EXHIBIT 10.4

EMPLOYMENT AGREEMENT

OUTERWALL INC.
and
JAMES GAHERITY

Dated as of March 11, 2014

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EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”), dated as of March 11, 2014,
between Outerwall Inc., a Delaware corporation, its subsidiaries and affiliates
collectively, (“Employer”), and James Gaherity (“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.
POSITION

1.1    Employment
Employer will employ Employee and Employee will provide services to Employer as
the President, Coinstar.
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 President 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”).
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 President, Coinstar shall consist, in part, of an
annual base salary of Three Hundred Thousand Dollars ($300,000) 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.

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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.
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, 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 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

Subject to Section 3.5 hereof, if Employer terminates Employee’s employment
without Cause during the Term, Employee shall be entitled to receive (a) a
termination payment 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, (c) a pro-rated
cash bonus consistent with Section 1.4(b) determined at Employee’s target bonus
opportunity for the year in which Employee’s employment terminates, and (d) an
amount equal to twelve (12) months’ of COBRA premiums at the rate in effect on
the date Employee’s employment terminates for the coverage in effect for
Employee and Employee’s spouse and dependent children on such date under the
Employer’s group health plans. 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 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.

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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 Sections 3.1(a), (c) and (d)
hereof shall be paid to Employee in a lump sum within ten (10) business days
after the release referred to in Section 3.5 hereof becomes effective; provided,
however, that in no event shall such payment be made later than March 15 of the
calendar year following the calendar year in which Employee’s employment
terminates.
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.
3.5
Release

Employee’s entitlement to any benefits pursuant to Sections 3.1(a), (c) and (d)
hereof is conditioned on Employee’s execution (and non-revocation) of a release
of claims in a form satisfactory to the Employer, which release must become
effective by the sixtieth (60th) day following the date on which Employee’s
employment terminates or such earlier date as is specified in such release. The
Employer shall provide Employee with the form of release no later than the
seventh (7th) day following the date on which Employee’s employment terminates.
3.6
Code Section 409A

The parties intend that this Agreement and the payments and benefits provided
hereunder, including, without limitation, those provided pursuant to Section 3.1
hereof, be exempt from the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) to the maximum extent possible, whether
pursuant to the short-term deferral exception described in Treas. Reg.
Section 1.409A-1(b)(4), the involuntary separation pay plan exception described
in Treas. Reg. Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code
Section 409A is applicable to this Agreement, the parties intend that this
Agreement and any payments and benefits thereunder comply with the deferral,
payout and other limitations and restrictions imposed under Code Section 409A.
Notwithstanding anything herein to the contrary, this Agreement shall be
interpreted, operated and administered in a manner consistent with such
intentions; provided, however that in no event shall Employer or its agents,
parents, subsidiaries, affiliates or successors be liable for any additional
tax, interest or penalty that may be imposed on Employee pursuant to Code
Section 409A or for any damages incurred by Employee as a result of this
Agreement (or the payments or benefits hereunder) failing to comply with, or be
exempt from, Code Section 409A. Without limiting the generality of the
foregoing, and notwithstanding any other provision of this Agreement to the
contrary:
(a)    to the extent Code Section 409A is applicable to this Agreement, a
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of amounts or benefits
upon or following a termination of employment unless such termination is also a
“separation from service,” as defined in Treas. Reg. Section 1.409A-1(h), after
giving effect to the presumptions contained therein (and without regard to the
optional

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alternative definitions available therein), and, for purposes of any such
provision of this Agreement, references to “terminate,” “termination,”
“termination of employment” and like terms shall mean separation from service;
(b)    if at the time Employee’s employment hereunder terminates, Employee is a
“specified employee” within the meaning of Code Section 409A, then to the extent
necessary to avoid subjecting Employee to the imposition of any additional tax
or interest under Code Section 409A, amounts that would (but for this provision)
be payable within six (6) months following the date of Employee’s termination of
employment shall not be paid to Employee during such period, but shall instead
be paid in a lump sum on the first business day of the seventh month following
the date on which Employee's employment terminates or, if earlier, upon
Employee’s death;
(c)    each payment made under this Agreement shall be treated as a separate
payment and the right to a series of installment payments under this Agreement
shall be treated as a right to a series of separate payments; and
(d)    nothing herein shall act to accelerate any payment to which Employee
would otherwise be entitled if such acceleration would subject Employee to an
additional tax or penalty under Code Section 409A.
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 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.
(b)    Employee further agrees that she 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’s employment 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).
(d)    If Employee violates any provision of this Section 4, Employee shall
repay all amounts received by Employee pursuant to Sections 3.1(a), (c) and (d)
hereof. In the event any such violation occurs prior to the payment of such
amounts, Employee shall cease to be entitled to any payment pursuant to such
Sections.
5.
REPRESENTATIONS AND WARRANTIES OF EMPLOYEE

Employee represents and warrants that neither the execution nor the performance
of this Agreement nor the execution or performance of 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:
If to Employee:    

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If to Employer:
Outerwall Inc.
 
1800 114th Avenue SE
 
Bellevue, WA 98004
 
Attn:    Chairman of the Board of Directors
 
cc:     Chief Legal Officer and General Counsel

Copy to:
Perkins Coie LLP
 
Attn: Lynn E. Hvalsoe
 
1201 Third Ave., 49th 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 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 be reasonably available to Employer and counsel for Employer for the
purpose of enabling Employer to defend against any legal claims in which
Employer determines she 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

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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 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 March 26, 2004, and the Change of Control Agreement executed on
March 11, 2014, 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, she 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.

OUTERWALL INC.
By:
/s/ Raquel Karls
 
Raquel Karls
Its
Chief Human Resources Officer
 
 
EMPLOYEE
 
/s/ James Gaherity
 
James Gaherity

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EXHIBIT A

Change of Control Agreement