Document:

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                                                                    Exhibit 10.2

                                 SONOSITE, INC.

                   1998 Nonofficer Employee Stock Option Plan
                 (as amended and restated on February 13, 2002)

1.       Purpose

         The purpose of the Plan is to enhance the long-term shareholder value
of the Corporation by offering opportunities to selected employees to
participate in the Corporation's growth and success, and to encourage them to
remain in the service of the Corporation and its subsidiaries and to acquire and
maintain stock ownership in the Corporation.

2.       Definitions

         The following terms have the corresponding meanings for purposes of the
Plan:

         "Change in Control" means

         (a) A "Board Change." For purposes of the Plan, a Board Change shall
have occurred if a majority of the seats (other than vacant seats) on the
Corporation's Board of Directors (the "Board") were to be occupied by
individuals who were neither (i) nominated by a majority of the Incumbent
Directors nor (ii) appointed by directors so nominated. An "Incumbent Director"
is a member of the Board who has been either (i) nominated by a majority of the
directors of the Corporation then in office or (ii) appointed by directors so
nominated, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person (as defined in Section 2(b)) other than the Board; or

         (b) The acquisition by any individual, entity or group (within the
meaning of Section 13(d) (3) or 14(d) (2) of the Exchange Act) (a "Person") of
"Beneficial Ownership" (within the meaning of Rule 13d3 promulgated under the
Exchange Act) of (i) 20% or more of either (A) the then outstanding shares of
common stock (the "Outstanding Corporation Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the "Outstanding
Corporation Voting Securities"), in the case of either (A) or (B) of this clause
(i), which acquisition is not approved in advance by a majority of the Incumbent
Directors or (ii) 33% or more of either (A) the Outstanding Corporation Common
Stock or (B) the Outstanding Corporation Voting Securities, in the case of
either (A) or (B) of this clause (ii), which acquisition is approved in advance
by a majority of the Incumbent Directors; provided, however, that the following
acquisitions shall not constitute a Change in Control: (x) any acquisition by
the Corporation, (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or

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consolidation, the conditions described in clauses (i), (ii) and (iii) of the
following subsection (c) are satisfied; or

         (c) Approval by the shareholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than 60% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Corporation Common Stock
and Outstanding Corporation Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (ii) no Person (excluding the
Corporation, any employee benefit plan (or related trust) of the Corporation or
such corporation resulting from such reorganization, merger or consolidation and
any Person beneficially owning, immediately prior to such reorganization, merger
or consolidation, directly or indirectly, 33% or more of the Outstanding
Corporation Common Stock or Outstanding Corporation Voting Securities, as the
case may be) beneficially owns, directly or indirectly, 33% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were Incumbent Directors at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

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

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of the board of directors of such corporation were approved by a majority of the
Incumbent Directors at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition of assets of
the Corporation.

         "Committee" means the Committee provided for in Section 5, which shall
administer the Plan.

         "Common Stock" means common stock, par value $0.01 per share, of the
Corporation.

         "Corporation" means SonoSite, Inc., a Washington corporation.

         "Designated Beneficiary" means any person designated in writing by a
Participant as a legal recipient of payments due under an award in the event of
the Participant's death, or in the absence of such designation, the
Participant's estate. Such designation must be on file with the Corporation in
order to be effective but, unless the Participant has made an irrevocable
designation, may be changed from time to time by the Participant.

         "Disability," unless otherwise defined by the Committee, means a mental
or physical impairment of the Participant that is expected to result in death or
that has lasted or is expected to last for a continuous period of 12 months or
more and that causes the Participant to be unable, in the opinion of the
Corporation, to perform his or her duties for the Corporation or its
subsidiaries and to be engaged in any substantial gainful activity.

         "Early Retirement" means early retirement as that term is defined by
the Plan Administrator from time to time for purposes of the Plan.

         "Fair Market Value" of the Common Stock as of any trading day means the
average (rounded to the next highest cent in the case of fractions of a cent) of
the high and low sales prices of the Common Stock as reported on such trading
day by the Nasdaq National Market. If no sales price is reported for the Common
Stock on such trading day, then "Fair Market Value" shall mean the highest bid
price reported for the Common Stock on such trading day by the National
Quotation Bureau Incorporated or any similar nationally recognized organization.
If there is no such reported price for the Common Stock for the date in
question, then such price on the last preceding date for which such price exists
shall be determinative of Fair Market Value. The Committee, in its sole
discretion, shall make all determinations required by this definition.

         "Participant" means a person who has received an award under the Plan.

         "Plan" means this SonoSite, Inc. 1998 Nonofficer Employee Stock Option
Plan.

         "Retirement" means retirement as of the Participant's normal retirement
date under the Corporation's 401(k) Plan or other similar successor plan
applicable to salaried employees, unless otherwise defined by the Committee from
time to time for purposes of the Plan.

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         "Withholding Tax" means any tax, including any federal, state or local
income tax, required by any governmental entity to be withheld or otherwise
deducted and paid with respect to the transfer of shares of Common Stock as a
result of the exercise of an option.

3.       Stock Subject to the Plan

         There are reserved for issuance upon the exercise of options under the
Plan 1,500,000 shares of Common Stock. Such shares may be authorized and
unissued shares of Common Stock or shares now held or subsequently acquired by
the Corporation. If any option granted under the Plan shall expire or terminate
for any reason (including, without limitation, by reason of its surrender,
pursuant to the provisions of the third paragraph of Section 7(b) or otherwise,
or cancellation, in whole or in part, pursuant to the provisions of Section 7(c)
or otherwise, or the substitution in place thereof of a new option) without
having been exercised in full, the shares subject thereto shall again be
available for the purposes of issuance under the Plan.

4.       Administration

         The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have plenary authority, in its
discretion, to determine the individuals to whom, and the time or times at
which, options shall be granted and the number of shares to be covered by each
such grant. In making such determinations, the Committee may take into account
the nature of the services rendered by the respective Participants, their
present and potential contributions to the Corporation's success and such other
factors as the Committee in its discretion may deem relevant. Subject to the
express provisions of the Plan, the Committee shall have plenary authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of option agreements
(which need not be identical) and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's determinations of
the matters referred to in this Section 4 shall be conclusive.

         To the extent consistent with applicable law, the Board may authorize a
senior executive officer of the Corporation to grant options under the Plan,
within the limits specifically prescribed by the Board.

5.       The Committee

         The Board shall designate a Committee of members of the Board.
Currently, the Committee shall consist solely of two or more members of the
Board. The Committee shall be appointed by the Board, which may from time to
time appoint members of the Committee in substitution for members previously
appointed and may fill vacancies, however caused, in the Committee. The
Committee shall select one of its members as its Chairman and shall hold its
meetings at such times and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee shall be made by
not less than a majority of its members. Any decision or determination reduced
to writing and signed by all the members shall be fully as effective as if it
had been made by a majority vote at a meeting duly

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called and held. The Committee may appoint a secretary, shall keep minutes of
its meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.

6.       Eligibility

         The Committee may grant options only to employees of the Corporation
and of its present and future subsidiary corporations ("subsidiaries") who are
not "executive officers," within the meaning prescribed by Rule 16a-1(f)
promulgated under the Exchange Act, or directors of the Corporation. Any person
eligible under the Plan may receive one or more grants of options as the
Committee shall from time to time determine, and such determinations may be
different as to different Participants and may vary as to different grants.

7.       Option Grants

         (a) The Committee is authorized under the Plan, in its discretion, to
issue options as "nonqualified stock options" that are not intended to qualify
as "incentive stock options" under Section 422 of the United States Internal
Revenue Code of 1986, as amended (the "Code") and the options shall be
designated as nonqualified stock options in the applicable option agreement.
Unless approved by the holders of a majority of the shares of the Corporation
present in person or by proxy and entitled to vote thereon at a duly convened
meeting of shareholders, the Committee shall not (a) grant any options under the
terms of the Plan with a purchase price that is less than 100% of the Fair
Market Value of the Common Stock on the date of grant or (b) reduce the purchase
price of any option outstanding or to be granted in the future under the terms
of the Plan; any amendment or repeal of the provisions of this sentence requires
the affirmative vote of the holders of a majority of shares of the Corporation
present at a duly convened shareholders' meeting in person or by proxy and
entitled to vote thereon. Notwithstanding the previous sentence, any option may
provide that the purchase price be equal to the average Fair Market Value of the
Common Stock over any continuous period of trading days beginning and ending no
more than 30 business days before or after the date such option is granted.

         (b) The Committee shall be authorized in its discretion to prescribe in
the option grant the installments, if any, in which an option granted under the
Plan shall become exercisable, provided that no option shall be exercisable
prior to the six months prior to the date of grant thereof except as provided in
Sections 7(c), (d), (g), (h) and (i) or except as the Committee otherwise
determines, and provided further that options granted to employees of the
Corporation's subsidiary in Spain, SonoSite Iberica, S.L., who are residents of
Spain shall be subject to the vesting schedule set forth in Addendum 1 attached
hereto. In no case may an option be exercised as to less than 50 shares at any
one time (or the remaining shares covered by the option if less than 50) during
the term of the option. The Committee shall also be authorized to establish the
manner of the exercise of an option. The term of each option shall be not more
than 10 years from the date of grant thereof.

         In general, upon exercise, the option price is to be paid in full in
cash; however, the Committee can determine at any time prior to exercise of an
option, that additional forms of payment will be permitted. To the extent
permitted by the Committee and applicable laws and regulations (including, but
not limited to, federal tax and securities laws and regulations and state

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corporate law), an option may be exercised (i) in Common Stock owned by the
option holder having a Fair Market Value on the date of exercise equal to the
aggregate option price, or in a combination of cash and stock; provided,
however, that payment in stock shall not be made unless such stock shall have
been owned by the option holder for a period of at least six months prior
thereto (or any shorter period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes); or (ii) by delivery of a properly
executed exercise notice, together with irrevocable instructions to a broker
designated by the Corporation, all in accordance with the regulations of the
Federal Reserve Board, to deliver promptly to the Corporation the amount of sale
or loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise.

     In lieu of requiring an option holder to pay cash or stock and to receive
in turn certificates for shares of Common Stock upon the exercise of an option,
if the option so provides, the Committee may elect to require the option holder
to surrender the option to the Corporation for cancellation as to all or any
portion of the number of shares covered by the intended exercise and receive in
exchange for such surrender a payment, at the election of the Committee, in
cash, in shares of Common Stock or in a combination of cash and shares of Common
Stock, equivalent to the appreciated value of the shares covered by the option
surrendered for cancellation. Such appreciated value shall be the difference
between the option price of such shares (as adjusted pursuant to Section 10) and
the Fair Market Value of such shares, which shall for this purpose be determined
by the Committee taking into consideration all relevant factors, but which shall
not be less than the Fair Market Value of such shares on the date on which the
option holder's notice of exercise is received by the Corporation. Upon delivery
to the Corporation of a notice of exercise of option, the Committee may avail
itself of its right to require the option holder to surrender the option to the
Corporation for cancellation as to shares covered by such intended exercise. The
Committee's right of election shall expire, if not exercised, at the close of
business on the fifth business day following the delivery to the Corporation of
such notice. Should the Committee not exercise such right of election, the
delivery of the aforesaid notice of exercise shall constitute an exercise by the
option holder of the option to the extent therein set forth, and payment for the
shares covered by such exercise shall become due immediately.

     (c)  In the event that a Participant's services for the Corporation or one
of its subsidiaries shall cease and the termination of such individual's service
is for cause, the option shall automatically terminate upon first notification
to the option holder of such termination of services, unless the Committee
determines otherwise, and such option shall automatically terminate upon the
date of such termination of services for all shares which were not purchasable
upon such date. For purposes of this Section 7(c), "cause" is defined as a
determination by the Committee that the option holder (i) has committed a
felony, (ii) has engaged in an act or acts of deliberate and intentional
dishonesty resulting or intended to result directly or indirectly in improper
material gain to or personal enrichment of the individual at the Corporation's
expense, or (iii) has willfully disobeyed the Corporation's appropriate rules,
instructions or orders, and such willful disobeyance has continued for a period
of 10 days following notice thereof from the Corporation.

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     In the event of the termination of the services of the holder of an option
because of Retirement, Early Retirement at the Corporation's request or
Disability, he may (unless such option shall have been previously terminated
pursuant to the provisions of the preceding paragraph or unless otherwise
provided in his option grant) exercise such option at any time prior to the
expiration of the option, (i) in the event of Disability or Retirement, to the
extent of the number of shares covered by such option, whether or not such
shares had become purchasable by him at the date of the termination of his
services and (ii) in the event of Early Retirement at the Corporation's request,
to the extent of the number of shares covered by such option at such time or
times as such option becomes purchasable by him in accordance with its terms.

     In the event of the death of an individual to whom an option has been
granted under the Plan, while he is performing services for the Corporation or a
subsidiary, the option theretofore granted to him (unless his option shall have
been previously terminated pursuant to the provisions of this Section 7(c) or
unless otherwise provided in his option grant) may, subject to the limitations
described in Section 7(f), be exercised by his Designated Beneficiary, by his
legatee or legatees of the option under his last will, or by his personal
representatives or distributees, at any time within a period of one year after
his death, but not after the expiration of the option, to the extent of the
remaining shares covered by his option whether or not such shares had become
purchasable by such an individual at the date of his death. In the event of the
death of an individual (i) during the 30-day period, or the 90-day period, as
applicable, following termination of his services or (ii) following termination
of his services by reason of Retirement, Early Retirement at the Corporation's
request or Disability, then the option (if not previously terminated pursuant to
the provisions of this Section 7(c)) may be exercised during the one-year period
following termination of his services or during the remaining term of the
option, respectively, but not after the expiration of the option, by his
Designated Beneficiary, by his legatee under his last will, or by his personal
representative or distributee, but only to the extent of the number of shares
purchasable by such Participant pursuant to the provisions of Section 7(d) at
the date of termination of his services.

     In the event of the termination of the services of the holder of an option,
other than by reason of Retirement, Early Retirement at the Corporation's
request, Disability or death, he may (unless his option shall have been
previously terminated pursuant to the provisions of this Section 7(c) or unless
otherwise provided in his option grant) exercise his option at any time within
30 days after such termination, if such option was granted prior to February 8,
2001, or within 90 days after such termination, if such option was granted on or
after February 8, 2001, or such longer period as determined by the Committee,
but not after the expiration of the option, to the extent of the number of
shares covered by his option which were purchasable by him at the date of the
termination of his services, and such option shall automatically terminate upon
the date of such termination of services for all shares which were not
purchasable upon such date.

     (d)  Notwithstanding the foregoing provisions, the Committee may determine,
in its sole discretion, in the case of any termination of services, that the
holder of an option may exercise such option to the extent of some or all of the
remaining shares covered thereby whether or not such shares had become
purchasable by such an individual at the date of the

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termination of his services and may exercise such option at any time prior to
the expiration of the original term of the option. Options granted under the
Plan shall not be affected by any change of relationship with the Corporation so
long as the holder continues to be an employee, consultant or independent
contractor of the Corporation or of a subsidiary. The Committee, in its absolute
discretion, may determine all questions of whether particular leaves of absence
constitute a termination of services. Nothing in the Plan or in any option
granted pursuant to the Plan shall confer on any individual any right to
continue in the employ or other service of the Corporation or any other person
or interfere in any way with the right of the Corporation or any other person to
terminate his employment or other services at any time.

     (e)  The date of grant of an option pursuant to the Plan shall be the date
specified by the Committee at the time it grants such option, provided that such
date shall not be prior to the date of such action by the Committee and that the
price shall be determined in accordance with Section 7(a) on such date. The
Committee shall promptly notify a grantee of an award and a written option grant
shall promptly be duly executed and delivered by or on behalf of the
Corporation.

     (f)  Notwithstanding any contrary waiting period, installment period or
other limitation or restriction in any option agreement or in the Plan, in the
event of a Change in Control, each option outstanding under the Plan shall
thereupon become exercisable at any time during the remaining term of the
option, but not after the term of the option, to the extent of the number of
shares covered by the option, whether or not such shares had become purchasable
by the Participant thereunder immediately prior to such Change in Control, by
the holder of the option.

     (g)  Anything in the Plan to the contrary notwithstanding, during the
90-day period from and after a Change in Control (x) an optionee (other than an
optionee who initiated a Change in Control in a capacity other than as an
officer or a director of the Corporation) who is an executive officer or a
director of the Corporation (within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder) with respect to an
option that was granted at least six months prior to the date of exercise
pursuant to this sentence and is unaccompanied by a stock appreciation right and
(y) any other optionee who is not an executive officer or a director with
respect to an option that is unaccompanied by a stock appreciation right shall,
unless the Committee shall determine otherwise at the time of grant, have the
right, in lieu of the payment of the full purchase price of the shares of Common
Stock being purchased under the option and by giving written notice to the
Corporation, to elect (within such 90-day period) to surrender all or part of
the option to the Corporation and to receive in cash an amount equal to the
amount by which the amount determined pursuant to Section 7(h) hereof on the
date of exercise (determined as if the optionee had exercised a limited stock
appreciation right on such date) shall exceed the purchase price per share under
the option multiplied by the number of shares of Common Stock granted under the
stock option as to which the right granted by this sentence shall have been
exercised. Such written notice shall specify the optionee's election to purchase
shares granted under the option or to receive the cash payment referred to in
the immediately preceding sentence.

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     (h)  For the purpose of determining the amount payable under Section 7(g)
hereof, the fair market value of the Common Stock will be equal to the higher of
(a) the highest Fair Market Value of the Common Stock during the 90-day period
ending on the date the limited stock appreciation right is exercised and (b)
whichever of the following is applicable:

          (1) the highest per share price paid in any tender or exchange offer
          which is in effect at any time during the 90 calendar days preceding
          the exercise of the limited right;

          (2) the fixed or formula price for the acquisition of shares of Common
          Stock in a merger or similar agreement approved by the Corporation's
          shareholders or Board, if such price is determinable on the date of
          exercise; and

          (3) the highest price per share paid to any shareholder of the
          Corporation in a transaction or group of transactions giving rise to
          the exercisability of the limited right.

     (i)  Notwithstanding the foregoing provisions, the optionee's employment or
other contract with the Corporation may provide that upon termination of his
employment or other services for other than cause or for "good reason" (as
defined in his contract), all stock options shall become immediately
exercisable.

8.   Withholding Taxes

     In connection with the transfer of shares of Common Stock as a result of
the exercise of an option, the Corporation (a) shall not issue a certificate for
such shares until it has received payment from the Participant of any
Withholding Tax in cash or by the retention or acceptance upon delivery thereof
by the Participant of shares of Common Stock sufficient in Fair Market Value to
cover the amount of such Withholding Tax and (b) shall have the right to retain
or sell without notice, or to demand surrender of, shares of Common Stock in
value sufficient to cover any Withholding Tax. The Corporation shall have the
right to withhold from any cash amounts due from the Corporation to the award
recipient pursuant to the Plan an amount equal to the Withholding Tax. In either
case, the Corporation shall make payment (or reimburse itself for payment made)
to the appropriate taxing authority of an amount in cash equal to the amount of
such Withholding Tax, remitting any balance to the Participant. For purposes of
this Section 8, the value of shares of Common Stock so retained or surrendered
shall be equal to the Fair Market Value of such shares on the date that the
amount of the Withholding Tax is to be determined (the "Tax Date"), and the
value of shares of Common Stock so sold shall be the actual net sale price per
share (after deduction of commissions) received by the Corporation.

     Notwithstanding the foregoing, the Participant may elect, subject to
approval by the Committee, to satisfy the obligation to pay any Withholding Tax,
in whole or in part, by providing the Corporation with funds sufficient to
enable the Corporation to pay such Withholding Tax or by having the Corporation
retain or accept upon delivery thereof by the Participant shares of Common Stock
sufficient in Fair Market Value to cover the amount of

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such Withholding Tax. Each election by a Participant to have shares retained or
to deliver shares for this purpose must be in writing and made on or prior to
the Tax Date.

9.   Transferability and Ownership Rights of Options

     No option granted under the Plan shall be transferable otherwise than
pursuant to the designation of a Designated Beneficiary or by will, descent or
distribution, and an option may be exercised, during the lifetime of the holder
thereof, only by him. The holder of an option shall have none of the rights of a
shareholder until the shares subject thereto shall have been registered in the
name of such holder on the transfer books of the Corporation.

10.  Adjustments Upon Changes in Capitalization

     Except as otherwise provided in Section 7(f), in the event of any changes
in the outstanding stock of the Corporation by reason of stock dividends, stock
splits, recapitalizations, mergers, consolidations, combinations or exchanges of
shares, split-ups, split-offs, spin-offs, liquidations or other similar changes
in capitalization, or any distribution to shareholders other than cash
dividends, the Committee shall make such adjustments, if any, in light of the
change or distribution as the Committee in its sole discretion shall determine
to be appropriate, in the number and class of shares or rights subject to
options and the exercise prices of the options. In the event of any such change
in the outstanding Common Stock of the Corporation, the aggregate number and
class of shares available under the Plan and the maximum number of shares as to
which options may be granted shall be appropriately adjusted by the Committee.

11.  Amendment and Termination

     Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no grants of options shall be made
after, December 11, 2008; provided, however, that such termination shall have no
effect on grants of options made prior thereto. The Board of Directors of the
Corporation may terminate the Plan, or modify or amend the Plan in such respects
as it shall deem advisable in order to conform to any change in any law or
regulation applicable thereto, or in other respects; provided, however, that as
specified in Section 7(a) of the Plan, any amendment or repeal of the applicable
provisions of such Section requires the affirmative vote of the holders of a
majority of shares of the Corporation present at a duly convened shareholders'
meeting in person or by proxy and entitled to vote thereon. The amendment or
termination of the Plan shall not, without the consent of the recipient of any
award under the Plan, alter or impair any rights or obligations under any award
theretofore granted under the Plan.

12.  Effectiveness of the Plan

     The Plan shall become effective on December 11, 1998. The Committee may in
its discretion authorize the granting of options, the issuance or exercise of
which shall be expressly subject to the condition that a registration statement
under the Securities Act of 1933, as amended, with respect to such shares shall
have become effective.

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Adopted by the Board on December 11, 1998. Plan amended and restated by the
Board on May 6, 1999, July 27, 2000, February 8, 2001, April 24, 2001, on
September 6, 2001 and on February 13, 2002.

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                         ADDENDUM TO THE SONOSITE, INC.
                   1998 Nonofficer Employee Stock Option Plan

                             FOR RESIDENTS OF SPAIN

This Addendum to the SonoSite, Inc. 1998 Nonofficer Employee Stock Option Plan
(the "Addendum") shall have application only to Participants who are employees
of SonoSite Iberica, S.L. and residents of Spain. Capitalized terms contained
herein shall have the meanings given to them in the Plan, unless otherwise
provided in this Addendum. Notwithstanding any provision to the contrary in the
Plan and to the extent required by applicable law, the following terms and
conditions shall apply to all awards granted to residents of Spain, who are
employees of SonoSite Iberica, S.L., until such time as the Board determines
otherwise.

Exercise of Options:  Vesting

(a)        Except as otherwise determined by the Committee, options will vest
           and become exercisable in connection with the following schedule:

           ---------------------------------------- ----------------------------
                 Date on and After Which Option Is    Portion of Total Option
                          Exercisable                   Which Is Exercisable
           ---------------------------------------- ----------------------------
            Two years and one day after the Grant              50%
           ---------------------------------------- ----------------------------
            Each One-Year Anniversary of Date of         an additional 25%
            Grant thereafter
           ---------------------------------------- ----------------------------

(b)        Notwithstanding the preceding sentence, an option shall become one
           hundred percent (100%) vested upon termination of services due to
           Disability or Retirement. If a Participant terminates services due to
           Early Retirement at the Company's request, the Participant may
           exercise, at any time before the Expiration Date, the portion of his
           option that was vested on the date of termination. If the Participant
           dies within 90 days after terminating services with the Company or
           after terminating services due to Retirement, Early Retirement at the
           Company's request or Disability, the option may be exercised in
           accordance with the terms and provisions contained in the Plan.

                                      -12-

<PAGE>

                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                                  SUMMARY PAGE

<TABLE>
<CAPTION>
                                                                                                        Date of
Date of                                                                                                 Shareholder
Board Action                 Action                       Section/Effect of Amendment                   Approval
<S>                          <C>                          <C>                                           <C>
December 11, 1998            Initial Plan Adoption                                                      Not required

May 6, 1999                  Amendment and Restatement    Various Sections amended.                     Not required
                             of Plan

July 27, 2000                Amendment and Restatement    Section 3, Stock Subject to Plan - the        Not required
                             of Plan                      number of shares of common stock
                                                          reserved for issuance under the Plan
                                                          was increased from 600,000 shares to
                                                          1,000,000 shares of common stock

February 8, 2001             Amendment and Restatement    Section 3, Stock Subject to Plan - the        Not required
                             of Plan                      number of shares of common stock
                                                          reserved for issuance under the Plan was
                                                          increased from 1,000,000 shares to
                                                          1,500,000 shares of common stock.

                                                          Section 7(c), Option Grants - certain
                                                          options granted on or after February 8,
                                                          2001, may be exercised for a 90-day period
                                                          after termination.

April 24, 2001               Amendment and Restatement    Section 6, Eligibility - clarification        Not required
                             of Plan                      of the meaning of the term "executive
                                                          officers."

                                                          Section 7(g) - certain references to
                                                          "officer" changed to "executive officer."

September 6, 2001            Amendment and Restatement    Sections 7(a) and 11 amended to provide       Not required.
                             of Plan                      that stock options cannot be granted
                                                          with an exercise price that is less than
                                                          100% of fair market value on the date of
                                                          grant and that the exercise price of any
</TABLE>

                                      -13-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                    Date of
Date of                                                                                             Shareholder
Board Action                 Action                       Section/Effect of Amendment               Approval
<S>                          <C>                          <C>                                       <C>
                                                          stock option cannot be reduced without
                                                          the approval of the shareholders. These
                                                          amendment were made in accordance with
                                                          the terms of that certain Share Purchase
                                                          Agreement dated August 8, 2001, among
                                                          SonoSite, Inc. and the purchasers named
                                                          on Schedule A thereto.

February 13, 2002            Amendment and Restatement    Sections 7(b) amended to provide for      Not required.
                             of Plan                      vesting of stock options granted to
                                                          employees of the Spanish subsidiary
                                                          that are residents of Spain and to
                                                          attach Addendum 1 setting forth in
                                                          forth in more detail such vesting.
</TABLE>

                                      -14-<PAGE>
                                                                    Exhibit 10.1

                               [GRAPHIC] Coinstar

                  OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN

                            Effective January 1, 2002

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                      <C>
ARTICLE 1   INTRODUCTION ..............................................................    1

     1.01   Establishment and Name of Plan ............................................    1

ARTICLE 2   DEFINITIONS ...............................................................    2

     2.01   Account Balance ...........................................................    2
     2.02   Board .....................................................................    2
     2.03   Committee .................................................................    2
     2.04   Code ......................................................................    2
     2.05   Company ...................................................................    2
     2.06   Compensation ..............................................................    2
     2.07   Compensation Deferral Agreement ...........................................    3
     2.08   Compensation Deferral Date ................................................    3
     2.09   Compensation Deferral Period ..............................................    3
     2.10   Deferred Compensation Account .............................................    3
     2.11   Determination Date ........................................................    3
     2.12   Disability ................................................................    4
     2.13   Distribution Date .........................................................    4
     2.14   Effective Date ............................................................    4
     2.15   Elective Deferral Amounts .................................................    4
     2.16   Forfeiture ................................................................    4
     2.17   Outside Director ..........................................................    4
     2.18   Participant ...............................................................    4
     2.19   Participating Company .....................................................    4
     2.20   Plan ......................................................................    4
     2.21   Plan Year .................................................................    5
     2.22   Related Company ...........................................................    5

ARTICLE 3   ELIGIBILITY AND PARTICIPATION .............................................    6

     3.01   Eligibility ...............................................................    6
     3.02   Participation for Purposes of Making Deferrals ............................    6
     3.03   Termination of Participation ..............................................    6

ARTICLE 4   ELECTIVE DEFERRALS ........................................................    7

     4.01   Participant's Accounts ....................................................    7
     4.02   Elective Deferral Amounts .................................................    7
     4.03   Deemed Investment Amounts Credited to Deferred Compensation Accounts ......    9
     4.04   Allocation of Accrued Earnings and Losses of Deemed Investments ...........    9

ARTICLE 5   DISTRIBUTION OF BENEFITS ..................................................   10

     5.01   In General ................................................................   10
</TABLE>

<PAGE>

                               Table of Contents
                                  (Continued)

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
     5.02   Time of Distribution ........................................    10
     5.03   Amount and Method of Distribution of Benefits ...............    10
     5.04   Committee Decision ..........................................    11
     5.05   Designation of Beneficiaries ................................    11

ARTICLE 6   FINANCING AND UNFUNDED STATUS ...............................    12

     6.01   Costs Borne by the Company and any Participating Company ....    12
     6.02   Unfunded Plan ...............................................    12
     6.03   Trust .......................................................    12

ARTICLE 7   FORFEITURE ..................................................    13

     7.01   Forfeitures .................................................    13

ARTICLE 8   ADMINISTRATION ..............................................    14

     8.01   General Administration ......................................    14
     8.02   Committee Procedures ........................................    14
     8.03   Indemnification of Committee Members ........................    14

ARTICLE 9   CLAIM PROCEDURES ............................................    15

     9.01   Presentation of Claim .......................................    15
     9.02   Notification of Decision ....................................    15
     9.03   Review of a Denied Claim ....................................    15
     9.04   Decision on Review ..........................................    16
     9.05   Legal Action ................................................    16

ARTICLE 10  AMENDMENT AND TERMINATION OF PLAN ...........................    17

     10.01  Amendment and Termination ...................................    17
     10.02  Termination of Participation by a Participating Company .....    17

ARTICLE 11  GENERAL PROVISIONS ..........................................    18

     11.01  Limitation of Rights ........................................    18
     11.02  No Assignment or Alienation of Benefits .....................    18
     11.03  Successors ..................................................    18
     11.04  Governing Law ...............................................    18
     11.05  Entire Agreement ............................................    18
     11.06  Unsecured General Creditor ..................................    19
     11.07  Participating Company's Liability ...........................    19
     11.08  Captions ....................................................    19
     11.09  Notice ......................................................    19
     11.10  Validity ....................................................    20
     11.11  Incompetent .................................................    20
     11.12  Furnishing Information ......................................    20
     11.13  Court Order .................................................    20
</TABLE>

                                       ii

<PAGE>

                                   ARTICLE 1

                                  INTRODUCTION

1.01     Establishment and Name of Plan

         This Coinstar, Inc. Outside Directors' Deferred Compensation Plan is
         established, effective January 1, 2002, as an unfunded plan maintained
         to provide elective deferred compensation to Outside Directors of
         Coinstar, Inc. or any Participating Company (as defined below). It is
         intended that the Plan will aid in attracting and retaining Outside
         Directors of exceptional ability.

<PAGE>

                                    ARTICLE 2

                                   DEFINITIONS

Each following word, term and phrase shall have the following respective
meanings whenever such word, term or phrase is capitalized and used in any
Article of this Plan unless the context clearly indicates otherwise:

2.01     Account Balance

         "Account Balance" means for each Participant the sum of the balances in
         the Participant's Deferred Compensation Account. A Participant's
         Account Balance shall be utilized solely as a device for the
         determination and measurement of the amounts to be paid as benefits to
         a Participant or his or her beneficiary pursuant to the Plan. A
         Participant shall not have at any time any interest in or to such
         Account Balance or in any deemed investment thereof. A Participant's
         Account Balance shall not constitute or be treated as a trust or trust
         fund of any kind.

2.02     Board

         "Board" means the Board of Directors of the Company.

2.03     Committee

         "Committee" means the Committee appointed by the Board to administer
         the Plan pursuant to Article 8 hereof. If no such Committee has been
         appointed, then the term Committee shall mean the Compensation
         Committee of the Board.

2.04     Code

         "Code" means the Internal Revenue Code of 1986, as amended from time to
         time, and any regulations promulgated thereunder.

2.05     Company

         "Company" means Coinstar, Inc., a Delaware Corporation and any business
         organization or corporation into which Coinstar, Inc. may be merged or
         consolidated or by which it may be succeeded.

2.06     Compensation

         "Compensation" means annual retainer and fees for attendance at board
         and various committee meetings paid to an Outside Director by the
         Participating Company during the calendar year with respect to duties
         performed as a member of the board of the Participating Company.
         Compensation, for purposes of this Plan, may include any new form of
         cash remuneration or stock equivalency paid by the Participating
         Company to an

                                       2

<PAGE>

         Outside Director that is explicitly designated as deferrable pursuant
         to this Plan by the Compensation Deferral Agreement form approved by
         the Committee. Compensation does not include expense reimbursement or
         imputed compensation.

2.07     Compensation Deferral Agreement

         "Compensation Deferral Agreement" means the written agreement to defer
         Compensation contemplated in Articles 3 and 4 hereof executed by the
         Participant and the Company or any Participating Company.

2.08     Compensation Deferral Date

         "Compensation Deferral Date" means the Effective Date in the initial
         Plan Year, and January 1, in each calendar year thereafter.

2.09     Compensation Deferral Period

         "Compensation Deferral Period" means the period beginning on January 1
         and ending on the following December 31 (the calendar year), or, for
         the initial Plan Year, the period beginning on the Effective Date and
         ending on December 31.

2.10     Deferred Compensation Account

         "Deferred Compensation Account" means, for each Participant, the
         separate book reserve account (and any sub-accounts or parts thereof)
         established by the Company and any Participating Company pursuant to
         Article 4 of this Plan to which shall be credited (added) the
         Participant's share of any Elective Deferral Amounts and from which any
         distributions, and any Forfeitures shall be subtracted; and which shall
         be adjusted for allocation of accrued earnings and losses thereon as
         described in Section 4.04 hereof. All amounts, which are credited to
         such Deferred Compensation Account, are credited solely for computation
         purposes and are at all times general assets of the Company and any
         Participating Company and subject to the claims of the general
         creditors of the Company and any Participating Company. A Participant's
         Deferred Compensation Account shall be utilized solely as a device for
         the determination and measurement of the amounts to be paid as deferred
         compensation benefits to the Participant or his or her beneficiary
         pursuant to the Plan. A Participant shall not have at any time any
         interest in or to such Deferred Compensation Account or in any deemed
         investment thereof. A Participant's Deferred Compensation Account shall
         not constitute or be treated as a trust or trust fund of any kind.

2.11     Determination Date

         "Determination Date" means the date on which the Committee determines
         the value of a Deferred Compensation Account. The Committee shall
         determine the value of each Deferred Compensation Account on the last
         business day of each month, and at such other times as it may, in its
         absolute discretion, determine.

                                       3

<PAGE>

2.12     Disability

         "Disability" shall mean the total and permanent disability of a
         Participant as defined in the Company long-term disability plan and as
         determined by the Committee.

2.13     Distribution Date

         "Distribution Date" means the date determined by the Committee within a
         reasonably practicable time period, but not later than 90 days after
         the Determination Date, which next follows the Participant's
         termination of board membership with the Participating Company.

2.14     Effective Date

         "Effective Date" of the Plan means January 1, 2002.

2.15     Elective Deferral Amounts

         "Elective Deferral Amounts" means the amount deferred from Compensation
         by a Participant as described in Section 4.02.

2.16     Forfeiture

         "Forfeiture" means the portion of a Participant's Account Balance that
         is forfeited under Section 5.03(b)(iii) hereof.

2.17     Outside Director

         "Outside Director" means a member of the board of any Participating
         Company who is not an employee of any Participating Company.

2.18     Participant

         "Participant" means any Outside Director who has elected to make
         deferrals under this Plan.

2.19     Participating Company

         "Participating Company" means the Company and any Related Company
         selected by the Company to participate in the Plan.

2.20     Plan

         "Plan" means the Coinstar, Inc. Outside Directors' Deferred
         Compensation Plan as established and set forth herein (together with
         any and all supplements hereto), and as amended from time to time.

                                       4

<PAGE>

2.21     Plan Year

         "Plan Year" means the twelve (12) consecutive month period beginning on
         each January 1 and ending on each following December 31 thereafter (the
         calendar year).

2.22     Related Company

         "Related Company" shall mean any corporation that, together with the
         Company, is treated as a single employer under Code Section 414(b),
         (c), (m) or (o).

                                       5

<PAGE>
                                    ARTICLE 3

                          ELIGIBILITY AND PARTICIPATION

3.01     Eligibility

         An Outside Director shall become eligible to participate by entering
         into a Compensation Deferral Agreement under Section 3.02 below. The
         Committee shall notify Outside Directors about the Plan and the
         benefits provided under it.

3.02     Participation for Purposes of Making Deferrals

         To the extent an Outside Director wishes to make a deferral election
         under the Plan, such Outside Director shall be permitted to elect to
         defer a portion of his or her Compensation as set forth in Section 4.02
         of the Plan with respect to any Compensation Deferral Period under
         Article 4 hereof by completing and delivering to the Committee a duly
         executed Compensation Deferral Agreement as provided in Section 4.02
         hereof.

3.03     Termination of Participation

         An Outside Director who ceases to serve on the board of a Participating
         Company shall cease participating as to new deferrals with respect to
         that Participating Company immediately.

                                       6

<PAGE>
                                    ARTICLE 4

                               ELECTIVE DEFERRALS

4.01     Participant's Accounts

         The Company shall establish and maintain for each Participant or former
         Participant a Deferred Compensation Account for the purpose of
         measuring and determining amounts payable under this Plan. The Company
         shall maintain such sub-accounts within such Accounts as it determines
         to be necessary for the proper administration of the Plan. The
         provisions of this Article 4 shall govern such Deferred Compensation
         Account.

4.02     Elective Deferral Amounts

         The provisions of this Section govern elective deferrals of
         Compensation by Participants under the Plan.

         (a)      Elective Deferrals Amounts.  The following provisions apply to
                  --------------------------
                  the elective deferral of Compensation by Participants under
                  the Plan.

                  (i)      Deferral Elections by Participants.  With respect to
                           ----------------------------------
                           a Compensation Deferral Period, a Participant may
                           make an election at any time during the period
                           beginning thirty (30) days prior to the Compensation
                           Deferral Date and ending ten (10) days prior to the
                           Compensation Deferral Date on which such Compensation
                           Deferral Period begins to defer a specified
                           percentage of his or her Compensation which would
                           otherwise be payable by the Company or any other
                           Participating Company to the Participant during the
                           Compensation Deferral Period beginning on such
                           Compensation Deferral Date. Any such election shall
                           be made on a Compensation Deferral Agreement, which
                           is duly executed by the Participant, and which is
                           delivered by such Participant to the Committee before
                           such Compensation Deferral Date and may not be
                           revoked, changed or modified for and during the
                           applicable Compensation Deferral Period, except as
                           otherwise provided in Section 4.02 below. Such
                           Compensation Deferral Agreement must be accepted by
                           the Committee to be valid.

                  (ii)     Deferral Elections by Certain New Participants.
                           ----------------------------------------------
                           Notwithstanding paragraph (i) immediately above, an
                           Outside Director who first becomes eligible to
                           participate in the Plan during the Compensation
                           Deferral Period may make an election no later than
                           thirty (30) days following the date such Outside
                           Director first becomes eligible to participate in the
                           Plan to defer a specified percentage of the
                           Compensation which would otherwise be earned by such
                           Outside Director and be payable by the Company or any
                           other Participating Company after the later of (i)
                           the date the Outside Director first becomes eligible
                           to participate in the Plan or (ii) the date

                                       7

<PAGE>

             such Compensation Deferral Agreement is received by the Committee
             and during the remainder of the Compensation Deferral Period. Any
             such election shall be made on a Compensation Deferral Agreement
             which is duly executed by the Outside Director and which is
             delivered by such Outside Director to the Committee no later than
             thirty (30) days following the date the Outside Director first
             becomes eligible to participate in the Plan, and may not be
             revoked, changed or modified for and during the applicable
             Compensation Deferral Period, and the provisions of Subsection
             4.02(a)(iii) shall apply to any such election. If such Outside
             Director does not make any such election, such Outside Director may
             make an election under Subsection 4.02(a) with respect to the next
             Compensation Deferral Period (or later Compensation Deferral
             Periods) pursuant to the applicable provisions, if he or she is
             eligible to participate in the Plan during such Compensation
             Deferral Period(s).

     (iii)   Continuation and Irrevocability of Election. Any election by
             -------------------------------------------
             a Participant pursuant to Subsection 4.02(a)(i) or (ii) and any
             subsequent election will continue (and may not be modified,
             altered, or changed in any way) until the earliest of:

             (A)  if the Participant makes a new deferral election, the first
                  day of the next Compensation Deferral Period following such
                  election,

             (B)  the Participant is no longer designated as eligible to
                  participate in the Plan,

             (C)  the Participant ceases to serve on the board of the
                  Participating Company, or

             (D)  the Plan is amended or terminated such that the Plan no
                  longer permits deferrals of Compensation.

                  A Participant's Compensation Deferral Agreement shall remain
                  in effect for all subsequent Compensation Deferral Periods
                  until the Participant executes a new Compensation Deferral
                  Agreement. Any new Compensation Deferral Agreement shall
                  become effective the first day of the Compensation Deferral
                  Period that next follows the date of the new Compensation
                  Deferral Agreement.

     (iv)    Maximum Deferral Commitments. For each Plan Year, the maximum
             ----------------------------
             percentage of Compensation that a Participant may elect to defer
             is 100%. Any otherwise required withholding shall be made prior
             to the deferral of Compensation.

(b)  Vesting. A Participant shall at all times be one hundred percent (100%)
     -------
     vested in his or her Deferred Compensation Account.

                                        8

<PAGE>

          (c)  Withholding and Crediting of Elective Deferral Amounts. The
               ------------------------------------------------------
               Company or any Participating Company shall withhold the specified
               percentage of amounts deferred by the Participant hereunder from
               the Compensation, which is otherwise payable to the Participant.
               The Committee shall credit amounts equal to such withheld amounts
               to the Participant's Deferred Compensation Account at the end of
               each month.

4.03      Deemed Investment Amounts Credited to Deferred Compensation Accounts

          Solely as a device to measure amounts payable to Participants, former
          Participants, or beneficiaries hereunder, the Committee shall
          establish uniform and nondiscriminatory rules consistent with this
          Section for the treatment of amounts credited to a Participant's
          Deferred Compensation Account based on the return of a set of
          investment funds designated by the Committee. No investment of such
          amounts is required. The Committee shall retain the discretion to
          invest all amounts credited to a Participant's Deferred Compensation
          Account under this Plan as it deems appropriate. The Committee may, in
          its sole discretion, permit Participants to designate deemed
          investment of amounts credited to a Participant's Deferred
          Compensation Account among investment funds designated by the
          Committee and to make transfers among such funds. In no event shall a
          Participant's designated deemed investment in a fund be considered or
          construed in any manner, as an actual investment in any such fund, and
          in the event that the Committee, in its own discretion, decides to
          invest funds in any or all of the funds, no Participant shall have any
          rights in or to such investments themselves.

4.04     Allocation of Accrued Earnings and Losses of Deemed Investments

          Solely as a device to measure amounts payable to Participants, former
          Participants, or beneficiaries hereunder, the Committee shall
          establish uniform and nondiscriminatory rules consistent with this
          Section to determine accrued income, gains and losses from the
          investments of Deferred Compensation Accounts deemed to be made
          pursuant to Section 4.03 hereof to be allocated among Participant
          Account Balances. Any accrued earnings and losses shall be allocated
          and credited to a Participant's Deferred Compensation Account on a
          monthly basis.

                                       9

<PAGE>
                                    ARTICLE 5

                            DISTRIBUTION OF BENEFITS

5.01   In General

       The provisions of this Article 5 govern the distribution of amounts
       payable under this Plan. A Participant whose board membership with the
       Participating Companies terminates for any reason shall be entitled to
       distribution of benefits pursuant to this Article, subject to the
       provisions of Article 7.

5.02   Time of Distribution

       The Company shall commence distribution of benefits beginning with the
       Distribution Date immediately following the Participant's termination
       of board membership with the Participating Companies for any reason
       (including retirement, death or Disability); provided, however that
                                                    --------  -------
       benefits shall be valued and paid pursuant to the provisions of Section
       5.03 hereof.

5.03   Amount and Method of Distribution of Benefits

       A Participant whose board membership with the Participating Companies
       terminates shall be entitled to receive a distribution of the balance
       credited to his or her Deferred Compensation Account as of the
       Determination Date. Distribution of such deferred compensation benefits
       to a former Participant under this Plan may be made by the Company on
       behalf of the relevant Participating Company, or the Participating
       Company itself may distribute such benefits, as directed by the
       Committee in its sole discretion as follows:

       (a)   Termination of Board Membership.
             -------------------------------

             In the event a Participant's board membership terminates for
             any reason, including (without limitation) death or
             Disability, then the Participant's Account Balance shall be
             paid to the Participant (and after the Participant's death, to
             his or her beneficiary). Payment shall be made in the form of
             a single lump sum payment on the Distribution Date.

       (b)   Early Withdrawals.
             -----------------

             (i)   A Participant may elect in a Compensation Deferral
                   Agreement to withdraw all or any portion of the amount
                   deferred, including any earnings credited thereon, pursuant
                   to that Compensation Deferral Agreement as of a date
                   specified in the election. Such date shall not be sooner
                   than five (5) years after the date the compensation
                   Deferral Period commences.

                                       10

<PAGE>

              (ii)   Payment. The amount payable under subparagraph (i) above
                     -------
                     shall be paid in a lump sum within ninety (90) days
                     following the beginning of the year in which the withdrawal
                     was elected to be made.

              (iii)  Acceleration of Distributions. A Participant may elect to
                     -----------------------------
                     receive a lump sum distribution of his or her entire
                     Account Balance at any time. However, any such election to
                     receive an early distribution shall be subject to a ten
                     percent (10%) penalty of the Participant's Account Balance,
                     which amount shall be deducted from the distributed amounts
                     and forfeited by the Participant. The amount payable under
                     this section shall be paid in a lump sum within ninety (90)
                     days following receipt of the request and shall be charged
                     to the Participant's Account as a distribution. The 10%
                     penalty amount of the Account Balance shall be permanently
                     forfeited and the Participant shall not be eligible to
                     participate for the remainder of the Plan Year and the next
                     following Plan Year.

5.04     Committee Decision

         Any decision to be made under this Article 5 with respect to the
         distribution of benefits with respect to a Participant or former
         Participant under this Plan shall be made by the Committee, but such
         Participant shall exclude himself therefrom for purposes of those
         decisions if such Participant is a member of the Committee.

5.05     Designation of Beneficiaries

         A Participant may elect to designate a beneficiary(ies) to receive any
         benefits payable under this Plan upon the Participant's death. In the
         event of a new beneficiary designation, all beneficiary designations
         previously filed shall be cancelled. No designation or change in
         designation of a beneficiary shall be effective until received and
         acknowledged in writing by the Committee or its designated agent. The
         Participant may change such designation from time to time and the last
         written designation delivered to the Committee prior to the
         Participant's death will control. If the Participant fails to
         specifically designate a beneficiary, or such designation is invalid,
         or if no designated beneficiary survives the Participant, or if all
         designated beneficiaries who survive the Participant die before all
         payments are made, then the remaining payments shall be made to the
         Participant's surviving spouse if such spouse is then living; if such
         spouse is not living, then to the executors or administrators of the
         estate of the Participant. If the Committee has any doubts as to the
         proper beneficiary to receive payment pursuant to this Plan, the
         Committee shall have the right, exercisable in its discretion to cause
         the Participating Companies to withhold such payments until the matter
         is resolved to the Committee's satisfaction.

                                       11

<PAGE>

                                    ARTICLE 6

                          FINANCING AND UNFUNDED STATUS

6.01   Costs Borne by the Company and any Participating Company

       The costs of the Plan shall be borne by the Participating Companies.

6.02   Unfunded Plan

       All benefits under the Plan shall be paid from the Company's general
       assets. Participants and their beneficiaries, heirs, successors, and
       assigns shall have no secured legal or equitable rights, interest or
       claims in or to any property or assets of the Company, nor shall they
       be beneficiaries of, or have any rights, claims or interests in any
       property or asset which may be acquired by the Company. The Company
       need not hold any assets in trust or as collateral security for the
       fulfilling of the obligations of the Company under this Plan. Any and
       all of the Company's assets and policies shall be, and remain, the
       general, unpledged, unrestricted assets of the Company. The Company's
       obligation under the Plan shall be that of an unfunded and unsecured
       promise to pay money in the future, and the Participants shall have the
       status of general unsecured creditors of the Company.

6.03   Trust

       At its sole discretion, the Company may establish one (1) or more
       trusts, with such trustees as the Board may approve, for the purpose of
       providing for the payment of benefits owed under the Plan. Although
       such a trust may be irrevocable, its assets shall be held for payment
       of all the Company's general creditors in the event of the Company's
       insolvency. To the extent any benefits provided under the Plan are paid
       from any such trust, the Company shall have no further obligation to
       pay them. If not paid from any trust, such benefits shall remain the
       obligation of the Company.

                                       12

<PAGE>
                                    ARTICLE 7

                                   FORFEITURE

7.01   Forfeitures

       Forfeitures may arise pursuant to Section 5.03(b) hereof. Forfeitures
       that arise under this Plan shall be subtracted (deleted) from a
       Participant's Account Balance and shall no longer be an obligation of
       any Company or Participating Company in any way.

                                       13

<PAGE>
                                    ARTICLE 8

                                 ADMINISTRATION

8.01   General Administration

       The Board shall appoint a Committee consisting of not less than three
       (3) persons to administer the Plan. Any member of the Committee may at
       any time be removed, with or without cause, and his or her successor
       appointed by the Board. Any vacancy caused by death, resignation or
       other reason shall be filled by the Board. The Committee shall be the
       plan administrator of the Plan and in general shall be responsible for
       the management and administration of the Plan. The Committee shall have
       full power and discretionary authority to administer the Plan in all of
       its details (including, without limitation, the discretionary authority
       to decide all claims for benefits and to construe and interpret the
       terms of the Plan), subject to applicable requirements of law. The
       Committee may approve amendments to the Plan, without prior approval or
       subsequent ratification by the Board, if the amendment: (i) does not
       significantly change the benefits provided under the Plan (except as
       required by a change in applicable law); (ii) does not significantly
       increase the costs of the Plan; or (iii) the amendment is intended to
       enable the Plan to remain in compliance with the requirements of the
       Code, or other applicable law, or to facilitate administration of the
       Plan. A duly authorized officer of the Company shall execute the
       amendment, evidencing the Company's adoption of the amendment.

       No member of the Committee who is an employee of the Company or any
       Participating Company, or Participant in this Plan, shall receive
       compensation for his or her services to the Plan. The Committee shall
       have such duties and powers as may be necessary to discharge its duties
       under this Plan. The fiscal records of the Plan shall be maintained on
       the basis of the Plan Year.

8.02   Committee Procedures

       The Committee may act at a meeting or in writing without a meeting. The
       Committee may adopt such by-laws and regulations, as it deems desirable
       for the conduct of its affairs. All decisions shall be made by majority
       vote. No member of the Committee who is at any time a Participant in
       this Plan shall vote in a decision of the Committee (whether in a
       meeting or by written action) made specifically and uniquely with
       respect to such member of the Committee or amount, payment, timing,
       form or other aspect of the benefits of such Committee member under
       this Plan.

8.03   Indemnification of Committee Members

       The Participating Companies shall indemnify and hold harmless each
       member of the Committee against any and all liability, claims, damages
       and expense (including all expenses reasonably incurred in such
       Committee member's defense in the event that the Company or any
       Participating Company fails to provide such defense upon such Committee
       member's written request) which the Committee member may incur while
       acting in good faith in the administration of the Plan.

                                       14

<PAGE>

                                    ARTICLE 9

                                CLAIM PROCEDURES

9.01 Presentation of Claim

     Any Participant or beneficiary of a deceased Participant (such Participant
     or beneficiary being referred to below as a "Claimant") may deliver to the
     Committee a written claim for a determination with respect to the amounts
     distributable to such Claimant from the Plan. The Committee shall have the
     discretionary authority to decide all claims for benefits and to construe
     and interpret the terms of the Plan.

9.02 Notification of Decision

     The Committee shall consider a Claimant's claim within a reasonable time,
     and shall notify the Claimant in writing:

     (a)  that the Claimant's requested determination has been made, and that
          the claim has been allowed in full; or

     (b)  that the Committee has reached a conclusion contrary, in whole or in
          part, to the Claimant's requested determination, and such notice must
          set forth in a manner calculated to be understood by the Claimant:

          (i)   the specific reason(s) for the denial of the claim, or any part
                of it;

          (ii)  specific reference(s) to pertinent provisions of the Plan upon
                which such denial was based;

          (iii) a description of any additional material or information
                necessary for the Claimant to perfect the claim, and an
                explanation of why such material or information is necessary;
                and

          (iv)  an explanation of the claim review procedure set forth in
                Section 9.03 below.

9.03 Review of a Denied Claim

     Within sixty (60) days after receiving a notice from the Committee that a
     claim has been denied, in whole or in part, a Claimant (or the Claimant's
     duly authorized representative) may file with the Committee a written
     request for a review of the denial of the claim. Upon filing of a written
     request for review, the Claimant (or the Claimant's duly authorized
     representative):

     (a)  may review pertinent documents;

     (b)  may submit written comments or other documents; and/or

     (c)  may request a hearing, which the Committee, in its sole discretion,
          may grant.

                                       15

<PAGE>

9.04 Decision on Review

     The Committee shall render it decision on review promptly, and not later
     than sixty (60) days after the filing of a written request for review of
     the denial, unless a hearing is held or other special circumstances require
     additional time, in which case the Committee's decision must be rendered
     within one hundred twenty (120) days after such date. Such decision must be
     written in a manner calculated to be understood by the Claimant, and it
     must contain:

     (a)  specific reason for the decision;

     (b)  specific reference(s) to the pertinent Plan provisions upon which the
          decision was based; and

     (c)  such other matters as the Committee deems relevant.

9.05 Legal Action

     A Claimant's compliance with the foregoing provisions of this Article 9 is
     a mandatory prerequisite to a Claimant's right to commence any legal action
     with respect to any claim for benefits under this Plan.

                                       16

<PAGE>

                                   ARTICLE 10

                        AMENDMENT AND TERMINATION OF PLAN

10.01 Amendment and Termination

      Generally, the Company shall have the right to amend or terminate the Plan
      by action of the Board at any time. However, no such amendment or
      termination shall adversely affect a benefit to which a Participant that
      is being paid out of the Plan at the time of amendment or termination or
      other beneficiary is entitled under Article 4 of the Plan to the date of
      such amendment or termination. A duly authorized officer of the Company
      shall execute the amendment, evidencing the Company's adoption of the
      amendment.

10.02 Termination of Participation by a Participating Company

      Although each Participating Company anticipates that it will continue in
      the Plan for an indefinite period of time, there is no guarantee that any
      Participating Company will continue its participation in the Plan.
      Accordingly, each Participating Company reserves the right to discontinue
      its participation or sponsorship of the Plan, and the Company reserves its
      right to terminate the Plan, at any time by appropriate action of its
      board of directors or duly appointed committee. Upon the termination of
      participation of any Participating Company (or upon termination of the
      Plan), the participation of the affected Participants shall terminate and
      his or her Account Balances shall be distributed in a lump sum as soon as
      practicable after such termination of participation or termination of the
      Plan.

                                       17

<PAGE>

                                   ARTICLE 11

                               GENERAL PROVISIONS

11.01 Limitation of Rights

      Neither the establishment of this Plan nor any amendment thereof, nor the
      payment of any benefits, will be construed as giving to any Participant,
      beneficiary, or other person any legal or equitable right against the
      Company or any Participating Company, except as provided herein. Neither
      the establishment of this Plan nor any amendment thereof, nor the payment
      of benefits, nor any action taken with respect to this Plan shall confer
      upon any person the right to continue service as an Outside Director of
      the Company, Participating Company or Related Company.

11.02 No Assignment or Alienation of Benefits

      The rights of a Participant, former Participant, beneficiary or any other
      person to payment of benefits under this Plan may not be assigned,
      transferred, anticipated, conveyed, pledged or encumbered except by will
      or the laws of descent or distribution; nor shall any such right be in any
      manner subject to levy, attachment, execution, garnishment or any other
      seizure under legal, equitable or other process for payment of any debts,
      judgments, alimony, or separate maintenance, or reached or transferred by
      operation of law in the event of bankruptcy, insolvency or otherwise;
      provided, however, that a Participant shall have the right to designate in
      --------  -------
      writing and in accordance with the provisions of Section 5.05 hereof
      primary and contingent beneficiaries to receive benefit payments
      subsequent to the death of the Participant.

11.03 Successors

      The provisions of this Plan shall be binding upon and inure to the benefit
      of the Participating Companies, their successors and assigns, and each
      Participant and his or her heirs, executors, administrators and legal
      representatives.

11.04 Governing Law

      The provisions of this Plan shall be construed and interpreted according
      to the internal laws of the State of Washington without regard to its
      conflicts of laws principles.

11.05 Entire Agreement

      This plan document together with any agreement or documents referred to
      herein represents the entire agreement between the Company, any
      Participating Company and any Participant in this Plan with respect to any
      interests in benefits payable under this Plan. This agreement supersedes
      any and all prior agreements between the Company and any Participant,
      whether such agreement or agreements were written or oral with respect to
      any interests in benefits payable under this Plan. Any amendment or
      modification to

                                       18

<PAGE>

      the terms of this Plan must be in writing and signed by an authorized
      officer of the Company. No Compensation Deferral Agreement shall in any
      way amend, alter or revise this Plan. In the event the terms of the
      Compensation Deferral Agreement or any other document or agreement or
      summary of this Plan conflict with the terms of the Plan as stated herein
      (or any amendments or supplements thereto), the terms of the Plan shall be
      controlling.

11.06 Unsecured General Creditor

      Participants and their beneficiaries, heirs, successors and assigns shall
      have no legal or equitable rights, interests or claims in any property or
      assets of a Company. For purposes of the payment of benefits under this
      Plan, any and all of a Company's assets shall be, and remain, the general,
      unpledged, unrestricted assets of the Company. A Company's obligation
      under the Plan shall be merely that of an unfunded and unsecured promise
      to pay money in the future.

11.07 Participating Company's Liability

      A Participating Company's liability for the payment of benefits shall be
      defined only by the Plan and the Compensation Deferral Agreement (to the
      extent not inconsistent with the Plan), as entered into between the
      Participating Company and a Participant. A Participating Company shall
      have no obligation to a Participant under the Plan except as expressly
      provided in the Plan and his or her Compensation Deferral Agreement (to
      the extent not inconsistent with the Plan).

11.08 Captions

      The captions of the articles, sections and paragraphs of this Plan are for
      convenience only and shall not control or affect the meaning or
      construction of any of its provisions.

11.09 Notice

      Any notice or filing required or permitted to be given to the Committee
      under this Plan shall be sufficient if in writing and hand-delivered, or
      sent by registered or certified mail, to the address below:

                             Compensation Committee
                                 Coinstar, Inc.
                              1800 114th Avenue SE
                               Bellevue, WA 98004

      Such notice shall be deemed given as of the date of delivery or, if
      delivery is made by mail, as of the date shown on the postmark on the
      receipt for registration or certification.

      Any notice or filing required or permitted to be given to a Participant
      under this Plan shall be sufficient if in writing and hand-delivered, or
      sent by mail, to the last known address of the Participant.

                                       19

<PAGE>

11.10 Validity

      In case any provision of this Plan shall be illegal or invalid for any
      reason, said illegality or invalidity shall not affect the remaining parts
      hereof, but this Plan shall be construed and enforced as if such illegal
      or invalid provision had never been inserted herein.

11.11 Incompetent

      If the Committee determines in its discretion that a benefit under this
      Plan is to be paid to a minor, a person declared incompetent or to a
      person incapable of handling the disposition of that person's property,
      the Committee may direct payment of such benefit to the guardian, legal
      representative or person having the care and custody of such minor,
      incompetent or incapable person, or the Committee may direct the payment
      of such benefit in such manner as the Committee considers advisable. Any
      payment of a benefit shall be a payment for the account of the Participant
      and the Participant's beneficiary, as the case may be, and shall be a
      complete discharge of any liability under the Plan for such payment
      amount.

11.12 Furnishing Information

      A Participant or his or her beneficiary will cooperate with the Committee
      by furnishing any and all information requested by the Committee and take
      such other actions as may be requested in order to facilitate the
      administration of the Plan and the payments of benefits hereunder,
      including but not limited to taking such physical examinations as the
      Committee may deem necessary.

11.13 Court Order

      The Committee is authorized to make any payments directed by court order
      in any action in which the Plan or the Committee has been named as a
      party. In addition, if a court determines that a spouse or former spouse
      of a Participant has an interest in the Participant's benefits under the
      Plan in connection with a property settlement or otherwise, the Committee,
      in its sole discretion, shall have the right, notwithstanding any election
      made by a Participant, to immediately distribute the spouse's or former
      spouse's interest in the Participant's benefits under the Plan to that
      spouse or former spouse. Any such distribution shall reduce the
      Participant's Account Balance and benefit under the Plan and shall
      completely discharge the Committee and the Participating Companies for any
      liability with respect to the portion of the Participant's benefit
      distributed.

                                       20

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed for and
on behalf of the Company by its duly authorized officers on this the 21st day
of November, 2001.

                                  COINSTAR, INC.

                                  By:    /s/ M. Carol Lewis
                                     -------------------------------------------
                                             M. Carol Lewis
                                  Title:  Corporate Secretary
                                        ----------------------------------------

ATTEST:

________________________________

                                       21

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