OUTR Outerwall Inc. (MM)

On April 11, 2016, Outerwall Inc. (the “Company”) entered into a Cooperation Agreement (the “Cooperation Agreement”) with Engaged Capital, LLC and certain of its affiliates (“Engaged”) (in aggregate a 14.6% beneficial holder of the Company’s common stock) and Jeffrey J. Brown (“Mr. Brown”). In connection with the execution of the Cooperation Agreement, the Board of Directors of the Company (the “Board”) increased the size of the Board by one to eight members and, to fill that vacancy, appointed Mr. Brown as an independent director and 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”). The Company has also agreed to reduce the size of the Board to seven members in connection with the Company’s 2016 annual meeting of stockholders (the “2016 Annual Meeting”) and subsequently appoint two additional independent directors (“Additional Independent Directors”) to be submitted by Engaged to the Board, and reviewed, approved and appointed by the Board, in accordance with the procedures provided in the Cooperation Agreement, expected to be as of August 1, 2016 (the two Additional Independent Directors, together with Mr. Brown, the “New Nominees”). One of the Additional Independent Directors will be appointed in the class of directors with a term expiring at the Company’s 2018 annual meeting of stockholders and the other Additional Independent Director will be appointed in the class of directors with a term expiring at the Company’s 2019 annual meeting of stockholders. Until 30 days prior to the deadline for the submission of stockholder nominations for directors for the 2017 Annual Meeting (the “Standstill Period”), Engaged has certain rights to recommend a substitute person if any of the New Nominees is unable or unwilling to serve as a director or resigns as a director, in accordance with the terms of the Cooperation Agreement.

Pursuant to the terms of the Cooperation Agreement:

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Mr. Brown, age 55, is the chief executive officer and founding member of Brown Equity Partners, LLC (“BEP”) (a principal investment firm). Prior to founding BEP in 2007, Mr. Brown served as a founding partner and primary deal originator of Forrest Binkley & Brown (a venture capital and private equity firm) from 1993 to 2007. Mr. Brown currently serves as a director of Medifast, Inc. (a nutrition and weight loss company) and RCS Capital Corporation (an investment firm). From 2011 until 2015, Mr. Brown served as a director of Midatech Pharma PLC (a nano-medicine company). From 2012 until 2014, Mr. Brown served as a director of Nordion, Inc. (a health science company). From 2009 until 2011, Mr. Brown served as a director of Steadfast Income REIT, Inc. (a real estate investment trust). In the course of his career, Mr. Brown has also worked at Hughes Aircraft Company, Morgan Stanley & Company, Security Pacific Capital Corporation and Bank of America Corporation.

Mr. Brown will receive the standard compensation received by the Company’s non-employee directors. The standard compensation arrangements received by the Company’s non-employee directors are generally as described in the Company’s definitive proxy statement on Schedule 14A filed on April 30, 2015 with the Securities and Exchange Commission.

Mr. Brown has delivered, and prior to their appointment, each of the Additional Independent Directors will deliver, to the Company a resignation letter providing that such New Nominee will immediately resign from the Board if (1) during the Standstill Period Engaged’s holdings of common stock of the Company decrease to less than 4.99% of the Company’s then outstanding common stock or (2) a New Nominee breaches, as determined by a court, any confidentiality-related requirement under any agreement, policy, code or guideline relating to the Company.

The foregoing description of the Cooperation Agreement is qualified in its entirety by reference to the full text of the Cooperation Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. The press release announcing matters relating to the Cooperation Agreement is attached hereto as Exhibit 99.1 and incorporated herein by reference.