Document:

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                                                                    EXHIBIT 10.3

                                 SONOSITE, INC.

                     NONEMPLOYEE DIRECTOR STOCK OPTION PLAN

                 (As Amended and Restated on September 6, 2001)

ARTICLE I  PURPOSES

         The purposes of the Nonemployee Director Stock Option Plan for (the
"Plan") are to attract and retain the services of experienced and knowledgeable
nonemployee directors of SonoSite, Inc. (the "Corporation") and to provide an
incentive for such directors to increase their proprietary interests in the
Corporation's long-term success and progress.

ARTICLE II  SHARES SUBJECT TO THE PLAN

         Subject to adjustment in accordance with Article VI hereof, under the
Plan there are reserved for issuance upon the exercise of options 125,000 shares
of the Corporation's common stock ("Shares"). Such Shares may be authorized and
unissued Shares or previously outstanding Shares then held in the Corporation's
treasury. If any option or restricted stock granted under the Plan shall expire
or terminate for any reason, without having been exercised in full, the shares
subject thereto shall again be available for the purposes of issuance under the
Plan. If shares of restricted stock shall be forfeited and returned to the
Corporation such shares shall again be available for the purposes of issuance
under the Plan.

ARTICLE III  ADMINISTRATION OF THE PLAN

         The administrator of the Plan (the "Plan Administrator") shall be the
Board of Directors of the Corporation (the "Board"). Subject to the terms of the
Plan, the Plan Administrator shall have the power to construe the provisions of
the Plan, to determine all questions arising thereunder and to adopt and amend
such rules and regulations for the administration of the Plan as it may deem
desirable. No member of the Plan Administrator shall participate in any vote by
the Plan Administrator on any matter materially affecting the rights of any such
member under the Plan.

ARTICLE IV  PARTICIPATION IN THE PLAN

         Each member of the Board elected or appointed who is not otherwise an
employee of the Corporation or any parent or subsidiary corporation (an
"Eligible Director") shall be eligible to participate in the Plan. Pursuant to
the Plan, each Eligible Director will automatically receive on the date of his
or her initial election or appointment to the Board, options to purchase 10,000
Shares at an exercise price equal to the fair market value of the Corporation's
common stock on the date of grant. Each Eligible Director will thereafter
automatically receive options to purchase 5,000 Shares immediately following
each year's annual meeting of shareholders, such

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subsequent grants having an exercise price equal to the fair market value of the
Shares on such anniversary dates; provided, however, that an Eligible Director
who receives an initial grant for commencing service on the Board in the same
calendar year as such annual meeting shall not receive a subsequent grant until
immediately following the second annual meeting of shareholders after the date
of such initial grant. In lieu of these grants, an Eligible Director elected to
the position of Chairman of the Corporation's Board will receive, upon his or
her election to the position of Board Chairman, options to purchase 25,000
Shares at an exercise price equal to the fair market value of the Shares on the
date of grant. Such Eligible Director Board Chairman will thereafter
automatically receive options to purchase 10,000 Shares immediately following
each year's annual meeting of shareholders, assuming continued service as the
Board Chairman through such date; provided, however, that a Board Chairman who
receives an initial grant upon election to the position of Board Chairman in the
same calendar year as such annual meeting shall not receive a subsequent grant
until immediately following the second annual meeting of shareholders after the
date of such initial grant. The option grants vest twelve months after the grant
date upon the optionee's continued service as a director or Chairman. An
Eligible Director Board Chairman vacating such Chairman position on the vesting
date and continuing in the position of nonemployee director will receive a
vesting of the number of options to which he or she would otherwise be entitled
by virtue of the nonemployee director position.

ARTICLE V  OPTION TERMS

         Each option granted to an Eligible Director under the Plan and the
issuance of Shares thereunder shall be subject to the following terms:

1.       Option Agreement

         Each option granted under the Plan shall be evidenced by an option
agreement (an "Agreement") duly executed on behalf of the Corporation. Each
Agreement shall comply with and be subject to the terms and conditions of the
Plan. Any Agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Plan Administrator.

2.       Option Exercise Price

         The option exercise price for an option granted under the Plan shall be
the fair market value of the Shares covered by the option at the time the option
is granted. For purposes of the Plan, "fair market value" shall be the average
of the high and low sales prices at which the Common Stock was sold on such date
as reported by the Nasdaq National Market System on such date or, if no Common
Stock was traded on such date, on the next preceding date on which Common Stock
was so traded. 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 Corporation shall not (a) grant any
options under the terms of the Plan with an exercise price that is less than
100% of the fair market value of the Shares covered by the option 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.

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3.       Vesting and Exercisability

         An option shall become fully vested and become nonforfeitable on
anniversary date the year following the year in which the option was granted if
the optionee has continued to serve as a Director until such date.

4.       Time and Manner of Exercise of Option

         Each option may be exercised in whole or in part at any time and from
time to time; provided, however, that no fewer than 50 Shares (or the remaining
Shares then purchasable under the option, if less than 50 Shares) may be
purchased upon any exercise of option rights hereunder and that only whole
Shares will be issued pursuant to the exercise of any option. Any option may be
exercised by giving written notice, signed by the person exercising the option,
to the Corporation stating the number of Shares with respect to which the option
is being exercised, accompanied by payment in full for such Shares, which
payment may be in whole or in part (i) in cash or by check or (ii) in shares of
Common Stock already owned for at least six (6) months by the person exercising
the option, valued at fair market value at the time of such exercise.

5.       Term of Options

         Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination as follows:

         (a) In the event that an optionee ceases to be a director of the
Corporation for any reason other than the death of the optionee, the options
granted to such optionee may be exercised by him or her only within one (1) year
after the date such optionee ceases to be a director of the Corporation.

         (b) In the event of the death of an optionee, whether during the
optionee's service as a director or during the one (1) year period referred to
in Section 5 (a), the options granted to such optionee shall be exercisable, and
such options shall expire unless exercised within one (1) year after the date of
the optionee's death, by the legal representatives or the estate of such
optionee, by any person or persons whom the optionee shall have designated in
writing on forms prescribed by and filed with the Corporation or, if no such
designation has been made, by the person or persons to whom the optionee's
rights have passed by will or the laws of descent and distribution.

6.       Transferability

         During an optionee's lifetime, an option may be exercised only by the
optionee. Options granted under the Plan and the rights and privileges conferred
thereby shall not be subject to execution, attachment or similar process and may
not be transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or by the applicable laws of
descent and distribution except that, to the extent permitted by applicable law
and Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Plan Administrator may permit a
recipient of an option to designate in writing during the optionee's lifetime a
beneficiary to receive and exercise options in the event of the optionee's death
(as provided in Section 5(b)). Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under the Plan or of any right or
privilege

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conferred thereby, contrary to the provisions of the Plan, or the sale or levy
or any attachment or similar process upon the rights and privileges conferred
hereby, shall be null and void.

7.       Participant's or Successor's Rights as Shareholder

         Neither the recipient of an option under the Plan nor the optionee's
successor(s) in interest shall have any rights as a shareholder of the
Corporation with respect to any Shares subject to an option granted to such
person until such person becomes a holder of record of such Shares.

8.       Limitation as to Directorship

         Neither the Plan nor the granting of an option nor any other action
taken pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express on implied, that an optionee has a right to continue as a
director for any period of time or at any particular rate of compensation.

9.       Regulatory Approval and Compliance

         The Corporation shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan,
or record as a holder of record of Shares the name of the individual exercising
an option under the Plan, without obtaining to the complete satisfaction of the
Plan Administrator the approval of all regulatory bodies deemed necessary by the
Plan Administrator, and without complying, to the Plan Administrator's complete
satisfaction, with all rules and regulations under federal, state or local law
deemed applicable by the Plan Administrator.

ARTICLE VII  CAPITAL ADJUSTMENTS

         The aggregate number and class of Shares for which options and
restricted stock may be granted under the Plan, the number and class of Shares
covered by each grant and each outstanding option and the exercise price per
Share thereof (but not the total price) shall all be proportionately adjusted
for any stock dividends, stock splits, recapitalizations, combinations or
exchanges of shares, split-ups, split-offs, spinoffs, or other similar changes
in capitalization. Upon the effective date of a dissolution or liquidation of
the Corporation with one or more corporations which results in more than eighty
percent of the outstanding voting shares of the Corporation being owned by one
or more affiliated corporations or other affiliated entities, or of a transfer
of all or substantially all the assets or more than eighty percent of the then
outstanding shares of the Corporation to another corporation or other entity,
this Plan and all options granted hereunder shall terminate. In the event of
such dissolution, liquidation, reorganization, merger, consolidation, transfer
of assets or transfer of stock, each optionee shall be entitled, for a period of
twenty days prior to the effective date of such transaction, to purchase the
full number of shares under his or her option which he or she is otherwise would
have been entitled to purchase during the remaining term of such option.

         Adjustments under this Article VII shall be made by the Plan
Administrator, whose determination shall be final. In the event of any
adjustment in the number of Shares covered by any option, any fractional Shares
resulting from such adjustment shall be disregarded and each such option shall
cover only the number of full Shares resulting from such adjustment.

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ARTICLE VIII  CHANGE OF CONTROL

         For purposes of the Plan "Change of 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 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 13d-3 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 of 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 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, immediately
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

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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 immediately 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 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.

ARTICLE IX  EXPENSES OF THE PLAN

         All costs and expenses of the adoption and administration of the Plan
shall be borne by the Corporation; none of such expenses shall be charged to any
optionee.

ARTICLE X EFFECTIVE DATE AND DURATION OF THE PLAN

         The Plan shall be effective on April 6, 1997. The Plan shall continue
in effect until it is terminated by action of the Board or the Corporation's
shareholders, but such termination shall not affect the then-outstanding terms
of any options.

ARTICLE XI  TERMINATION AND AMENDMENT OF THE PLAN

         The Board may amend, terminate or suspend the Plan at any time, in its
sole and absolute discretion; provided, however, that if required to qualify the
Plan under Rule 16b-3 promulgated under Section 16(b) of the Exchange Act, no
amendment may be made more than once every six

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(6) months that would change the amount, price, timing or vesting of the
options, other than to comport with changes in the Internal Revenue Code of
1986, as amended, or the rules and regulations promulgated thereunder; and
provided, further, that if required to qualify the Plan under Rule 16b-3, no
amendment that would

         (a) materially increase the number of Shares that may be issued under
 the Plan,

         (b) materially modify the requirements as to eligibility for
participation in the Plan, or

         (c) otherwise materially increase the benefits accruing to participants
under the Plan shall be made without the approval of the Corporation's
shareholders.

In addition, as specified in Article V, Section 2 of the Plan, the approval of a
majority of the shares of the Corporation present and entitled to vote at a duly
convened meeting of shareholders is required for any amendment that would modify
or repeal the applicable provisions of such Section.

ARTICLE XII  COMPLIANCE WITH RULE 16b-3

         It is the intention of the Corporation that the Plan comply in all
respects with Rule 16b-3 promulgated under Section 16(b) of the Exchange Act and
that Plan participants remain disinterested persons ("disinterested persons")
for purposes of administering other employee benefit plans of the Corporation
and having such other plans be exempt from Section 16 (b) of the Exchange Act.
Therefore, if any Plan provision is later found not to be in compliance with
Rule 16b-3 or if any Plan provision would disqualify Plan participants from
remaining disinterested persons, that provision shall be deemed null and void,
and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.

         Plan adopted by the Corporation's Board of Directors on April 3, 1998
and approved by the Corporation's Shareholder and effective on April 3, 1998.
Plan amended and restated by the Board of Directors on May 6, 1999, to reflect
amendments to Article IV. Plan amended and restated by the Board of Directors on
September 6, 2001, to reflect amendments to Article IV, Article V, Section 2,
and to Article XI.

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                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

                                 COINSTAR, INC.

                                      and

                                   DAVID COLE

                           Dated as of October 3, 2001

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                              EMPLOYMENT AGREEMENT

     This Employment Agreement (this "Agreement"), dated as of October 3, 2001,
between Coinstar, Inc., a Delaware corporation ("Employer"), and David Cole
("Employee");

                              W I T N E S S E T H:
                              --------------------

     WHEREAS, Employer and Employee wish to document certain understandings and
agreements; and

     WHEREAS, Employer desires to employ Employee upon the terms and conditions
set forth herein; and

     WHEREAS, Employee is willing to provide services to Employer upon the terms
and conditions set forth herein;

                              A G R E E M E N T S:
                              --------------------

     NOW, THEREFORE, for and in consideration of the foregoing premises and for
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, Employer and Employee hereby agree as follows:

1.   EMPLOYMENT

     Employer will employ Employee and Employee will provide services to
Employer as its Chief Executive Officer.

2.   ATTENTION AND EFFORT

     Employee will devote all of his productive time, ability, attention and
effort to Employer's business and will skillfully serve its interests during the
term of this Agreement.

3.   TERM

     Unless otherwise terminated pursuant to paragraph 6 of this Agreement,
Employee's term of employment under this Agreement shall expire on December 31,
2003.

4.   COMPENSATION

     During the term of this Agreement, Employer agrees to pay or cause to be
paid to Employee, and Employee agrees to accept in exchange for the services
rendered hereunder by him, the following compensation:

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     4.1. Base Salary

     Employee's compensation shall consist, in part, of an annual base salary of
Two Hundred Seventy Five Thousand Dollars ($275,000) before all customary
payroll deductions. Such annual base salary shall be paid in substantially equal
installments and at the same intervals as other officers of Employer are paid.
Employee's salary shall be reviewed by Employer's Compensation Committee before
January 1, 2003 to determine in its discretion an appropriate increase in the
base salary.

     4.2. Bonus

     Employee shall be eligible for a cash bonus in 2002 consistent with the
existing program for senior managers, provided performance targets applicable to
such bonuses are met, and, provided further, any such bonus shall be pro-rated
in the event of a termination without Cause.

     4.3. Stock Options

     Employee shall receive a grant of 200,000 non-qualified stock options that
will vest over a four (4) year period. The option exercise price per share will
reflect the closing price of the Employer's stock on Employee's first day of
employment; options shall begin vesting on that date. Employee shall be eligible
for additional grants of options annually.

     4.4  Relocation Costs and Expenses

     Employer agrees to pay (and Employee to reimburse if applicable) relocation
costs and expenses in accordance with the offer letter dated September 27, 2001.

5.   BENEFITS

     During the term of this Agreement, Employee will be entitled to
participate, subject to and in accordance with applicable eligibility
requirements, in fringe benefit programs as shall be provided from time to time
by, to the extent required, action of Employer's Board of Directors.

6.   TERMINATION

     Employment of Employee pursuant to this Agreement may be terminated as
follows, but in any case, the provisions of paragraph 8 hereof shall survive the
termination of this Agreement and the termination of Employee's employment
hereunder:

     6.1. By Employer

     With or without Cause (as defined below), Employer may terminate the
employment of Employee at any time during the term of employment upon giving
Notice of Termination (as defined below).

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     6.2. By Employee

     Employee may terminate his employment at any time, for any reason, upon
giving Notice of Termination.

     6.3. Automatic Termination

     This Agreement and Employee's employment hereunder shall terminate
automatically upon the death or total disability of Employee. The term "total
                                                                        -----
disability" as used herein shall mean Employee's inability to perform the duties
----------
set forth in paragraph 1 hereof for a period or periods aggregating 180 calendar
days in any 12-month period as a result of physical or mental illness, loss of
legal capacity or any other cause beyond Employee's control, unless Employee is
granted a leave of absence by the Employer. Employee and Employer hereby
acknowledge that Employee's ability to perform the duties specified in paragraph
1 hereof is of the essence of this Agreement. Termination hereunder shall be
deemed to be effective (a) at the end of the calendar month in which Employee's
death occurs or (b) immediately upon a determination by the Employer of
Employee's total disability, as defined herein.

     6.4. Termination in Connection With a Change in Control

     Concurrent with the commencement of Employee's employment hereunder,
Employee and the Company shall enter into a Change of Control Agreement, a copy
of which is attached hereto as Exhibit A. Notwithstanding Sections 7.1 and 7.2
of this Agreement and in full substitution therefor, if Employee's employment
terminates under circumstances described in the Change of Control Agreement,
Employee's rights upon termination will be governed by terms of the Change of
Control Agreement and his right to termination payments under this Employment
Agreement shall cease.

     6.5. Notice

     The term "Notice of Termination" shall mean at least 30 days' written
               ---------------------
notice of termination of Employee's employment, during which period Employee's
employment and performance of services will continue; provided, however, that
                                                      --------  -------
Employer may, upon notice to Employee and without reducing Employee's
compensation during such period, excuse Employee from any or all of his duties
during such period. The effective date of the termination of Employee's
employment hereunder shall be the date on which such 30-day period expires.

     6.6 Resignation from Board of Directors

     Upon termination of Employee's employment for any reason, Employee hereby
agrees to resign from Employer's or any of Employer's subsidiaries board of
directors effective upon the date of such termination.

________________________________________________________________________________
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7.   TERMINATION PAYMENTS

     In the event of termination of the employment of Employee, all compensation
and benefits set forth in this Agreement shall terminate except as specifically
provided in this paragraph 7:

     7.1. Termination by Employer

     If Employer terminates Employee's employment without Cause during the term
of this Agreement, Employee shall be entitled to receive (a) termination
payments equal to twelve (12) months' annual base salary, and (b) any unpaid
annual base salary which has accrued for services already performed as of the
date termination of Employee's employment becomes effective. Such payment shall
be provided in equal monthly installments, less applicable deductions and tax
withholding, at regular payroll intervals. Employer agrees to continue
Employee's health insurance benefits, including current dependent coverage, for
twelve (12) months following the date the Employee is terminated without Cause.
Thereafter Employee may self-pay health insurance under COBRA if he elects to do
so. All other Employer benefits cease on the date of termination without Cause.
If Employee is terminated by Employer for Cause, Employee shall not be entitled
to receive any of the foregoing benefits, other than those set forth in clause
(b) above. In the event Employee obtains other employment during any salary
continuation period hereunder following a termination without Cause, Employer's
obligation shall be offset by the amount of salary or pay received from such
other employment.

     7.2. Termination by Employee

     In the case of the termination of Employee's employment by Employee,
Employee shall not be entitled to any payments hereunder, other than those set
forth in clause (b) of subparagraph 7.1 hereof.

     7.3. Expiration of Term

     In the case of a termination of Employee's employment as a result of the
expiration of the term of this Agreement, Employee shall not be entitled to
receive any payments hereunder, other than those set forth in clause (b) of
subparagraph 7.1 and any bonus to which Employee may be entitled under
subparagraph 4.2 hereof.

     7.4. Payment Schedule

     All payments under this paragraph 7 shall be made to Employee at the same
interval as payments of salary were made to Employee immediately prior to
termination.

     7.5. Cause

     Wherever reference is made in this Agreement to termination being with or
without Cause, "Cause" is limited to the occurrence of one or more of the
                -----
following events:

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                                                                               4

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     (a) Failure or refusal to carry out the lawful duties of Employee described
in Section 1 hereof or any directions of the Board of Directors of Employer,
which directions are reasonably consistent with the duties herein set forth to
be performed by Employee;

     (b) Violation by Employee of a state or federal criminal law involving the
commission of a crime against Employer or a felony;

     (c) Current use by Employee of illegal substances; deception, fraud,
misrepresentation or dishonesty by Employee; any act or omission by Employee
which substantially impairs Employer's business, good will or reputation; or

     (d) Any other material violation of any provision of this Agreement.

8.   NONCOMPETITION, NONDISCLOSURE AND
     NONDISPARAGEMENT

     (a) The nature of Employee's employment with Employer has given Employee
access to trade secrets and confidential information, including information
about its technology and customers. Therefore, during the one (1) year following
termination of employment for whatever reason, Employee agrees that he will not
engage in, be employed by, perform services for, participate in the ownership,
management, control or operation of, or otherwise be connected with, either
directly or indirectly, any business or activity whose efforts are in
competition with (i) the products or services manufactured or marketed by
Employer at the time of this Agreement, or (ii) the products or services which
have been under research or development by Employer during the term of
Employee's employment, and which Employer has demonstrably considered for
further development or commercialization. The geographic scope of this
restriction shall extend to anywhere Employer is doing business, has done
business or intends to do business. Employee acknowledges that the restrictions
are reasonable and necessary for protection of the business and goodwill of
Employer.

     If, within one year of the date of termination, Employee violates this
paragraph 8, Employee shall forfeit any remaining termination payments provided
under paragraph 7.

     (b) Employee further agrees that he will not at any time disclose
confidential information about Employer relating to its business, technology,
practices, products, marketing, sales, services, finances or legal affairs.

     (c) Following termination of Employee for any reason, Employee and Employer
shall refrain from making any derogatory comment in the future to the press or
any individual or entity regarding the other that relates to their activities or
relationship prior to the date of termination, which comment would likely cause
material damage or harm to the business interests or reputation of Employee or
Employer. Employee acknowledges that the non-disparagement provisions of this
Section 8(c) are essential to Employer, that Employer would not enter into this
Agreement if it did not include this Section 8(c), and that damages sustained by
Employer as a result of a breach of this Section 8(c) cannot be adequately
quantified or remedied by damages alone. Accordingly, Employer shall be entitled
to injunctive and other equitable relief to prevent or curtail any breach of
this Section 8(c).

________________________________________________________________________________
                                                                               5

<PAGE>

9.   REPRESENTATIONS AND WARRANTIES OF EMPLOYEE

     Employee represents and warrants that neither the execution nor the
performance of this Agreement by Employee will violate or conflict in any way
with any other agreement by which Employee may be bound, or with any other
duties imposed upon Employee by corporate or other statutory or common law.

10.  FORM OF NOTICE

     All notices given hereunder shall be given in writing, shall specifically
refer to this Agreement and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail,
return receipt requested, at the address set forth below or at such other
address as may hereafter be designated by notice given in compliance with the
terms hereof:

     If to Employee:       David Cole
                           ____________
                           ____________

     If to Employer:       Coinstar, Inc.
                           1800 114/th/ Avenue SE
                           Bellevue, WA 98004

     Copy to:              Perkins Coie LLP
                           Attn: Stephanie Daley-Watson
                           1201 Third Ave., 48th Floor
                           Seattle, WA 98101-3099

If notice is mailed, such notice shall be effective upon mailing, or if notice
is personally delivered or sent by telecopy or other electronic facsimile
transmission, it shall be effective upon receipt.

11.  ASSIGNMENT

     This Agreement is personal to Employee and shall not be assignable by
Employee. Employer may assign its rights hereunder to (a) any corporation or
other entity resulting from any merger, consolidation or other reorganization to
which Employer is a party or (b) any corporation, partnership, association or
other person to which Employer may transfer all or substantially all of the
assets and business of Employer existing at such time. All of the terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
________________________________________________________________________________
                                                                               6

<PAGE>

12.      WAIVERS

         No delay or failure by any party hereto in exercising, protecting or
enforcing any of its rights, titles, interests or remedies hereunder, and no
course of dealing or performance with respect thereto, shall constitute a waiver
thereof. The express waiver by a party hereto of any right, title, interest or
remedy in a particular instance or circumstance shall not constitute a waiver
thereof in any other instance or circumstance. All rights and remedies shall be
cumulative and not exclusive of any other rights or remedies.

13.      ARBITRATION

         Any controversies or claims arising out of or relating to this
Agreement shall be fully and finally settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect (the "AAA Rules"), conducted by one arbitrator either mutually agreed
             ---------
upon by Employer and Employee or chosen in accordance with the AAA Rules, except
that the parties thereto shall have any right to discovery as would be permitted
by the Federal Rules of Civil Procedure for a period of 90 days following the
commencement of such arbitration and the arbitrator thereof shall resolve any
dispute which arises in connection with such discovery. The prevailing party
shall be entitled to costs, expenses and reasonable attorneys' fees, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. This provision shall not preclude Employer from
seeking court enforcement or relief based upon an alleged violation of
Employee's obligations under any noncompetition or non-disclosure agreement.

14.      AVAILABILITY AND CONSULTATION

         If Employee's employment with Employer terminates for any reason,
Employee will thereafter make himself reasonably available to Employer and
counsel for Employer for the purpose of enabling Employer to defend against any
legal claims in which Employer determines he may have knowledge or information.
Employer will reimburse Employee for reasonable out-of-pocket expenses incurred
in connection with any consultations under this Section 14.

15.      AMENDMENTS IN WRITING

         No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by Employer
and Employee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by Employer and Employee.

--------------------------------------------------------------------------------
                                                                               7

<PAGE>

16.      APPLICABLE LAW

         This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the state of Washington, without regard
to any rules governing conflicts of laws.

17.      SEVERABILITY

         If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.

18.      HEADINGS

         All headings used herein are for convenience only and shall not in any
way affect the construction of, or be taken into consideration in interpreting,
this Agreement.

19.      COUNTERPARTS

         This Agreement, and any amendment or modification entered into pursuant
to paragraph 15 hereof, may be executed in any number of counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.

20.      ENTIRE AGREEMENT

         Except for the Proprietary Information and Inventions Agreement
executed by Employee as of the date hereof , this Agreement sets forth the
entire understanding between Employee and Employer, superseding any prior
agreements or understandings, express or implied, pertaining to the terms of
Employee's employment with Employer. Employee acknowledges that in executing
this Agreement, he does not rely upon any representation or statement by any
representative or agent of Employer concerning the subject matter of this
Agreement.

--------------------------------------------------------------------------------
                                                                               8

<PAGE>

     IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.

                                              COINSTAR, INC.

/s/  David Cole                                   /s/  M. Carol Lewis
-----------------------------------           By________________________________
DAVID COLE

                                              Its:  Corporate Secretary

--------------------------------------------------------------------------------
                                                                               9

<PAGE>

                                    Exhibit A

                           CHANGE OF CONTROL AGREEMENT

     This Change of Control Agreement (this "Agreement"), dated as of October 3,
2001, is between Coinstar, Inc. (the "Employer"), and David Cole (the
"Employee"). This Agreement is an exhibit to that certain Employment Agreement
dated as of the date hereof between the Employer and the Employee (the
"Employment Agreement").

     The Board of Directors of the Employer (the "Board") has determined that it
is in the best interests of the Employer and its stockholders to ensure that the
Employer will have the continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Appendix
A to this Agreement, which is incorporated herein by this reference) of the
Employer. The Board believes it is imperative to diminish the inevitable
distraction of the Employee arising from the personal uncertainties and risks
created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Employer currently and in the
event of any threatened or pending Change of Control, to encourage the
Employee's willingness to serve a successor in an equivalent capacity, and to
provide the Employee with reasonable compensation and benefits arrangements in
the event that a Change of Control results in the Employee's loss of equivalent
employment.

     In order to accomplish these objectives, the Board has caused the Employer
to enter into this Agreement.

1.   EMPLOYMENT

     1.1   Certain Definitions

           (a) "Effective Date" shall mean the first date during the Change of
                --------------
Control Period (as defined in Section 1.1(b)) on which a Change of Control
occurs.

           (b) "Change of Control Period" shall mean the period
                ------------------------
commencing on the date of this Agreement and ending on the second anniversary of
the date the Employer gives notice to the Employee that the Change of Control
Period shall be terminated.

     1.2   Employment Period

     The Employer hereby agrees to continue the Employee in its employ or in the
employ of its affiliated companies, and the Employee hereby agrees to remain in
the employ of the Employer or its affiliated companies, in accordance with the
terms and provisions of this Agreement, for the period commencing on the
Effective Date and ending on the second anniversary of such date (the
"Employment Period").

<PAGE>

     1.3   Position and Duties

     During the Employment Period, the Employee's position, authority, duties
and responsibilities shall be at least reasonably commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 90-day period immediately preceding the Effective Date.

     1.4   Employment Status

     If prior to the Effective Date the Employee's employment with the Employer
or its affiliated companies terminates, then the Employee shall have no further
rights under this Agreement.

     1.5   Board of Directors

     The Employee is either currently or at some future time may become a member
of the Board. His continuation as such shall be subject to the terms of the
Employment Agreement as well as the will of the Employer's stockholders and the
Board, as provided in the Employer's by-laws and certificate of incorporation.
Removal of the Employee from, or nonelection of the Employee to, the Board by
the Employer's stockholders or the Board, as provided in the Employer's by-laws
and articles of incorporation or the Employment Agreement, shall in no event be
deemed a breach of this Agreement by the Employer.

2.   ATTENTION AND EFFORT

     During the Employment Period, and excluding any periods of vacation and
sick leave to which the Employee is entitled, the Employee will devote all of
his professional productive time, ability, attention and effort to the business
and affairs of the Employer and the discharge of the responsibilities assigned
to him hereunder, and will use his best efforts to perform faithfully and
efficiently such responsibilities.

3.   COMPENSATION

     During the Employment Period, the Employer agrees to pay or cause to be
paid to the Employee, and the Employee agrees to accept in exchange for the
services rendered hereunder by him, the following compensation:

     3.1   Salary

     The Employee shall receive an annual base salary (the "Annual Base
Salary"), at least equal to the annual salary established by the Board prior to
the Effective Date for the fiscal year in which the Effective Date occurs. The
Annual Base Salary shall be paid in substantially equal installments and at the
same intervals as the salaries of other officers of the Employer are paid.

                                      -2-

<PAGE>

     3.2 Bonus

     Employee may be entitled to receive, in addition to the Annual Base Salary,
an annual bonus in an amount to be determined by the Board of Directors of the
Employer in its sole discretion.

     3.3 Benefits

     During the Employment Period, the Employee shall be entitled to
participate, subject to and in accordance with applicable eligibility
requirements, in such fringe benefit programs as shall be provided to other
executive employees of the Employer and its affiliated companies from time to
time during the Employment Period by action of the Board (or any person or
committee appointed by the Board to determine fringe benefit programs and other
emoluments).

     3.4 Expenses

     During the Employment Period, the Employee shall be entitled to receive
prompt reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures of the Employer and its
affiliated companies in effect for the employees of the Employer and its
affiliated companies during the Employment Period or pursuant to an applicable
travel policy.

4.   TERMINATION

     Employment of the Employee during the Employment Period may be terminated
as follows but, in any case, the nondisclosure and noncompetition provisions set
forth in Section 8 of the Employment Agreement shall survive the termination of
this Agreement and the termination of the Employee's employment with the
Employer:

     4.1 By the Employer or the Employee

     Upon giving Notice of Termination (as defined below), the Employer may
terminate the employment of the Employee with or without Cause (as defined in
the Employment Agreement), and the Employee may terminate his employment for
Good Reason (as defined below) or for any reason, at any time during the
Employment Period.

     4.2 Automatic Termination

     This Agreement and the Employee's employment during the Employment Period
shall terminate automatically pursuant to Section 6.3 of the Employment
Agreement upon the death of the Employee. The Employee and the Employer hereby
acknowledge that the Employee's presence and ability to perform the duties
specified in Section 1.3 hereof is of the essence of this Agreement.

                                       -3-

<PAGE>

     4.3 Notice of Termination

     Any termination by the Employer or by the Employee during the Employment
Period shall be communicated by Notice of Termination to the other party given
within 30 days in accordance with Section 6.5 of the Employment Agreement. The
term "Notice of Termination" shall mean a written notice which (a) indicates the
specific termination provision in this Agreement relied upon and (b) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated. The failure by the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Cause shall not waive any right of the Employer hereunder or preclude the
Employer from asserting such fact or circumstance in enforcing the Employer's
rights hereunder.

     4.4 Date of Termination

     During the Employment Period, "Date of Termination" means (a) if the
Employee's employment is terminated by reason of death, at the end of the
calendar month in which the Employee's death occurs, and (b) in all other cases,
five days after the date of personal delivery of or mailing of, as applicable,
the Notice of Termination. The Employee's employment and performance of services
will continue during such five-day period; provided, however, that the Employer
                                           --------  -------
may, upon notice to the Employee and without reducing the Employee's
compensation during such period, excuse the Employee from any or all of his
duties during such period.

5.   TERMINATION PAYMENTS

     In the event of termination of the Employee's employment during the
Employment Period, all compensation and benefits set forth in this Agreement
shall terminate except as specifically provided in this Section 5.

     5.1 Termination by the Employer for Other Than Cause or by the Employee for
         Good Reason

     If the Employer terminates the Employee's employment other than for Cause
or the Employee terminates his employment for Good Reason prior to the end of
the Employment Period, the Employee shall be entitled to:

         (a) Receive payment of the following accrued obligations (the "Accrued
Obligations"):

             (i)  the Employee's Annual Base Salary through the Date of
     Termination to the extent not theretofore paid;

             (ii)  the product of (x) the Annual Bonus payable with respect to
     the fiscal year in which the Date of Termination occurs and (y) a fraction,
     the numerator of which is the number of days in the current fiscal year
     through the Date of Termination, and the denominator of which is 365; and

                                      -4-

<PAGE>

                   (iii)  any compensation previously deferred by the Employee
         (together with accrued interest or earnings thereon, if any) as such
         deferred compensation becomes payable under the deferral plan, and any
         accrued vacation pay, in each case to the extent not theretofore paid;
         and

              (b)  an amount as separation pay equal to the Employee's Annual
Base Salary.

         5.2  Termination for Cause or Other Than for Good Reason

         If the Employee's employment shall be terminated by the Employer for
Cause as defined in the Employment Agreement or by the Employee for other than
Good Reason during the Employment Period, this Agreement shall terminate without
further obligation to the Employee other than the obligation to pay to the
Employee his Annual Base Salary through the Date of Termination plus the amount
of any compensation previously deferred by the Employee (as such deferred
compensation becomes payable under the deferral plan), in each case to the
extent theretofore unpaid.

         5.3  Termination Because of Death

         If the Employee's employment is terminated by reason of the Employee's
death during the Employment Period, this Agreement shall terminate automatically
without further obligations to the Employee or his legal representatives under
this Agreement, other than for payment of Accrued Obligations (which shall be
paid to the Employee's estate or beneficiary, as applicable in the case of the
Employee's death).

         5.4  Payment Schedule

         Payments under Section 5.1(a) shall be paid to the Employee in a lump
sum in cash within 30 days of the Date of Termination. Payments under Section
5.1(b) shall be paid to Employee at regular scheduled payroll intervals over the
twelve (12) month period following the Date of Termination.

         5.5   Good Reason

         For purposes of this Agreement, "Good Reason" means any of the
following events or conditions and the failure to cure such event or condition
within 20 days after receipt of written notice from Employee:

              (a)  The assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position, authority, duties or
responsibilities as contemplated by Section 1.3 hereof or any other action by
the Employer which results in a diminution in such position, authority, duties
or responsibilities, excluding for this purpose an isolated and inadvertent
action not taken in bad faith and which is remedied by the Employer promptly
after receipt of notice thereof given by the Employee, and further excluding
reasonable changes in particular duties and reporting responsibilities which may
result from the Employer becoming part of a larger business organization at some
future time provided that such changes in the aggregate do not result in a
material alteration in the Employee's position, authority, duties or
responsibilities;

                                      -5-

<PAGE>

          (b) Any failure by the Employer to comply with any of the provisions
of Section 3 hereof, other than an isolated and inadvertent failure not
occurring in bad faith and which is remedied by the Employer promptly after
receipt of notice thereof given by the Employee;

          (c) Any failure by the Employer to comply with and satisfy Section 11
of the Employment Agreement, provided that the Employer's successor has received
at least ten days' prior written notice from the Employer or the Employee of the
requirements of Section 11 thereof;

          (d) Any purported termination of the Employee's employment that is not
in accordance with the definition of Cause under the Employment Agreement; or

          (e) A relocation of the Employer's principal executive offices to a
location outside of the Seattle metropolitan area, or the Employer's requirement
that the Employee be based anywhere other than the Seattle metropolitan area,
except for required travel on the Employer's business to an extent substantially
consistent with the Employee's position, duties and responsibilities.

6. REPRESENTATIONS, WARRANTIES AND OTHER CONDITIONS

   In order to induce the Employer to enter into this Agreement, the Employee
represents and warrants to the Employer as follows:

   6.1    Health

   The Employee is in good health and knows of no physical or mental disability
which, with or without any accommodation which may be required by law and which
places no undue burden on the Employer, would prevent him from fulfilling his
obligations hereunder. The Employee agrees, if the Employer requests, to submit
to periodic medical examinations by a physician or physicians designated by,
paid for and arranged by the Employer. The Employee agrees that the
examination's medical report shall be provided to the Employer.

   6.2    No Violation of Other Agreements

   The Employee represents that neither the execution nor the performance of
this Agreement by the Employee will violate or conflict in any way with any
other agreement by which the Employee may be bound.

   6.3.   Reaffirmation of Obligations

   The Employee hereby acknowledges and reaffirms the Employee Proprietary
Information and Inventions Agreement executed by Employee on the date hereof and
Employee's obligations under Section 8 of the Employment Agreement.

                                      -6-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.

                                               EMPLOYEE

                                               /s/ David Cole

                                               _________________________________
                                               David Cole

                                                  COINSTAR, INC.

                                                  By:  /s/ M. Carol Lewis
                                                  Its: Corporate Secretary

                                      -7-

<PAGE>

                                  APPENDIX A TO

                           CHANGE OF CONTROL AGREEMENT

     For purposes of this Agreement, a "Change of Control" shall mean:

     (a)  A "Board Change" which, for purposes of this Agreement, shall have
occurred if a majority (excluding vacant seats) of the seats on the Employer's
Board are 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 Employer 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 hereinafter defined) 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 13d-3 promulgated under the Exchange Act)
of (i) 20% or more of either (A) the then outstanding shares of Common Stock of
the Employer (the "Outstanding Employer Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Employer entitled
to vote generally in the election of directors (the "Outstanding Employer 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 Employer Common Stock or (B)
the Outstanding Employer 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 of Control: (w) any acquisition directly from the
Employer or in connection with aoffering of the Employer pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission, (x) any acquisition by the Employer, (y) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Employer or any corporation controlled by the Employer or (z) any acquisition by
any corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions described
in clauses (i), (ii) and (iii) of subsection (c) of this Appendix A are
satisfied; or

     (c)  Consummation of a reorganization, merger or consolidation approved by
the stockholders of the Employer, in each case, unless, immediately 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 the individuals and

<PAGE>

entities who were the beneficial owners, respectively, of the Outstanding
Employer Common Stock and the Outstanding Employer Voting Securities immediately
prior to such reorganization, merger or consolidation in substantially the same
proportion as their ownership immediately prior to such reorganization, merger
or consolidation of the Outstanding Employer Common Stock and the Outstanding
Employer Voting Securities, as the case may be, (ii) no Person (excluding the
Employer, any employee benefit plan (or related trust) of the Employer 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 Employer
Common Stock or the Outstanding 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 the Incumbent Directors at the time of the execution of
the initial agreement providing for such reorganization, merger or
consolidation; or

     (d) Consummation of the following events approved by the stockholders of
the Employer (i) a complete liquidation or dissolution of the Employer or (ii)
the sale or other disposition of all or substantially all the assets of the
Employer, other than to a corporation with respect to which immediately
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 the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Employer Common Stock and the Outstanding Employer 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 Employer Common Stock and the Outstanding Employer Voting
Securities, as the case may be, (B) no Person (excluding the Employer, any
employee benefit plan (or related trust) of the Employer 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 Employer
Common Stock or the Outstanding Employer 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 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 Employer.

     Notwithstanding the foregoing, there shall not be a Change of Control if,
in advance of such event, the Employee agrees in writing that such event shall
not constitute a Change of Control.

                                      -2-

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