Group be required to put forth
candidates for appointment as Additional Independent Directors, provided that if
the Engaged Group has not attempted to put forth such candidates for appointment
prior to July 1, 2016, then all rights of the Engaged Group and responsibilities
of the Company relating to appointment of Additional Independent Directors shall
terminate.

(i) The Initial Independent Director (or any Engaged Replacement Director (as
defined below), if applicable) agrees that, at all times while serving as a
member of the Board, he or she shall (A) qualify as “independent” pursuant to
the Securities and Exchange Commission (“SEC”) rules and regulations and NASDAQ
listing standards and (B) qualify to serve as a director under the Delaware
General Corporation Law. The Initial Independent Director (or any Engaged
Replacement Director, if applicable) will promptly advise the Nominating and
Governance Committee in writing if he or she ceases to satisfy any of the
conditions identified in the previous sentence.

(ii) The Engaged Group shall recommend candidates to fill the seats of the
Additional Independent Directors to the Company promptly after the execution of
this Agreement in order that procedures outlined herein can be appropriately and
timely followed. Each such candidate for Additional Independent Director shall
(A) qualify as “independent” pursuant to SEC rules and regulations and NASDAQ
listing standards, (B) qualify to serve as a director under the Delaware General
Corporation Law, (C) possess the skills, experience, knowledge, personal
attributes, business and personal background essential and necessary to serve
effectively on the Board and contribute to the overall success of the Company,
in each case as reasonably determined by the Nominating and Governance
Committee, and (D) have no prior or current relationship with the Engaged Group,
its principals or any of its Affiliates (as defined below) that has not been
previously disclosed to the Company and that could reasonably be deemed to be
required to be disclosed pursuant to Item 404 under Regulation S-K of the
Exchange Act (as defined below) if the Engaged Group were the “registrant” for
purposes of such rule and the candidate were a director or executive officer of
such registrant (a “Qualified Director”). The Nominating and Governance
Committee shall make its determination and recommendation regarding whether each
candidate recommended by the Engaged Group so qualifies within ten (10) business
days after: (1) such candidate has submitted to the Company the documentation
required by Section 1(b)(vi) herein; (2) representatives of the Company’s Board
have conducted customary interview(s) of such candidate; and (3) the Nominating
and Governance Committee has completed its diligence process with regard to such
candidate to its reasonable satisfaction. The Company shall use its reasonable
best efforts to conduct any interview(s) and diligence contemplated in this
section as promptly as practicable, but in any case, assuming reasonable
availability of the candidate, within twenty (20) business days after the
Engaged Group’s submission of such candidate and such candidate’s submission of
the documentation requested by Section 1(b)(vi) herein. In the event the
Nominating and Governance Committee does not accept a person recommended by the
Engaged Group as an Additional Independent Director (given that the Nominating
and Governance Committee cannot unreasonably withhold its consent, provided that
it is understood that any failure to accept such person by the committee due to
such

 

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person’s prior or current relationship with the Engaged Group, its principals or
any of its Affiliates shall be deemed reasonable), the Engaged Group shall have
the right to recommend additional person(s) whose appointment shall be subject
to the Nominating and Governance Committee recommending such person as an
Additional Independent Director, in accordance with the procedures described
above. Upon the recommendation of an Additional Independent Director candidate
by the Nominating and Governance Committee, the Board shall review, approve and
vote on the appointment of such person to the Board no later than five (5)
business days after the Nominating and Governance Committee’s recommendation of
such person, as applicable, and if approved by the Board, appointment would be
effective as of August 1, 2016 (or, if such appointment is made after August 1,
2016, effective consistent with the first sentence of Section 1(a)); provided,
however, that if the Board does not approve and appoint such Additional
Independent Director, as applicable, to the Board, the Parties shall continue to
follow the procedures of this Section 1(a)(ii) until an Additional Independent
Director is approved and appointed to the Board. Each Additional Independent
Director will promptly advise the Nominating and Governance Committee in writing
if he or she ceases to satisfy any of the conditions identified in clause (A)
and clause (B) of the second sentence of this Section 1(a)(ii).

(iii) During the Standstill Period (as defined below), if any of the New
Nominees (or an Engaged Replacement Director (as defined below)) is unable or
unwilling to serve as a director or resigns as a director and so long as the
Engaged Group continuously beneficially holds in the aggregate at least 4.99% of
the Company’s then outstanding Common Stock (the “Minimum Ownership Threshold”),
the Engaged Group shall have the ability to recommend a substitute person(s) for
any such New Nominee(s) in accordance with this Section 1(a)(iii) (any such
replacement nominee shall be referred to as the “Engaged Replacement Director”).
Each candidate for Engaged Replacement Director recommended by the Engaged Group
must (A) qualify as “independent” pursuant to the SEC rules and regulations and
NASDAQ listing standards, (B) qualify to serve as a director under the Delaware
General Corporation Law, (C) possess the skills, experience, knowledge, personal
attributes, business and personal background essential and necessary to serve
effectively on the Board and contribute to the overall success of the Company,
in each case as reasonably determined by the Nominating and Governance Committee
and (D) have no prior or current relationship with the Engaged Group, its
principals or any of its Affiliates that has not been previously disclosed to
the Company and that could reasonably be deemed to disqualify such director from
being a Qualified Director. The Nominating and Governance Committee shall make
its determination and recommendation regarding whether such candidate so
qualifies within ten (10) business days after: (1) such candidate has submitted
to the Company the documentation required by Section 1(b)(vi) herein; (2)
representatives of the Company’s Board have conducted customary interview(s) of
such candidate; and (3) the Nominating and Governance Committee has completed
its diligence process with regard to such candidate to its reasonable
satisfaction. The Company shall use its reasonable best efforts to conduct any
interview(s) and diligence contemplated in this section as promptly as
practicable, but in any case, assuming reasonable availability of the candidate,
within twenty (20) business days after the Engaged Group’s submission of such
person and such person’s submission of the documentation required by Section
1(b)(vi) herein. In the event the Nominating and Governance Committee does not
accept a substitute person recommended by the Engaged Group as the Engaged
Replacement Director (given that the Nominating and Governance Committee cannot
unreasonably withhold its consent, provided that it is understood that any
failure to accept such person by the committee due to such person’s prior or
current relationship with the Engaged Group, its principals or any of its
Affiliates shall be deemed reasonable), the Engaged Group shall have the right
to recommend additional substitute person(s) whose appointment shall be subject
to the Nominating and Governance Committee recommending such person in
accordance with the procedures described above. Upon the recommendation of an
Engaged Replacement Director candidate by the Nominating and Governance
Committee, the Board shall review, approve and vote on the appointment of such
Engaged Replacement Director to the Board no later than five (5) business days
after the Nominating and Governance Committee’s recommendation of such

 

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Engaged Replacement Director; provided, however, that if the Board does not
approve and appoint such Engaged Replacement Director to the Board, the Parties
shall continue to follow the procedures of this Section 1(a)(iii) until an
Engaged Replacement Director is approved and appointed to the Board. For the
avoidance of doubt, if at any time the Engaged Group’s aggregate ownership of
Common Stock decreases to less than the Minimum Ownership Threshold, the right
of the Engaged Group pursuant to this Section 1(a)(iii) to participate in the
recommendation of an Engaged Replacement Director candidate to fill the vacancy
caused by any such resignation (or unwillingness or inability to serve) of an
Engaged Replacement Director, shall automatically terminate.

(iv) During the Standstill Period, the Board and all applicable committees of
the Board shall not create any executive committee of the Board, or delegate to
any existing or new committee of the Board, responsibilities substantially
similar to those of an executive committee. During the Standstill Period, if the
Board or a committee of the Board creates a committee tasked with exploring or
evaluating strategic and financial alternatives to maximize stockholder value,
the Initial Independent Director or his Engaged Replacement Director, if
applicable, shall be appointed as a member of such committee.

(b) Additional Agreements.

(i) The Engaged Group irrevocably withdraws its demands for a stockholder list,
and other materials and books and records pursuant to Section 220 of the
Delaware General Corporation Law or otherwise, and shall not make, or cause any
of its Affiliates or Associates to make, any such or similar demand during the
Standstill Period.

(ii) The Engaged Group agrees to cause its Affiliates and Associates to comply
with the terms of this Agreement and shall be responsible for any breach of this
Agreement by any such Affiliate or Associate. As used in this Agreement, the
terms “Affiliate” and “Associate” shall have the respective meanings set forth
in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934,
as amended, or the rules or regulations promulgated thereunder (the “Exchange
Act”) and shall include all persons or entities that at any time during the term
of this Agreement become Affiliates or Associates of any person or entity
referred to in this Agreement. A breach of this Agreement by an Affiliate or
Associate of any member of the Engaged Group, if such Affiliate or Associate is
not a party hereto, shall be deemed to occur if such Affiliate or Associate
engages in conduct that would constitute a breach of this Agreement if such
Affiliate or Associate was a party hereto to the same extent as the Engaged
Group, as applicable.

(iii) Upon execution of this Agreement, the Engaged Group hereby agrees that it
will not, and that it will not permit any of its Affiliates or Associates to,
directly or indirectly, (A) nominate or recommend for nomination any person for
election at the 2016 Annual Meeting, (B) submit any proposal for consideration
at, or bring any other business before, the 2016 Annual Meeting or any special
meeting of stockholders held during the Standstill Period, or (C) initiate,
encourage or participate in any “withhold” or similar campaign with respect to
the 2016 Annual Meeting. The Engaged Group shall not publicly or privately
encourage or support any other stockholder or person or entity to take any of
the actions described in this Section 1(b)(iii).

(iv) The Engaged Group agrees that it will (A) continue to have the right to
vote all of the Shares held as of the date hereof through the 2016 Annual
Meeting and (B) appear in person or by proxy at the 2016 Annual Meeting and vote
all shares of Common Stock of the Company beneficially owned by the Engaged
Group (or otherwise for which it has voting rights) at such meeting (1) in favor
of the slate of directors recommended by the Board, (2) in favor of the
ratification of the appointment of KPMG LLP (or such other firm as may be
determined by the Board) as the Company’s independent registered public
accounting firm for the year ending December 31, 2016, and (3) in accordance
with the recommendation of Institutional Shareholder

 

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Services on each other proposal to come before the 2016 Annual Meeting;
provided, however, that if a proposal with respect to any Extraordinary
Transaction (as defined below) is presented at the 2016 Annual Meeting, the
Engaged Group may vote in its sole discretion with respect to such matter.

(v) Concurrently with the execution of this Agreement with respect to the
Initial Independent Director, and prior to any appointment of the Additional
Independent Directors with respect to the Additional Independent Directors, each
New Nominee has delivered or will deliver to the Company an irrevocable
resignation letter pursuant to which such New Nominee will immediately resign
from the Board and all applicable committees thereof (A) if at any time during
the Standstill Period the Engaged Group’s aggregate beneficial ownership of
Common Stock decreases to less than the Minimum Ownership Threshold or (B) if a
New Nominee materially breaches, as determined by a court of competent
jurisdiction in a final judicial ruling, any confidentiality-related requirement
under any agreement, policy, code or lawful guideline relating to the Company.
In addition, prior to the appointment of any Engaged Replacement Director to the
Board pursuant to Section 1(a)(iii), the Engaged Group agrees to obtain from
such Engaged Replacement Director and deliver to the Company an irrevocable
resignation letter pursuant to which the Engaged Replacement Director shall
resign in the circumstances set forth in the first sentence of this Section
1(b)(v) as would be applicable to the director that such person is replacing.

(vi) Prior to the date of this Agreement, the Initial Independent Director has
submitted, and prior to their appointment to the Board, each Additional
Independent Director will submit to the Company (A) a fully completed copy of
the Company’s standard director & officer questionnaire and other reasonable and
customary director onboarding documentation required by the Company of all
current directors in connection with the appointment or election of new Board
members, (B) the applicable information required for a stockholder’s notice or
otherwise pursuant to Section 5(c) of the Company’s Amended and Restated Bylaws,
as in effect (the “Bylaws”), and (C) written acknowledgments that such New
Nominee agrees to be bound by all agreements, policies, codes and guidelines
applicable to non-employee directors of the Company, including those regarding
confidentiality, as such may be amended from time to time. Any Engaged
Replacement Director will also promptly (but in any event prior to being placed
on the Board in accordance with this Agreement) submit to the Company (1) a
fully completed copy of the Company’s standard director & officer questionnaire
and other reasonable and customary director onboarding documentation required by
the Company of all current non-employee directors in connection with the
appointment or election of new Board members, (2) the applicable information
required for a stockholder’s notice or otherwise pursuant to Section 5(c) of the
Bylaws, (3) a written acknowledgment that the Engaged Replacement Director
agrees to be bound by all lawful agreements, policies, codes and guidelines
applicable to non-employee directors of the Company, including those regarding
confidentiality, as such may be amended from time to time, and (4) an executed
counterparty signature page to this Agreement.

(vii) The Engaged Group agrees that each New Nominee’s (or any Engaged
Replacement Director’s) compensation as a non-employee director for 2016 (or for
the year in which such Engaged Replacement Director is appointed to the Board,
if applicable) will be pro-rated based on the date of such New Nominee’s (or
such Engaged Replacement Director’s) commencement of services as a director.

(viii) While the New Nominees (or any Engaged Replacement Director) are serving
as directors on the Board, the New Nominees (or any Engaged Replacement
Director) and all of the other members of the Board agree to cooperate and work
constructively with one another to develop and implement initiatives designed to
create durable, sustainable stockholder value, provided that each director will
be always free to reach his or her own good faith decisions regarding what is in
the best interest of stockholders.

 

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(ix) During the term of this Agreement, upon written request from the Company,
each member of the Engaged Group will promptly provide the Company with
information regarding the amount of the securities of the Company then
beneficially owned by each member of the Engaged Group. Such information
provided to the Company will be kept strictly confidential unless required to be
disclosed pursuant to law.

(x) During the Standstill Period, the Initial Independent Director (or his
Engaged Replacement Director, as applicable) shall: (1) be provided advance
notice of, and the opportunity to participate in, any conference or call,
whether in person or by teleconference, and whether scheduled or not, between
the Chair of the Board and the Company’s financial advisors, regarding the
Board’s exploration of strategic and financial alternatives; and (2) (x) be
provided advance notice of, and the opportunity to participate in, any
conference or call, whether in person or by teleconference, and whether
scheduled or not, between the Chair of the Board and the Company’s Chief
Executive Officer, regarding a conference or call primarily dedicated to
material developments in connection with the Board’s exploration of strategic
and financial alternatives, and (y) if the Initial Independent Director (or his
Engaged Replacement Director, as applicable) is unable to participate in such
conference or call, then he (or his Engaged Replacement Director, as applicable)
will be debriefed about such discussion at a weekly conference to be scheduled
between the Initial Independent Director (or his Engaged Replacement Director,
as applicable) and the Company’s Chief Executive Officer.

(xi) No later than May 1, 2016, the Board, by a vote of the entire Board, shall
retain a nationally recognized law firm to advise the Board in connection with
the Board’s evaluation of strategic and financial alternatives to maximize
stockholder value. In connection with such retention, the Board shall have
complete discretion to interview and retain any nationally recognized firm it
sees fit, provided that the Board will interview (but need not select) at least
one law firm recommended by the Initial Independent Director.

 

  2. Standstill Provisions.

(a) The standstill period (the “Standstill Period”) begins on the date of this
Agreement and shall extend until thirty (30) days prior to the deadline for the
submission of stockholder nominations for directors for the 2017 Annual Meeting
pursuant to the Bylaws. The Engaged Group agrees that during the Standstill
Period, neither it nor any of its Affiliates or Associates under its control or
direction will, and it will cause each of its Affiliates and Associates under
its control not to, directly or indirectly, in any manner, alone or in concert
with others:

(i) solicit, or knowingly encourage or in any way engage in any solicitation of,
any proxies or consents or become a “participant” in a “solicitation,” directly
or indirectly, as such terms are defined in Regulation 14A under the Exchange
Act of proxies or consents (including, without limitation, any solicitation of
consents that seeks to call a special meeting of stockholders or by encouraging
or participating in any “withhold” or similar campaign), in each case, with
respect to securities of the Company or any securities convertible or
exchangeable into or exercisable for any such securities (collectively,
“securities of the Company”);

(ii) advise, knowingly encourage, support, instruct or influence any person with
respect to any of the matters covered by this Section 2(a) or with respect to
the voting or disposition of any securities of the Company at any annual or
special meeting of stockholders, except in accordance with Section 1, or seek to
do so;

(iii) agree, attempt, seek or propose to deposit any securities of the Company
in any voting trust or similar arrangement, or subject any securities of the
Company to any arrangement or agreement with respect to the voting thereof,
other than any such voting trust, arrangement or agreement solely among the
Engaged Group, Affiliates or Associates of the Engaged Group and otherwise in
accordance with this Agreement;

 

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(iv) seek or knowingly encourage any person to submit nominations in furtherance
of a “contested solicitation” or take other applicable action for the election
or removal of directors with respect to the Company;

(v) (A) seek publicly or seek to communicate to any third party (other than to
the executive officers or directors of the Company) to have the Company or any
of its Affiliates or Associates waive or make amendments to its respective
charter, bylaws or other applicable governing documents, or other actions that
may impede or facilitate the acquisition of control of the Company or such
Company Affiliate or Associate, (B) seek to cause a class of securities of the
Company or any of its Affiliates or Associates to be delisted from, or to cease
to be quoted on, any securities exchange, or (C) seek to cause a class of
securities of the Company or any of its Affiliates or Associates to become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act;

(vi) form, join in or in any way participate in a partnership, limited
partnership, syndicate or other group, including, without limitation, a group as
defined under Section 13(d) of the Exchange Act with any person who is not
identified on Annex A as a member of the Engaged Group or an Engaged Group
Affiliate (any such person, a “Third Party”), with respect to any securities of
the Company or take any other action that would divest the Engaged Group of the
ability to vote or cause to be voted its shares of Common Stock (or interest in
such shares) in accordance with this Agreement;

(vii) effect or seek to effect, offer or propose to effect, cause or participate
in, or in any way assist or facilitate any other person to effect or seek, offer
or propose to effect or participate in, any tender or exchange offer, merger,
consolidation, acquisition, scheme, arrangement, business combination,
recapitalization, reorganization, sale or acquisition of assets, liquidation,
dissolution, extraordinary dividend, significant share repurchase or other
extraordinary transaction involving the Company or any of its subsidiaries or
joint ventures or any of their respective securities (each, an “Extraordinary
Transaction”), or make any public statement or public disclosure regarding any
intent, purpose, plan or proposal with respect to the Board, the Company, its
management, policies or affairs or any of its securities or assets (including
with respect to an Extraordinary Transaction) or this Agreement, including any
intent, purpose, plan or proposal that is conditioned on, or would require
waiver, amendment, nullification or invalidation of, any provision of this
Agreement or take any action that could require the Company to make any public
disclosure relating to any such intent, purpose, plan, proposal or condition;
provided, however, that this clause shall not preclude the tender by the Engaged
Group or an Engaged Group Affiliate of any securities of the Company into any
tender or exchange offer or vote with respect to any Extraordinary Transaction
approved by the Board; provided, further, that this clause shall not preclude
the Engaged Group from making a public statement or disclosure with respect to
how it intends to vote, and its reasons for so voting, on the approval or
disapproval of an Extraordinary Transaction announced by the Company;

(viii) (A) call or seek to call or request the call of any meeting of
stockholders, including by written consent, (B) seek, alone or in concert with
others, representation on, or nominate any candidate to, the Board, except as
specifically set forth in Section 1, (C) seek the removal of any member of the
Board, (D) solicit consents from stockholders or otherwise act or seek to act by
written consent, (E) conduct a referendum of stockholders or (F) make a request
for any stockholder list or other similar Company books and records request in
its capacity as a stockholder;

(ix) except following unanimous approval of the Board, purchase or cause to be
purchased or otherwise acquire or agree to acquire beneficial ownership of any
Common Stock or

 

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other securities of the Company, or any securities convertible into or
exchangeable for Common Stock, if, in any such case immediately after the taking
of such action, the Engaged Group together with its Affiliates and Associates
would, in the aggregate, beneficially own more than 19.99% of the then
outstanding shares of Common Stock;

(x) sell, offer or agree to sell directly or indirectly other than through the
open market, through swap or hedging transactions or otherwise, the securities
of the Company (including any rights decoupled from the underlying securities)
held by the Engaged Group to any Third Party unless (A) such Third Party is a
passive investor that has not filed a Schedule 13D and would not as a result of
the purchase of the securities of the Company be required to file a Schedule 13D
and (B) such sale, offer, or agreement to sell would not knowingly result in
such Third Party, together with its Affiliates, owning, controlling or otherwise
having any beneficial or other ownership interest in the aggregate of 4.99% or
more of the shares of Common Stock outstanding at such time or would increase
the beneficial or other ownership interest of any Third Party who, together with
its Affiliates, has a beneficial or other ownership interest in the aggregate of
4.99% or more of the shares of Common Stock outstanding at such time, except in
each case in a transaction approved by the Board;

(xi) institute, solicit or join, as a party, any litigation, arbitration or
other proceeding against the Company or any of its current or former directors
or officers (including derivative actions), other than (A) litigation by the
Engaged Group to enforce the provisions of this Agreement, (B) counterclaims
with respect to any proceeding initiated by, or on behalf of, the Company or its
Affiliates against the Engaged Group, the New Nominees or any Engaged
Replacement Director and (C) the exercise of statutory appraisal rights;
provided, that the foregoing shall not prevent any member of the Engaged Group
from responding to or complying with a validly issued legal process;

(xii) engage in any short sale or purchase, sale or grant of any option,
warrant, convertible security, stock appreciation right or other similar right
(including, without limitation, any put or call option or swap transaction) with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from a decline
in the market price or value of the securities of the Company, or engage in any
securities lending transaction, repurchase transaction, rehypothecation or other
similar transaction involving the securities of the Company;

(xiii) enter into any negotiations, arrangements, understanding or agreements
(whether written or oral) with, or advise, finance, assist, seek to persuade or
knowingly encourage, any Third Party to take any action or make any statement in
connection with any of the foregoing, or make any investment in or enter into
any arrangement with any other person that engages, or offers or proposes to
engage, in any of the foregoing, or otherwise take or cause any action or make
any statement inconsistent with any of the foregoing; provided, however, that to
the extent received during the Standstill Period, this Section 2(a)(xiii) shall
not limit the ability of the Engaged Group to receive unsolicited inbound
communications in a “listen only” capacity from third parties interested in a
potential transaction with the Company (in no event, however, may the Engaged
Group (or its Affiliates or Associates) participate in, directly, or indirectly,
any outbound communications) provided that (x) the Engaged Group (and its
Affiliates and Associates) shall not in any way respond to such inbound
communications/telephone calls, (y) the Engaged Group shall refer any such
inbound communication to the Company’s Chief Executive Officer, and (z) the
Engaged Group shall immediately after any such inbound communication contact the
Company’s Chief Executive Officer and inform such officer of such communication;
or

(xiv) take any action challenging the validity or enforceability of this Section
2 or this Agreement, or make or publicly advance any request or proposal that
the Company or Board amend, modify or waive any provision of this Agreement
(provided, that the Engaged Group may

 

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make confidential requests to the Board to amend, modify or waive any provision
of this Section 2, which the Board may accept or reject in its sole discretion,
so long as any such request is not publicly disclosed by the Engaged Group and
is made by the Engaged Group in a manner that does not require the public
disclosure thereof by the Company, the Engaged Group or any other person).

Notwithstanding anything to the contrary, nothing in this Agreement shall
restrict any of the New Nominees or Engaged Director Replacements from taking
any action in his or her capacity as a director of the Company in a manner
consistent with his or her fiduciary duties to the Company.

 

  3. Representations and Warranties of the Company.

The Company represents and warrants to the Engaged Group that (a) the Company
has the corporate power and authority to execute this Agreement and to bind it
thereto, (b) this Agreement has been duly and validly authorized, executed and
delivered by the Company, constitutes a valid and binding obligation and
agreement of the Company, and is enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws generally affecting the rights of creditors and subject to general
equity principles and (c) the execution, delivery and performance of this
Agreement by the Company does not and will not (i) violate or conflict with any
law, rule, regulation, order, judgment or decree applicable to the Company, or
(ii) result in any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both could constitute such a breach,
violation or default) under or pursuant to, or result in the loss of a material
benefit under, or give any right of termination, amendment, acceleration or
cancellation of, any organizational document, agreement, contract, commitment,
understanding or arrangement to which the Company is a party or by which it is
bound.

 

  4. Representations and Warranties of the Engaged Group.

The Engaged Group (collectively and as to each member) represents and warrants
to the Company that (a) each authorized signatory of the Engaged Group set forth
on the signature page hereto has the power and authority to execute this
Agreement and any other documents or agreements to be entered into in connection
with this Agreement and to bind the Engaged Group thereto, (b) this Agreement
has been duly authorized, executed and delivered by the Engaged Group, and is a
valid and binding obligation of the Engaged Group, enforceable against the
Engaged Group in accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws generally affecting the rights of
creditors and subject to general equity principles, (c) the execution of this
Agreement, the consummation of any of the transactions contemplated hereby, and
the fulfillment of the terms hereof, in each case in accordance with the terms
hereof, will not conflict with, or result in a breach or violation of the
organizational documents of the Engaged Group as currently in effect, (d) the
execution, delivery and performance of this Agreement by the Engaged Group does
not and will not (i) violate or conflict with any law, rule, regulation, order,
judgment or decree applicable to the Engaged Group or (ii) result in any breach
or violation of or constitute a default (or an event which with notice or lapse
of time or both could constitute such a breach, violation or default) under or
pursuant to, or result in the loss of a material benefit under, or give any
right of termination, amendment, acceleration or cancellation of, any
organizational document, agreement, contract, commitment, understanding or
arrangement to which the Engaged Group is a party or by which it is bound, (e)
as of the date of this Agreement, the Engaged Group is deemed to beneficially
own in the aggregate 2,431,170 shares of Common Stock (and no more), (f) as of
the date hereof, the Engaged Group does not currently have, and does not
currently have any right to acquire, any interest in any other securities of the
Company (for example, any rights, options or other securities convertible into
or exercisable or exchangeable (whether or not convertible, exercisable or
exchangeable immediately or only after the passage of time or the occurrence of
a specified event) for such securities or any obligations measured by the price
or value of any securities of the Company or any of its Affiliates, including
any swaps or other derivative arrangements designed to produce economic benefits
and risks that correspond to the ownership of Common Stock, whether or not any
of the foregoing would give rise to beneficial ownership (as determined under
Rule 13d-3 promulgated under the Exchange Act), and whether or not to be settled
by delivery of Common Stock, payment of cash or by other consideration, and
without regard to any short position under any such contract or arrangement),
(g) the Engaged Group has not, directly or indirectly, compensated in any

 

9

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way or agreed to, and will not, compensate any of the New Nominees (or any
Engaged Replacement Director) for his or her respective service as a candidate
or director of the Company with any cash, securities (including any rights or
options convertible into or exercisable for or exchangeable into securities or
any profit sharing agreement or arrangement), or other form of compensation
directly or indirectly related to the Company or its securities, or otherwise,
(h) the Engaged Group (i) has no prior or current relationship with the Initial
Independent Director or any of his Affiliates or Associates, other than what has
been disclosed in the materials previously submitted to the Company pursuant to
Section 1(b)(vi) hereof and what could reasonably be deemed to not disqualify
him from being a Qualified Director, and will not engage in any other
relationship with the Initial Independent Director or any of his Affiliates or
Associates that could reasonably be deemed to disqualify him from being a
Qualified Director while such director serves on the Board, and (ii) will not
have any prior or then current relationships with any Additional Independent
Director or his or her Affiliates or Associates (or any Engaged Replacement
Director or any of his or her Affiliates or Associates), other than what has
been disclosed in the materials previously submitted to the Company pursuant to
Section 1(b)(vi) hereof and what could reasonably be deemed to not disqualify
such director from being a Qualified Director while such director serves on the
Board, (i) no person other than the Engaged Group has any rights with respect to
the Shares, and (j) none of the Engaged Group or its Affiliates or Associates
has formed, or has any present intent to form, a group (within the meaning of
Section 13(d) under the Exchange Act) with any Third Party in relation to the
Company or the securities of the Company.

 

  5. Termination.

This Agreement shall remain in full force and effect until the earliest of:

(a) thirty (30) days prior to the deadline for the submission of stockholder
nominations for directors for the 2017 Annual Meeting pursuant to the Bylaws;
and

(b) such other date established by mutual written agreement of the Parties
hereto.

Notwithstanding the foregoing, the provisions of Section 7 through Section 12
and Section 15 shall survive the termination of this Agreement. In addition, the
provisions of Section 1(b)(viii), Section 13 and Section 14 shall survive the
termination of this Agreement and remain in effect throughout each of the New
Nominees’ (or the Engaged Replacement Directors’) continued service as a member
of the Board. No termination pursuant to Section 5(a) shall relieve any Party
from liability for any breach of this Agreement prior to such termination.

 

  6. Press Release; Communications.

Promptly following the execution of this Agreement, the Company shall issue a
mutually agreeable press release, in substantially the form attached hereto as
Annex B (the “Mutual Press Release”), announcing certain terms of this
Agreement. In connection with the execution of this Agreement, and subject to
the terms of this Agreement, no Party (including the Company’s Board and any
committee thereof) shall issue any other press release or public statement
regarding this Agreement or the matters contemplated hereby without the prior
written consents of the other Parties, other than a Form 8-K and proxy statement
materials for the 2016 Annual Meeting to be filed by the Company and an
amendment to the Engaged Group’s Schedule 13D relating to the Company to be
filed by the Engaged Group, provided, that the Company may make any ordinary
course communications with Company constituencies, including employees,
customers, suppliers, investors and stockholders, and SEC filing disclosures
consistent with the Mutual Press Release, Form 8-K and Schedule 13D. During the
Standstill Period, no Party shall make any public announcement or statement that
is inconsistent with or contrary to the statements made in the Mutual Press
Release, except as required by law or the rules and regulations of any stock
exchange or governmental entity with the prior written consent of the Engaged
Group and the Company, as applicable, and otherwise in accordance with this
Agreement. The Company, with respect to its Form 8-K, and the Engaged Group,
with respect to its amendment to its Schedule 13D, will provide the other Party,
prior to each such filing, a reasonable opportunity to review and comment on
such documents, and each such Party will consider any comments from the other
Party in good faith.

 

10

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  7. Specific Performance.

Each of the Engaged Group, on the one hand, and the Company, on the other hand,
acknowledges and agrees that irreparable injury to the other Party hereto would
occur in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached and that such
injury would not be adequately compensable by the remedies available at law
(including the payment of money damages). It is accordingly agreed that the
Engaged Group, on the one hand, and the Company, on the other hand (the “Moving
Party”), shall each be entitled to specific enforcement of, and injunctive
relief to prevent any violation of, the terms hereof, and the other Party hereto
will not take action, directly or indirectly, in opposition to the Moving Party
seeking such relief on the grounds that any other remedy or relief is available
at law or in equity. Each of the Parties hereto agrees to waive any bonding
requirement under any applicable law. This Section 7 is not the exclusive remedy
for any violation of this Agreement.

 

  8. Expenses.

Each Party shall be responsible for its own fees and expenses incurred in
connection with the negotiation, execution and effectuation of this Agreement
and the transactions contemplated hereby, including, but not limited to, any
matters related to the 2016 Annual Meeting, except that the Company will
reimburse Engaged Capital for its reasonable documented expenses, including
legal fees, incurred in connection with the negotiation and entry into this
Agreement and other matters related to the 2016 Annual Meeting, in an amount not
to exceed $100,000.

 

  9. Severability.

If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. The Parties agree to use their commercially reasonable best
efforts to agree upon and substitute a valid and enforceable term, provision,
covenant or restriction for any of such that is held invalid, void or
enforceable by a court of competent jurisdiction.

 

  10. Notices.

Any notices, consents, determinations, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon confirmation of receipt, when sent by email (provided such
confirmation is not automatically generated); or (iii) one (1) business day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the Party to receive the same. The addresses for such
communications shall be:

 

If to the Company:

   Outerwall Inc.    1800 114th Avenue SE    Bellevue, WA 98004   
Attention: Donald R. Rench, Chief Legal Officer    Telephone: (425) 943-8090   
Email: Don.Rench@outerwall.com With copies (which shall not constitute notice)
to:    Perkins Coie LLP    1201 Third Avenue, Suite 4900    Seattle, WA 98101   
Attention:  Andrew Bor   

  Jens Fischer

   Telephone: (206) 359-8000          Email: ABor@perkinscoie.com   

          JFischer@perkinscoie.com

 

11

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If to the Engaged Group:

   Engaged Capital, LLC    610 Newport Center Drive, Suite 250    New Port
Beach, CA 92660    Attention: Glenn W. Welling    Telephone: (949) 734-7900   
Email: glenn@engagedcapital.com With a copy (which shall not constitute notice)
to:    Olshan Frome Wolosky LLP    Park Avenue Tower    65 East, 55th Street   
New York, NY 10022    Attention: Steve Wolosky   

 Aneliya Crawford

   Telephone: (212) 451-2300    Email: SWolosky@olshanlaw.com   

   ACrawford@olshanlaw.com

 

  11. Applicable Law.

This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware without reference to the conflict of laws
principles thereof. Each of the Parties hereto irrevocably agrees that any legal
action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the other Party hereto or its successors or assigns, shall
be brought and determined exclusively in the Court of Chancery in the State of
Delaware (or, if any such court declines to accept jurisdiction over a
particular matter, any state or federal court located in the State of
Delaware). Each of the Parties hereto hereby irrevocably submits with regard to
any such action or proceeding for itself and in respect of its property,
generally and unconditionally, to the personal jurisdiction of the aforesaid
courts and agrees that it will not bring any action relating to this Agreement
in any court other than the aforesaid courts. Each of the Parties hereto hereby
irrevocably waives, and agrees not to assert in any action or proceeding with
respect to this Agreement, (a) any claim that it is not personally subject to
the jurisdiction of the above-named courts for any reason, (b) any claim that it
or its property is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) and (c) to the fullest extent permitted by
applicable legal requirements, any claim that (i) the suit, action or proceeding
in such court is brought in an inconvenient forum, (ii) the venue of such suit,
action or proceeding is improper or (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts. EACH OF THE PARTIES HERETO
WAIVES THE RIGHT TO TRIAL BY JURY.

 

  12. Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall
be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the Parties and delivered to the other
Party (including by means of electronic delivery).

 

12

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  13. Mutual Non-Disparagement.

Subject to applicable law, each of the Parties covenants and agrees that, during
the Standstill Period (unless otherwise specified in accordance with this
Agreement) or if earlier, until such time as the other Party or any of its
agents, subsidiaries, affiliates, successors, assigns, officers, key employees
or directors shall have breached this Section 13, neither it nor any of its
respective agents, subsidiaries, affiliates, successors, assigns, officers, key
employees or directors, shall in any way criticize, attempt to discredit, make
derogatory statements with respect to, call into disrepute, defame, make or
cause to be made any statement or announcement that relates to and constitutes
an ad hominem attack on, or relates to and otherwise disparages (or causes to be
disparaged) the other Parties or such other Parties’ subsidiaries, affiliates,
successors, assigns, officers (including any current, future or former officer
of a Party or a Parties’ subsidiaries), directors (including any current, future
or former director of a Party or a Parties’ subsidiaries), employees,
stockholders, agents, attorneys or representatives, or any of their practices,
procedures, businesses, business operations, products or services, in any
manner.

 

  14. Confidentiality.

The Engaged Group agrees that it will not, and will cause its Affiliates and
Associates not to, seek to obtain confidential information of the Company from
any New Nominee (or Engaged Replacement Director) and (ii) the New Nominees (and
Engaged Replacement Directors) agree to preserve the confidentiality of the
Company’s business and information, including, but not limited to, discussions,
determinations and other matters considered in meetings of the Board and Board
committees and with Company officers and employees, and will enter into a
confidentiality agreement consistent with those entered into by other
non-employee directors of the Company and adhere to, among other things, all
confidentiality-related requirements included in policies, codes and guidelines
of and relating to the Company.

 

  15. Entire Agreement; Amendment and Waiver; Successors and Assigns; Third
Party Beneficiaries.

This Agreement (including, for purposes of this Section 15, the Annexes hereto)
contains the entire understanding of the Parties hereto with respect to its
subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings between the Parties other
than those expressly set forth herein and incorporated pursuant thereto. No
modifications of this Agreement can be made except in writing signed by an
authorized representative of each of the Company and the members of the Engaged
Group. No failure on the part of any Party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such Party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law. The terms and conditions of
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the Parties hereto and their respective successors, heirs,
executors, legal representatives, and permitted assigns. No Party shall assign
this Agreement or any rights or obligations hereunder without, with respect to
the Engaged Group and the New Nominees (or an Engaged Replacement Director), the
prior written consent of the Company, and with respect to the Company, the prior
written consent of the Engaged Group. This Agreement is solely for the benefit
of the Parties hereto and is not enforceable by any other persons.

[The remainder of this page intentionally left blank]

 

13

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized signatories of the Parties as of the date hereof.

 

OUTERWALL INC. By:  

/s/ Erik E. Prusch

Name:   Erik E. Prusch Title:   Chief Executive Officer

 

[Signature Page to Agreement]

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ENGAGED GROUP

 

Engaged Capital Master Feeder I, LP By:   Engaged Capital, LLC
General Partner By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Founder and Chief Investment Officer

Engaged Capital Master Feeder II, LP

By:   Engaged Capital, LLC
General Partner By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Founder and Chief Investment Officer
Engaged Capital Co-Invest III, L.P. By:   Engaged Capital, LLC
General Partner By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Founder and Chief Investment Officer
Engaged Capital I, LP By:   Engaged Capital, LLC
General Partner By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Founder and Chief Investment Officer
Engaged Capital I Offshore, Ltd. By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Director

 

[Signature Page to Agreement]

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Engaged Capital II, LP By:   Engaged Capital, LLC
General Partner By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Founder and Chief Investment Officer

 

Engaged Capital II Offshore Ltd. By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Director

 

Engaged Capital, LLC By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Founder and Chief Investment Officer

 

Engaged Capital Holdings, LLC By:  

/s/ Glenn W. Welling

  Name:   Glenn W. Welling   Title:   Sole Member

 

/s/ Glenn W. Welling

Glenn W. Welling

 

[Signature Page to Agreement]

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INITIAL INDEPENDENT DIRECTOR By:  

/s/ Jeffrey J. Brown

Name:   Jeffrey J. Brown

 

[Signature Page to Agreement]

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Annex A

Members of the Engaged Group

Engaged Capital, LLC

Engaged Capital Holdings, LLC

Engaged Capital Master Feeder I, LP

Engaged Capital Master Feeder II, LP

Engaged Capital Co-Invest III, L.P.

Engaged Capital I, LP

Engaged Capital I Offshore, Ltd.

Engaged Capital II, LP

Engaged Capital II Offshore Ltd.

Glenn W. Welling

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Annex B

Mutual Press Release

OUTERWALL ANNOUNCES COOPERATION AGREEMENT WITH ENGAGED CAPITAL, LLC

Jeffrey J. Brown Appointed to the Board

Agrees to Appoint Two New Independent Directors

BELLEVUE, Wash. — April 12, 2016 — Outerwall Inc. (“Outerwall” or the “Company”)
(Nasdaq: OUTR) today announced that it has entered into a Cooperation Agreement
with Engaged Capital, LLC (“Engaged Capital”), which beneficially owns 2,431,170
shares of Outerwall common stock, representing approximately 14.6 percent of the
Company’s outstanding shares. Under the terms of the Cooperation Agreement,
Outerwall has appointed Jeffrey J. Brown, Chief Executive Officer and founding
member of Brown Equity Partners, LLC, to its Board of Directors, effective
immediately. Outerwall has also agreed to add two new independent directors to
the Company’s Board to be submitted by Engaged Capital. The directors are
expected to be named on or before August 1, 2016 and the Board will consist of a
maximum of nine directors at that time.

“We appreciate the open and constructive dialogue we have had with all of our
shareholders, including Engaged Capital, and are pleased to have reached this
agreement,” said Erik E. Prusch, Outerwall’s Chief Executive Officer. “As
evidenced by the recent 100 percent increase in Outerwall’s quarterly dividend
and decision to explore strategic and financial alternatives to maximize
shareholder value, we are aligned with shareholders and are taking decisive
actions on their behalf. We welcome the additional perspectives to our Board as
we continue to evaluate all strategic and financial options to maximize
shareholder value while managing our business for profitability and cash flow.”

“We applaud Outerwall for initiating a process to explore strategic alternatives
and are pleased to have been able to work constructively with the Outerwall
Board and management team to ensure shareholder representation in the boardroom
through this important phase of the Company’s lifecycle,” said Glenn W. Welling,
Principal and Chief Investment Officer at Engaged Capital. “Jeff Brown brings
decades of transaction and corporate governance experience to the Outerwall
Board. We look forward to continuing to work together with Jeff and the rest of
the Board to ensure that the Board’s decisions maximize value for shareholders.”

Mr. Brown will serve in the class of directors with a term expiring at the 2017
Annual Meeting of Stockholders. With Mr. Brown’s appointment, the Outerwall
Board has been expanded to eight directors, seven of whom are independent. The
Outerwall Board will be expanded to accommodate the two additional independent
directors upon their appointment.

Pursuant to the Cooperation Agreement, Engaged Capital has agreed to vote all of
its shares in favor of Outerwall’s nominees at the 2016 Annual Meeting of
Stockholders, and has agreed to customary standstill provisions. The full
agreement between Outerwall and Engaged Capital will be filed on a Form 8-K with
the Securities and Exchange Commission.

About Jeffrey J. Brown

Jeffrey J. Brown, 55, is Chief Executive Officer and a founding member of Brown
Equity Partners, LLC (“BEP”), which provides capital to management teams and
companies. Prior to founding BEP in 2007, Mr. Brown served as a founding partner
of Forrest Binkley & Brown, a venture capital and private equity firm. In his 29
years in the investment business, Mr. Brown has served on over 40 boards of
directors, including service on seven public companies: Medifast, Inc. (Lead
Director), RCS Capital Corporation, Midatech Pharma PLC, Nordion, Inc.,
Steadfast Income REIT, Inc., Golden State Vintners, Inc. (Chairman) and
Stamps.com. Throughout his career, Mr. Brown has also worked at Hughes Aircraft
Company, Morgan Stanley & Company, Security Pacific Capital Corporation and Bank
of America Corporation.

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About Outerwall

Outerwall Inc. (Nasdaq: OUTR) has more than 20 years of experience creating some
of the most profitable spaces for their retail partners. The company delivers
breakthrough kiosk experiences that delight consumers and generate revenue for
retailers. As the company that brought consumers Redbox® entertainment,
Coinstar® money services, and ecoATM® electronics recycling kiosks, Outerwall is
leading the next generation of automated retail and paving the way for
inventive, scalable businesses. Outerwall™ kiosks are in neighborhood grocery
stores, drug stores, mass merchants, malls, and other retail locations in the
United States, Canada, Puerto Rico, the United Kingdom, and Ireland. Learn more
at www.outerwall.com.

About Engaged Capital

Engaged Capital, LLC (“Engaged Capital”) was established in 2012 by a group of
professionals with significant experience in activist investing in North America
and was seeded by Grosvenor Capital Management, L.P., one of the oldest and
largest global alternative investment managers. Engaged Capital is a limited
liability company owned by its principals and formed to create long-term
shareholder value by bringing an owner’s perspective to the managements and
boards of undervalued public companies. Engaged Capital manages both a long-only
and long/short North American equity fund. Engaged Capital’s efforts and
resources are dedicated to a single investment style, “Constructive Activism”
with a focus on delivering superior, long-term, risk-adjusted returns for
investors. Engaged Capital is based in Newport Beach, California.

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. Words
indicating future events, performance, results and actions, such as “will” and
“expect,” and variations of such words, and similar expressions identify
forward-looking statements, but their absence does not mean that a statement is
not forward-looking. The forward-looking statements in this press release
include, among others, statements regarding Company interactions with and
actions relating to investors, exploration of strategic and financial
alternatives, annual meeting and board composition matters, and execution of
business strategies. Forward-looking statements are not guarantees of future
actions, events or performance, which may vary materially from those expressed
or implied in such statements. Differences may result from, among other things,
actions taken by the Company or investors, including Engaged Capital, or other
third parties, including those beyond the Company’s control. Such risks and
uncertainties include, but are not limited to, results of interactions with
third parties, including investors, actions by the Company’s board and
management and investors, results and timing of strategic and financial
alternatives, and related transactions and actions, continuation of or changes
in strategic and financial objectives, and the ability to attract new or
maintain retailer relationships, penetrate or maintain markets and distribution
channels, and react to changing consumer demands. The foregoing list of risks
and uncertainties is illustrative, but by no means exhaustive. For more
information on factors that may affect future performance, results or actions,
please review “Risk Factors” described in our most recent Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q filed with the Securities and
Exchange Commission (“SEC”), as well as other public filings with the SEC. These
forward-looking statements reflect the Company’s expectations as of the date
hereof. The Company undertakes no obligation to update the information provided
herein.

Investor Contacts:

Rosemary Moothart

Director, Investor Relations

425-943-8140

rosemary.moothart@outerwall.com

Innisfree M&A

Scott Winter / Jennifer Shotwell

212-750-5833

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Media Contacts:

Susan Johnston

Vice President, Corporate Communications & Public Affairs

425-943-8993

Susan.Johnston@outerwall.com

Joele Frank, Wilkinson Brimmer Katcher

Matthew Sherman / James Golden / Matthew Gross

212-355-4449