Document:

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                                                                    Exhibit 10.2

                              EMPLOYMENT AGREEMENT

     This Agreement made between ROBERT F. BARONNER, JR., herein referred to as
Employee, and BANK OF CHARLES TOWN, whose principal place of business is located
in Charles Town, Jefferson County, West Virginia, herein referred to as
Employer, and POTOMAC BANKSHARES, INC., the corporate parent of Employer
("BANKSHARES").

                                    RECITALS

     WHEREAS Employer is engaged in the business of banking, in Charles Town,
Jefferson County, West Virginia;

     WHEREAS Employee has been engaged in and has had a great deal of experience
in the business of banking;

     WHEREAS Employee is willing to be employed by Employer, and Employer is
willing to employ Employee, on the terms, covenants and conditions hereinafter
set forth; and

     WHEREAS Employer deems it in its best interests to secure the continued
services, and ensure the undivided dedication and objectivity of Employee, in
the future and in the event of any threat or occurrence of or negotiation or
other action that could lead to, or create the possibility of, a Change in
Control, as defined in this Agreement;

     NOW, THEREFORE: For the reasons set forth above, and in consideration of
the mutual promises and agreements hereinafter set forth, employer and employee
agree as follows:

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                                   SECTION ONE
                                   DEFINITIONS

     1.  Definitions. As used in this Agreement, the following terms shall have
         -----------
the respective meanings set forth below

     (a) "Board" means the Board of Directors of the Employer.

     (b) "Cause" means (i) the willful and continued failure of Employee to
perform substantially his duties with the Employer (other than any such failure
resulting from Employee's incapacity due to physical or mental illness or any
such failure subsequent to Employee being delivered a Notice of Termination
without Cause by the Employer or delivering a Notice of Termination for Good
Reason to the Employer) after a written demand for substantial performance is
delivered to Employee by the Board which specifically identifies the manner in
which the Board believes that Employee has not substantially performed
Employee's duties, (ii) the willful engaging by Employee in illegal conduct or
gross misconduct which is directly demonstrably and materially injurious to the
Employer or its affiliates or (iii) the Employee's conviction of, or plea of
guilty of nolo contendere to, a felony involving moral turpitude. For purposes
          ---------------
of this paragraph (b) no act or failure to act by Employee shall be considered
"willful" unless done or omitted to be done by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Employer or its affiliates. The unwillingness of Employee to accept any
condition or event which would constitute Good Reason under Section

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1(f) may not be considered by the Board to be a failure to perform or misconduct
by Employee. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause for purposes of this Agreement unless and until there
shall have been delivered to him a copy of a resolution, duly adopted by a vote
of a majority of the entire Board at a meeting of the Board called and held
(after reasonable notice to Employee and an opportunity for Employee and his
counsel to be heard before the Board). The Employer must notify Employee of an
event constituting Cause within ninety (90) days following its knowledge of its
existence or such event shall not constitute Cause under this Agreement.

          (c) "Change in Control" means the occurrence of any one of the
following events:

          (i) individuals who, on January 1, 2001, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to January 1,
2001, whose election or nomination for election was approved by a vote of at
least two-thirds (2/3) of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Employer in which
such person is named as a nominee for director, without objection to such
nomination) shall be an Incumbent Director; provided, however, that no
                                            --------  -------
individual elected or nominated as a director of the Employer initially as a
result of an actual or threatened election contest with respect to directors

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or any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to an Incumbent
Director;

     (ii)  any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14 (d)(2) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange act), directly or indirectly, of
securities of the Employer representing 50% or more of the combined voting power
of the Employer's then outstanding securities eligible to vote for the election
of the Board (the "Employer Voting Securities"); provided, however, that the
                                                 --------  -------
event described in this paragraph (i) shall not be deemed to be a Change of
Control by virtue of any of the following acquisitions: (A) by the Employer or
any Subsidiary, (B) by any employee benefit plan sponsored or maintained by the
Employer or any Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, (D) pursuant to a
Non-Control Transaction (as defined in paragraph (iii), (E) pursuant to any
acquisition by Employee or any group of persons including Employee (or any
entity controlled by Employee or any group of persons including Employee); or
(F) a transaction (other than one described in (iii) below) in which Employer
Voting Securities are acquired from the Employer, if a majority of the Incumbent
Directors then on the Board approve a resolution providing expressly that the
acquisition pursuant to this clause

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(F) does not constitute a Change in Control under this paragraph (i);

     (iii) the consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Employer or any of its
Subsidiaries that requires the approval of the Employer's stockholders, whether
for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(A) more than 60% of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent Corporation"), is
represented by Employer Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, shares into which such
Employer Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Employer Voting
Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan sponsored or
maintained by the Surviving Corporation or the Parent Corporation), is or
becomes the

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beneficial owner, directly or indirectly, of 50% or more of the total voting
power of the outstanding voting securities eligible to elect directors or the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and (C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) following the consummation of the Business Combination
were Incumbent Directors at the time of the Board's approval of the execution of
the initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a "Non-Control Transaction"); or

         (iv) the stockholders of the Employer approve a plan of complete
liquidation or dissolution of the Employer or a sale or disposition of all or
substantially all of the Employer's assets.

         Notwithstanding the foregoing, a Change in Control of the Employer
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 50% of the Employer Voting Securities as a result of the
acquisition of Employer Voting Securities by the Employer which reduces the
number of Employer Voting Securities outstanding; provided, that if after such
                                                  --------  ----
acquisition by the Employer such person becomes the beneficial owner of
additional Employer Voting Securities that increases the percentage of
outstanding Employer Voting Securities beneficially owned by such person, a
Change in Control of the Employer shall

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then occur.

         (d)  "Date of Termination" means (i) the effective date on which
Employee's employment by the Employer terminates as specified in a prior written
notice by the Employer or Employee, as the case may be, to the other, delivered
pursuant to Section 10 or (II) if Employee's employment by the Employer
terminates by reason of death, the date of death of Employee.

         (e)  "Disability" means Employee's total and permanent disability as
defined by the Employer's long-term disability plan (as in existence immediately
prior to the Change in Control, or if none is in existence, the most recent such
plan).

         (f)  "Good Reason" means, without Employee's express written consent,
the occurrence of any of the following events after a Change in Control:

         (1)  (A)  any change in the duties or responsibilities (including
reporting responsibilities) of Employee that is inconsistent in any material and
adverse respect with Employee's position(s), duties, responsibilities or status
with the Employer immediately prior to such Change in Control (including any
material and adverse diminution of such duties or responsibilities); provided,
                                                                     --------
however that Good Reason shall not be deemed to occur upon a change in duties or
responsibilities that is solely and directly a result of the Employer no longer
being a publicly traded entity and does not involve any other event set forth in
this paragraph (f) or (B) a material and adverse change in Employee's

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titles or offices (including, if applicable, membership on the Board) with the
Employer as in effect immediately prior to such Change in Control;

         (2)  a reduction by the Employer in Employee's rate of annual base
salary or annual target bonus opportunity (including any adverse change in the
formula for such annual bonus target) as in effect immediately prior to such
Change in Control or as the same may be increased from time to time thereafter;

         (3)  any requirement of the Employer that Employee (i) be based
anywhere more than fifty (50) miles from the facility where Employee is located
at the time of such Change in Control or (ii) travel on Employer business to an
extent substantially greater than the travel obligations of Employee immediately
prior to such Change in Control;

         (4)  the failure of the Employer to (A) continue in effect any employee
benefit plan, compensation plan, welfare benefit plan or material fringe benefit
plan in which the Employee is participating immediately prior to such Change in
Control or the taking of any action by the Employer which would adversely affect
Employee's participation in or reduce Employee's benefits under any such plan,
unless Employee is permitted to participate in other plans providing Employee
with substantially equivalent benefits in the aggregate (at substantially
equivalent cost with respect to welfare benefit plans), or (B) provide Employee
with paid vacation in accordance with the most favorable vacation policies of
the

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Employer and its affiliated companies as in effect for Employee immediately
prior to such Change in Control, including the crediting of all service for
which Employee had been credited under such vacation policies prior to the
Change in Control; or

         (5)  the failure of the Employer to obtain the assumption agreement
from any successor as contemplated in Section 8(b).

         Notwithstanding the foregoing, an isolated and inadvertent action taken
in good faith and which is remedied by the Employer within ten (10) days after
receipt of notice thereof given by Employee shall not constitute Good Reason.
Employee must notify Employer of any event constituting Good Reason within
ninety (90) days following his knowledge of its existence or such event shall
not constitute Good Reason under this Agreement. Employee's termination of
employment under this Agreement for Good Reason shall in no event impair
Employee's ability to receive benefits under any retirement-based plans or
programs for which Employee is otherwise eligible as of Employee's Date of
Termination.

         (g)  "Nonqualifying Termination" means a termination of Employee's
employment (1) by the Employer for Cause, (2) by Employee for any reason other
than Good Reason (including Retirement if Good Reason does not exist at such
time), (3) as a result of Employee's death, or (4) as a result of Disability.

         (h)  "Qualifying Termination" means any termination of Employee's
employment that is not a Nonqualifying Termination.

         (i)  "Retirement" means termination of employment by Employee

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in accordance with the Employer's retirement plan generally applicable to
salaried employees (as in existence immediately prior to the Change in Control),
or in accordance with any retirement arrangement established with respect to
Employee with Employee's written consent.

         (j)  "Subsidiary" means any corporation or other entity in which the
Employer or Potomac Bankshares has a direct or indirect ownership interest of
50% or more of the total combined voting power of the then outstanding
securities of such corporation or other entity entitled to vote generally in the
election of directors.

         (k)  "Termination Period" means the period of time beginning with a
Change in Control and ending two (2) years following such Change in Control.
Notwithstanding anything in this Agreement to the contrary, if (i) Employee's
employment is terminated prior to a Change in Control for reasons that would
have constituted a Qualifying Termination if they had occurred following a
Change in Control and (ii) Employee reasonably demonstrates that such
termination (or Good Reason event) was at the request or suggestion of a third
party who had indicated an intention or taken steps reasonably calculated to
effect a Change in Control then for purposes of this Agreement (and
notwithstanding whether a Change in Control occurs), the date immediately prior
to the date of such termination of employment or event constituting Good Reason
shall be treated as a Change in Control.

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                                   SECTION TWO
                                   EMPLOYMENT

         Employer and Potomac Bankshares hereby employ, engage, and hire
Employee as President and Chief Executive Officer of Potomac Bankshares, Inc.
and The Bank of Charles Town, and as member of the Board of Directors of same,
and employee hereby accepts and agrees to such hiring, engagement, and
employment, subject to the general supervision and pursuant to the orders,
advice, and direction of the Board of Directors of Employer and Potomac
Bankshares. Employee shall perform such other duties as are customarily
performed by one holding such position in other, same, or similar businesses or
enterprises as that engaged in by Employer, and shall also additionally render
such other and related services and duties as may be assigned to him from time
to time by Employer.

                                  SECTION THREE
                            BEST EFFORTS OF EMPLOYEE

         Employee agrees that he will at all times faithfully, industriously,
and to the best of his ability, experience, and talents, perform all of the
duties that may be required of and from him pursuant to the terms of this
Agreement, to the reasonable satisfaction of employer.

                                  SECTION FOUR
                               TERM OF EMPLOYMENT

         The term of this agreement shall be a period of one (1) year,
commencing January 1, 2001, and terminating December 31, 2001, subject, however,
to prior termination only as herein provided. At

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the expiration date of December 31, 2001, this agreement shall be considered
renewed for regular periods of one year, provided neither party submits a notice
of termination pursuant to Section 17.

                                  SECTION FIVE
                            COMPENSATION OF EMPLOYEE

     Employer shall pay employee, and employee shall accept from employer, as
Employee's base salary, compensation at the rate of One Hundred Ten Thousand
Dollars ($110,000.00) per annum, payable using the normal pay periods of
employees of Employer while this agreement shall be in force.

     Additionally, Employee shall receive an annual Directors' fee in an amount
equal to the fee paid to other directors of employer, and paid at the normal pay
period for said directors.

     Employer shall maintain the premium payments for medical coverage for
employee, at least at the same level of coverage as that offered to other
employees of the Employer.

     Employer shall reimburse employee for all reasonable and necessary expenses
incurred by Employee while tending to the business of the Employer, including
but not limited to travel, customer development and entertainment, and
professional development expenses.

     Employer shall maintain the monthly full-family dues payment for Employee
at Cress Creek Country Club.

                                   SECTION SIX

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                                CHANGE IN CONTROL

     1.  Obligation of Employee. In the event of a tender or exchange offer,
         ----------------------
proxy contest, or the execution of any agreement which, if consummated, would
constitute a Change in Control, Employee agrees not to voluntarily leave the
employ of the Employer, other than as a result of Disability, Retirement
(following age sixty (60)) or an event which would constitute Good Reason if a
Change in Control had occurred, until the Change in Control occurs or, if
earlier, such tender or exchange offer, proxy contest, or agreement is
terminated or abandoned; provided, however, that such obligation shall not
                         --------  -------
extend for a period exceeding one hundred and eighty (180) days from the initial
event resulting in the obligation under this Section 2.

     2.  Payments Upon Termination of Employment.
         ---------------------------------------

     (a) If during the Termination Period the employment of Employee shall
terminate, other than by reason of a Nonqualifying Termination, then the
Employer shall pay to Employee (or Employee's beneficiary or estate) within ten
(10) days following the Date of Termination, as compensation for services
rendered to the Employer:

     (1) a lump-sum cash amount equal to the sum of (A) Employee's unpaid base
salary from the Employer and its affiliate companies through the Date of
Termination (without taking into account any reduction of base salary
constituting Good Reason), (B) any bonus payments which have become payable, to
the extent not theretofore

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paid, and (C) any compensation previously deferred by Employee other than
pursuant to a tax-qualified plan (together with any interest thereon) and any
unpaid accrued vacation, each to the extent not theretofore paid;

     (2) to the extent not paid under the terms of the Employer's annual
incentive compensation plan, a lump-sum cash amount equal to the target award
for the Employee under such annual incentive compensation plan for the fiscal
year in which his Date of Termination occurs, reduced pro rata for that portion
of the fiscal year not completed as of the end of the month in which such Date
of Termination occurs; and

     (3) a lump-sum cash amount equal to the sum of (A) twice the Employee's
annual rate of base salary from the Employer and its affiliated companies in
effect immediately prior to the Date of Termination (not taking into account any
reductions which would constitute Good Reason) plus (B) the average annualized
bonus earned by the Employee from the Employer (or its Subsidiaries) during the
three fiscal years (or shorter annualized period if Employee had not been
employed for the full three-year period) ending immediately prior to the year of
the Change in Control.

     (b) If during the Termination Period the employment of Employee shall
terminate, other than by reason of a Nonqualifying Termination, then for a
period of eighteen (18) months following the Date of Termination, the Employer
shall provide Employee (and Employee's dependents, if applicable) with the same
level of

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medical, dental, accident, disability, and life insurance benefits upon
substantially the same terms and conditions (including contributions required
from Employee to receive such benefits) as existed immediately prior to
Employee's Date of Termination (or, if more favorable to Employee, as such
benefits and terms and conditions existed immediately prior to the Change in
Control); provided, that, if Employee cannot continue to participate in the
          --------  ----
Employer plans providing such benefits, the Employer shall otherwise provide
such benefits on the same after-tax basis as if continued participation had been
permitted. Notwithstanding the foregoing, if Employee becomes reemployed with
another employer and is eligible to receive welfare benefits from such employer,
the welfare benefits described herein shall be secondary to such benefits during
the period of Employee's eligibility, but only to the extent that the Employer
reimburses Employee for any increased cost and provides any additional benefits
necessary to give Employee the benefits promised hereunder.

     (c) Any amount of severance paid pursuant to this Section 6 shall offset
any other amount of severance to be received by Employee upon termination of
employment of Employee under any other severance plan or policy of the Employer,
including any employment agreement.

     (d) If during the Termination Period the employment of Employee shall
terminate by reason of a Nonqualifying Termination, then the Employer shall pay
to Employee within ten (10) days

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following the Date of Termination a lump sum cash amount equal to the sum of (i)
Employee's unpaid base salary from the Employer through the Date of Termination,
(ii) any bonus payments which have become payable, to the extent not theretofore
paid, and (iii) any compensation previously deferred by Employee other than
pursuant to a tax-qualified plan (together with any interest thereon) and any
unpaid accrued vacation, each to the extent not theretofore paid.

     3.  Withholding Taxes. The Employer may withhold from all payments due to
         -----------------
the Employee (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Employer is required to
withhold therefrom.

     4.  Limitations on Payments by the Employer.
         ---------------------------------------

     (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Employer (or any of its affiliate entities) or any entity which effectuates a
Change in Control (or any of its affiliated entities) to or for the benefit of
Employee (whether pursuant to the terms of this Agreement of otherwise) (the
"Payments") would be subject to the excise tax (the "Excise Tax") under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the
amounts payable to Employee under this Agreement shall be reduced (reducing
first the payments under Section 3(a)(ii), unless an alternative method of
reduction is elected by Employee) to the maximum amount

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as will result in no portion of the Payments being subject to such excise tax
(the "Safe Harbor Cap"). For purposes of reducing the Payments to the Safe
Harbor Cap, only amounts payable under this Agreement (and not other Payments)
shall be reduced, unless consented to by Employee.

     (b) All determinations required to be made under this Section 5 shall be
made by the public accounting firm that is retained by the Employer and Potomac
Bankshares as of the date immediately prior to the Change in Control (the
"Accounting Firm"). In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control (or if the Accounting Firm fails to make the Determination), Employee
may appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). If payments are reduced to the Safe Harbor
Cap, the Accounting Firm shall provide a reasonable opinion to Employee that he
is not required to report any Excise Tax on his federal income tax return. All
fees, costs and expenses (including, but not limited to, the costs of retaining
experts) of the Accounting Firm shall be borne by the Employer. The
determination by the Accounting Firm shall be binding upon the Employer and
Employee (except as provided in Subsection (c) below).

     (c) If it is established pursuant to a final determination of a court or an
Internal Revenue Service (the "IRS") proceeding which

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has been finally and conclusively resolved, that Payments have been made to, or
provided for the benefit of, Employee by the Employer, which are in excess of
the limitations provided in this Section 5 (hereinafter referred to as an
"Excess Payment"), such Excess Payment shall be deemed for all purposes to be a
loan to Employee made on the date Employee received the Excess Payment and
Employee shall repay the Excess Payment to the Employer on demand, together with
interest on the Excess Payment at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of Employee's receipt of such Excess
Payment until the date of such repayments. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the determination, it is
possible that Payments which will not have been made by the Employer should have
been made (an "Underpayment"), consistent with the calculations required to be
made under this Section 5. In the event that it is determined (1) by the
Accounting Firm, the Employer (which shall include the position taken by the
Employer, or together with its consolidated group, on its federal income tax
return) or the IRS or (2) pursuant to a determination by a court, that an
Underpayment has occurred, the Employer shall pay an amount equal to such
Underpayment to Employee within ten (10) days of such determination together
with interest on such amount at the applicable federal rate from the date such
amount would have been paid to Employee until the date of payment.

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                                  SECTION SEVEN
                          SUCCESSORS; BINDING AGREEMENT

     (a) This Agreement shall not be terminated by any Business Combination. In
the event of any such Business Combination, the provisions of this Agreement
shall be binding upon the Surviving Corporation, and such Surviving Corporation
shall be treated as the Employer hereunder.

     (b) The Employer agrees that in connection with any Business Combination,
it will cause any successor entity to the Employer unconditionally to assume, by
written instrument delivered to Employee (or his beneficiary or estate), all of
the obligations of the Employer hereunder. Failure of the Employer to obtain
such assumption prior to the effectiveness of any such Business Combination that
constitutes a Change in Control shall constitute Good Reason hereunder and shall
entitle Employee to compensation and other benefits from the Employer in the
same amount and on the same terms as Employee would be entitled hereunder if
Employee's employment were terminated following a Change in Control other than
by reason of a Nonqualifying Termination. For purposes of implementing the
foregoing, the date on which any such Business Combination becomes effective
shall be deemed the date Good Reason occurs, and shall be the Date of
Termination if requested by Employee.

     (c) This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives,

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executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee shall die following the Date of Termination while any
amounts would be payable to Employee hereunder had Employee continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to such person or persons appointed in writing
by Employee to receive such amounts or, if no person is so appointed, to
Employee's estate.

                                  SECTION EIGHT
                                     NOTICE

     (a) For purposes of this Agreement, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered or five (5) days after deposit in the United
States mail, certified and return receipt requested, postage prepaid, addressed
as follows:

                           If to the Employee:

                           Robert F. Baronner, Jr.
                           2060 Fox Chase Drive
                           Martinsburg, WV  25401

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                           If to the Employer or Potomac Bankshares:

                           Bank of Charles Town
                           Potomac Bankshares, Inc.
                           P. O. Box 906
                           Charles Town, WV  254l4
                           Attention:  John C. Skinner, Jr.

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address be
effective only upon receipt.

     (b) A written notice of Employee's Date of Termination by the Employer or
Employee, as the case may be, to the other, shall (i) indicate the specific
termination provision in this Agreement relied upon, and (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Employee's employment under the provision
so indicated.

                                  SECTION NINE
                     FULL SETTLEMENT; RESOLUTION OF DISPUTES

     The Employer's obligation to make any payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Employer may have against Employee or others. In no event
shall Employee be obligated to seek other employment or take other action by way
of mitigation of the amounts payable to Employee under any of the provisions of
this Agreement and, except as provided in Section

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3(b) hereof, such amounts shall not be reduced whether or not Employee obtains
other employment.

                                   SECTION TEN
                          EMPLOYMENT WITH SUBSIDIARIES

     Employment with the Employer for purposed of this Agreement shall include
employment with any Subsidiary.

                                 SECTION ELEVEN
                             GOVERNING LAW; VALIDITY

     The interpretation, construction and performance of this Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of West Virginia without regard to the principle of conflicts of laws.
the invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which other provisions shall remain in full force and effect.

                                 SECTION TWELVE
                                  COUNTERPARTS

     This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall constitute one and the
same instrument.

                                SECTION THIRTEEN
                                OTHER EMPLOYMENT

     Employee shall devote all of his time, attention, knowledge, and skills
solely to the business and interest of employer, and

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employer shall be entitled to all of the benefits, profits or other issues
arising from or incident to all work, services, and advice of employee, and
employee shall not, during the term hereof, be interested directly or
indirectly, in any manner, as partner, officer, director, stockholder, advisor,
employee or in any other capacity in any other business similar to employer's
business or any allied trade; provided, however, that nothing herein contained
shall be deemed to prevent or limit the right of employee to invest any of his
surplus funds in the capital stock or other securities of any corporation whose
stock or securities are publicly owned or are regularly traded on any public
exchange, nor shall anything herein contained be deemed to prevent employee from
investing or limit employee's right to invest his surplus funds in real estate,
or to engage in any other activity which does not interfere or otherwise
conflict with Employee's obligations to Employer under this Agreement, all
subject to the restrictions and limitations imposed by Federal and State banking
laws on officers and directors of banks and bank holding companies.

                                SECTION FOURTEEN
                         AGREEMENTS OUTSIDE OF CONTRACT

     This contract contains the complete agreement concerning the employment
arrangement between the parties and shall, as of the effective date hereof,
supersede all other agreements between the parties. The parties stipulate that
neither of them has made any representation with respect to the subject matter
of this agreement

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or any representations including the execution and delivery hereof except such
representations as are specifically set forth herein and each of the parties
hereto acknowledges that he or it has relied on its own judgment in entering
into this agreement. The parties hereto further acknowledge that any payments or
representations that may have heretofore been made by either of them to the
other are of no effect and that neither of them has relied thereon in connection
with his or its dealings with the other.

                                 SECTION FIFTEEN
                            MODIFICATION OF CONTRACT

     No waiver or modification of this agreement or of any covenant, condition,
or limitation herein contained shall be valid unless in writing and duly
executed by the party to be charged therewith and no evidence of any waiver or
modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this agreement, or the rights or obligations of the parties hereunder,
unless such waiver or modification is in writing, duly executed as aforesaid,
and the parties further agree that the provisions of this section may not be
waived except as herein set forth.

                                 SECTION SIXTEEN
                                   TERMINATION

     This agreement may be terminated by either party on thirty

                                       24

<PAGE>

(30) days' written notice to the other. Such notice also applies to Employer's
determination not to renew this Agreement. Except as set forth in Section 6
hereof, Employer shall terminate this Agreement, or fail to renew same for any
reason other than Cause as defined in Section 1, employee shall be entitled to
compensation for one full year from termination, as set forth in Section 5, and
Employee shall, for a period of twelve (12) months from termination, continue to
provide to Employee and Employee's dependents, if applicable, with the same
level of medical, dental, disability and life insurance benefits upon
substantially the same terms and conditions (including contributions required
from Employee to receive such benefits) as existed immediately prior to the
termination, provided that, if Employee cannot continue to participate in the
             -------- ----
Employer plans providing such benefits, the Employer shall otherwise provide
such benefits on the same after-tax basis as if continued participation had been
permitted. Notwithstanding the foregoing, if Employee becomes re-employed with
another employer and is eligible to receive welfare benefits from such employer,
the welfare benefits described herein shall be secondary to such benefits during
the period of Employee's eligibility, but only to the extent that the Employer
reimburses Employee for any increased cost and provides any additional benefits
necessary to give Employee the benefits promised hereunder. Employee may
withhold required taxes from all payments due to Employee hereunder. In the
event of termination for Cause,

                                       25

<PAGE>

Employer thereon may terminate employment without notice and with pay only to
the date of such termination. It is further agreed that any breach or evasion of
any of the terms of this contract by either party hereto will result in
immediate and irreparable injury to the other party and will authorize recourse
to injunction and/or specific performance as well as to all other legal or
equitable remedies to which such injured party may be entitled hereunder.

                                SECTION SEVENTEEN
                                  SEVERABILITY

     All agreements and covenants contained herein are severable, and in the
event any of them, with the exception of those contained in Sections One and
Four hereof, shall be held to be invalid by any competent court, this contract
shall be interpreted as if such invalid agreements or covenants were not
contained herein.

     In witness whereof, the parties have executed this agreement at Charles
Town, West Virginia, on July 10, 2001.
                        -------------

                                           BANK OF CHARLES TOWN

                                           /s/ John C. Skinner, Jr.
                                           ------------------------
                                           By:  John C. Skinner, Jr.
                                           for the Board of Directors

                                           POTOMAC BANKSHARES, INC.

                                           /s/ John C. Skinner, Jr.
                                           ------------------------
                                           By:  John C. Skinner, Jr.
                                           for the Board of Directors

                                           /s/ Robert F. Baronner, Jr.
                                           ---------------------------
                                           ROBERT F. BARONNER, JR.

                                       26

<PAGE>

STATE OF WEST VIRGINIA,

COUNTY OF Jefferson, TO-WIT:
          ---------

     Taken, subscribed and sworn to by John C. Skinner, Jr., for the Board of
Directors of Bank of Charles Town, before me, a Notary Public, this 12 day of
                                                                    --
July, 2001.
----

                                          /s/ Virginia Mae Longerbeam
                                          ---------------------------
                                          Notary Public

My commission expires:

May 7, 2006
---------------------

STATE OF WEST VIRGINIA,

COUNTY OF Jefferson, TO-WIT:
          ---------

     Taken, subscribed and sworn to by John C. Skinner, Jr., for the Board of
Directors of Potomac Bankshares, Inc., before me, a Notary Public, this 12/th/
                                                                        ------
day of July, 2001.
       ----

                                          /s/ Virginia Mae Longerbeam
                                          ---------------------------
                                          Notary Public

My commission expires:

May 7, 2006
-----------

                                       27

<PAGE>

STATE OF WEST VIRGINIA,

COUNTY OF Jefferson, TO-WIT:
          ---------

     Taken, subscribed and sworn to by Robert F. Baronner, Jr., before me, a
Notary Public, this 12/th/ day of July, 2001.
                    ------        ----

                                          /s/ Virginia Mae Longerbeam
                                          -------------------------------
                                          Notary Public

My commission expires:

May 7, 2006
-----------

                                       28<PAGE>

                                                                    EXHIBIT 4.14

        SEVENTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND LIMITED WAIVER
        -----------------------------------------------------------------

           This SEVENTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND LIMITED
WAIVER (this "Amendment") is entered into as of December 21, 2001, by and among
              ---------
Coinstar, Inc., a Delaware corporation ("Borrower"), the financial institutions
                                         --------
named on the signature pages hereof (each, a "Lender" and collectively the
                                              ------
"Lenders"), and Comerica Bank-California, successor in interest to Imperial
 -------
Bank, as Agent for the Lenders ("Agent"), with reference to the following facts:
                                 -----

           A.  Borrower, Agent, and Lenders are parties to that certain Credit
Agreement dated as of February 19, 1999, as amended (the "Credit Agreement").
                                                          ----------------

           B.  The parties desire to further amend the Credit Agreement in
accordance with the terms of this Amendment.

           NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

           1.  Defined Terms. Capitalized terms not otherwise defined herein
               -------------
shall have the same meanings as set forth in the Credit Agreement. All
references to "Imperial Bank" in the Loan Documents shall mean and refer to
Comerica Bank-California.

           2.  Amendments to Credit Agreement. The Credit Agreement is hereby
               ------------------------------
amended as follows:

               (a)  The following defined terms in Section 1.1 are amended to
read as follows:

                    "Consolidated EBITDA": At any date of determination, the net
                     -------------------
               income of Borrower (excluding Foreign Subsidiaries), plus, to the
                                                                    ----
               extent deducted in computing such net income, without
               duplication, the sum of (a) interest expense (excluding
               capitalized interest), (b) income tax expense, (c) depreciation
               expense, (d) amortization expense, (e) any extraordinary or
               nonrecurring losses and (e) other noncash items reducing such net
               income, minus, to the extent added in computing net income,
                       -----
               without duplication, the sum of (i) any extraordinary or
               nonrecurring gains and (ii) other noncash items increasing such
               consolidated net income, for the twelve months ending on such
               date, determined in accordance with GAAP.

                    "Consolidated Total Debt": At any date of determination, the
                     -----------------------
               sum, determined on a consolidated basis, of all outstanding Loans
               and the Letter of Credit Usage under this Agreement, all Debt of
               the Borrower and its consolidated Subsidiaries (excluding Foreign
               Subsidiaries) that is subordinated to the Debt under this
               Agreement, and all other interest-bearing Debt of the Borrower
               and its consolidated Subsidiaries (excluding Foreign
               Subsidiaries)

                                        1

<PAGE>

           "Consolidated Total Debt Service": For any date of determination, the
            -------------------------------
sum, determined on a consolidated basis, of (i) all interest expense of the
Borrower and its consolidated Subsidiaries (excluding Foreign Subsidiaries) with
respect to all Debt (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its consolidated Subsidiaries (excluding Foreign
Subsidiaries), excluding capitalized interest, for the three months ending on
such date multiplied by four, plus (ii) scheduled reductions of principal of all
Debt (other than with respect to the Indenture) of the Borrower and its
consolidated Subsidiaries (excluding Foreign Subsidiaries) for the twelve (12)
months following such date (including that portion of rental payments with
respect to Capital Leases which is or should be applied as a reduction to the
principal of such Capital Leases in accordance with GAAP), plus (iii) fees and
charges for Letter of Credit Usage as set forth in Section 2.5(f) of this
Agreement for the three months ending on such date multiplied by four, provided,
                                                                       --------
that reductions of principal of the Revolving Loans shall be calculated as
though such Loans were scheduled to be repaid in twelve (12) equal quarterly
installments on the last day of each fiscal quarter of the Borrower commencing
on the Revolving Maturity Date.

           "Current Liabilities": As of any applicable date, all amounts that
            -------------------
should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of the Borrower (excluding Foreign Subsidiaries) as
at such date, including all Debt that is payable upon demand or within one year
from the date of determination thereof unless such Debt is renewable or
extendable at the option of the Borrower to a date more than one year from the
date of determination, plus, to the extent not already included therein, all
outstanding Loans and the Letter of Credit Usage under this Agreement, and any
other Debt owing to Lenders, but excluding deferred revenue, and excluding
amounts due and payable to retail partners of the Borrower.

           "Loans": The Revolving Loans, the Term Loans, the Term Facility B
            -----
Loans, and any combination thereof, made to the Borrower pursuant to Section
2.1, Section 2.6, and Section 2.8, respectively.

           "Quick Assets": At any date of determination, the total unrestricted
            ------------
cash, unrestricted cash equivalents, and accounts receivable of the Borrower
(excluding Foreign Subsidiaries), excluding any cash owned by retail partners of
the Borrower, determined in accordance with GAAP.

           "Revolving Maturity Date": October 15, 2003.
            -----------------------

                                        2

<PAGE>

           (b)  The following new defined terms are added to Section 1.1 in
their proper alphabetical order, which shall read as follows:

                "Consolidated Capital Expenditures": At any date of
                 ---------------------------------
      determination, the dollar amount of gross expenditures (including
      obligations under Capital Leases) incurred by the Borrower (excluding
      Foreign Subsidiaries) for the twelve months ending on such date, for fixed
      assets, real property, plant and equipment, and renewals, improvements and
      replacements thereto required to be included in "capital expenditures",
      "additions to property, plant or equipment" or comparable items in the
      consolidated statement of changes in financial position of the Borrower in
      conformity with GAAP, excluding, however, expenditures of insurance
      proceeds received as the result of damage or destruction of the property
      being replaced, and excluding expenditures financed with the proceeds of
      any Debt of the Borrower.

                "Term Facility B Commitment": As to Comerica Bank-California,
                 --------------------------
      the lesser of (a) Twelve Million Dollars ($12,000,000) and (b) such
      Lender's pro rata share of the Borrowing Base. The term "Term Facility B
                                                               ---------------
      Commitments" shall mean the aggregate Term Facility B Commitments of all
      -----------
      of the Lenders, as such amount may be reduced pursuant to the terms of
      this Agreement.

                "Term Facility B Commitment Termination Date": December 4, 2002.
                 -------------------------------------------

                "Term Facility B Loan": As defined in Section 2.8(a).
                 --------------------

                "Term Facility B Maturity Date": December 4, 2006.
                 -----------------------------

                "Term Facility B Notes": As defined in Section 2.8(c).
                 ---------------------

           (c)  Section 2.1(d) is amended to read as follows:

                (d) Revolving Commitment Fee. The Borrower agrees to pay to the
                    ------------------------
      Agent for the ratable benefit of the Lenders a commitment fee (the
      "Revolving Commitment Fee") on the average daily unused portion of the
      Revolving Commitments, from December 21, 2001 until the Revolving Maturity
      Date, at the rate of (i) 0.50% per annum for so long as the average daily
      aggregate balance of Borrower's direct deposit accounts maintained with
      the Agent for any quarter is less than $300,000, (ii) 0.30% per annum for
      so long as the average daily aggregate balance of Borrower's direct
      deposit accounts maintained with the Agent for any quarter is equal to or
      greater than $300,000 but less than $600,000, and (iii) 0.15% per annum
      for so long as the average daily aggregate balance of Borrower's direct
      deposit accounts maintained with the Agent for any quarter is equal to or
      greater than $600,000, payable in arrears on the last day of each calendar
      quarter commencing on the first such date occurring after December 21,
      2001. The Revolving Commitment Fee shall be calculated on the basis of a
      360-day year for the actual days elapsed, and shall be non-refundable. For
      the purposes of calculating the Revolving Commitment Fee, the Letter of
      Credit Usage shall be deemed a usage of the Commitments.

                                        3

<PAGE>

           (d)  Section 2.2(a)(ii) is amended to read as follows:

                     (ii) Term Loans. The aggregate principal amount of the Term
                          ----------
         Loans outstanding on the Term Commitment Termination Date shall be
         payable in sixteen (16) equal quarterly installments payable on the
         last day of each March, June, September and December, commencing on
         September 30, 2002, and ending on the Maturity Date, on which date the
         remaining outstanding principal amount of the Term Loans, together with
         accrued interest thereon shall be due and payable; provided however,
                                                            -------- -------
         that if this Agreement is not amended in accordance with Section 9.1 to
         extend the Revolving Maturity Date beyond October 15, 2003, then the
         remaining outstanding principal amount of the Term Loans, together with
         accrued interest thereon shall be due and payable on the Revolving
         Maturity Date.

           (e)  A new Section 2.2(a)(iv) is added to the Credit Agreement, which
shall read as follows:

                     (iv) Term Facility B Loans. Each Term Facility B Loan shall
                          ---------------------
         be payable in sixteen (16) equal quarterly installments of principal,
         plus accrued interest, payable on the last day of each March, June,
         September and December, commencing on the first of such days to occur
         after the date such Loan is made, and ending on the Term Facility B
         Maturity Date, on which date the remaining outstanding principal amount
         of the Term Facility B Loans, together with accrued interest thereon
         and any other amounts owing under this Agreement shall be due and
         payable; provided however, that if this Agreement is not amended in
                  -------- -------
         accordance with Section 9.1 to extend the Revolving Maturity Date
         beyond October 15, 2003, then the remaining outstanding principal
         amount of the Term Facility B Loans, together with accrued interest
         thereon and any other amounts owing under this Agreement, shall be due
         and payable on the Revolving Maturity Date.

           (f)  Section 2.3(a) is amended to read as follows:

                (a)  Payment of Interest. Interest with respect to each Loan
                     -------------------
         shall be payable in arrears on each Interest Payment Date for such
         Loan, on the maturity date for such Loan, and on the date of any
         prepayment.

           (g)  Section 2.6(d) is amended to read as follows:

                (d)  Term Commitment Fee. The Borrower agrees to pay to the
                     -------------------
         Agent for the ratable benefit of the Lenders a commitment fee (the
         "Term Commitment Fee") on the average daily unused portion of the Term
         Commitments, from December 21, 2001 until the Term Commitment
         Termination Date, at the rate of (i) 0.50% per annum for so long as the
         average daily aggregate balance of Borrower's direct deposit accounts
         maintained with the Agent for any quarter is less than $300,000, (ii)
         0.30% per annum for so long as the average daily aggregate balance of
         Borrower's direct deposit accounts maintained with the Agent for any
         quarter is equal to or greater than $300,000 but less than $600,000,
         and (iii) 0.15% per annum for so long as the average daily aggregate
         balance of Borrower's direct deposit accounts maintained with the Agent
         for any quarter is equal to or greater than $600,000, payable in
         arrears on the last day of each calendar quarter commencing on the
         first such date occurring after December 21, 2001. The Term Commitment
         Fee shall be calculated on the basis of a 360-day year for the actual
         days elapsed, and shall be non-refundable.

                                        4

<PAGE>

          (h)  A new Section 2.8 is added to the Credit Agreement, which shall
read as follows:

               2.8  The Term Facility B Loans.
                    -------------------------

                    (a)  The Term Facility B Commitment. Each Lender agrees,
                         ------------------------------
        severally and not jointly, on the terms and conditions hereinafter set
        forth, to make Loans (each, a "Term Facility B Loan") to the Borrower
                                       --------------------
        from time to time during the period from the date hereof to and
        including the Term Facility B Commitment Termination Date in an
        aggregate amount not to exceed such Lender's Term Facility B Commitment;
        provided, however, that no Lender shall be obligated on any date to make
        --------  -------
        a Loan which, when added to the outstanding Loans and the Letter of
        Credit Usage, would exceed the Borrowing Base. Each Term Facility B Loan
        shall be used by the Borrower solely for the redemption of its 13%
        Senior Subordinated Discount Notes due 2006 issued pursuant to the
        Indenture dated as of October 1, 1996, between the Borrower and The Bank
        of New York, as Trustee, in the amount of such Loan. Each Term Facility
        B Loan shall consist of a LIBO Rate Loan or a Base Rate Loan, as
        determined by the Borrower and notified to the Agent in accordance with
        Section 2.8(b) and shall be in a minimum amount of $500,000; provided
        that a Term Facility B Loan consisting of a LIBO Rate Loan shall be in a
        minimum amount of $2,000,000. Each Term Facility B Loan shall be made on
        the same day by the Lenders ratably according to their respective Term
        Facility B Commitments. Term Facility B Loans, once repaid, may not be
        reborrowed.

                    (b)  Making the Term Facility B Loans.
                         --------------------------------

                         (i)  The Borrower may borrow under the Term Facility B
        Commitments on any Business Day if the Borrowing is to consist of a Base
        Rate Loan and on any LIBO Business Day if the Borrowing is to consist of
        a LIBO Rate Loan, provided that the Borrower shall give the Agent
        irrevocable notice (which notice must be received by the Agent prior to
        10:00 A.M., San Francisco time) (i) three (3) LIBO Business Days prior
        to the requested Borrowing date in the case of a LIBO Rate Loan, and
        (ii) one (1) Business Day prior to the requested Borrowing date in the
        case of a Base Rate Loan, specifying (A) the amount of the proposed
        Borrowing, (B) the requested date of the Borrowing, (C) whether the
        Borrowing is to consist of a LIBO Rate Loan or a Base Rate Loan, and (D)
        if the Loan is to be a LIBO Rate Loan, the length of the Interest Period
        therefor. Promptly following receipt of such notice, the Agent shall
        notify each Lender of the date of the Loan, whether the Loan will be a
        Base Rate Loan or a LIBO Rate Loan, the amount of that Lender's pro rata
        share of the Loan and, if the Loan is a LIBO Rate Loan, of the
        applicable Interest Period. Not later than 1:00 P.M., San Francisco
        time, on the date specified for any Loan, each Lender shall deposit
        immediately available funds in the amount of its pro rata share of the
        Loan to the account of the Agent set forth on the signature pages
        hereof. Upon satisfaction of the applicable conditions set forth in
        Article IV, the Agent will make available the proceeds of all such Loans
        to the Borrower by crediting the account of the Borrower on the books of
        the Agent, or as otherwise directed by the Borrower.

                                        5

<PAGE>

                         (ii)  The notice of Borrowing may be given orally
     (including telephonically) or in writing (including telex or facsimile
     transmission); provided that any oral notice shall be confirmed in writing
     on the same Business Day and all written notices and confirmation shall be
     in the form of the Notice of Term Loan attached hereto as Exhibit D. Any
                                                               ---------
     conflict regarding a notice or between an oral notice and a written notice
     applicable to the same Borrowing shall be conclusively determined by the
     Agent's books and records. The Agent's failure to receive any written
     notice of a particular Borrowing shall not relieve the Borrower of its
     obligations to repay the Borrowing made and to pay interest thereon. The
     Agent shall not incur any liability to the Borrower in acting upon, and
     shall be entitled to rely upon, any notice of Borrowing, or any notice of
     interest rate conversion or extension or regarding any Letter of Credit,
     which the Agent believes in good faith to have been given by a Person duly
     authorized to borrow on behalf of the Borrower.

                         (iii) Unless the Agent shall have received notice from
     a Lender prior to the date of any Borrowing that such Lender will not make
     available to the Agent such Lender's ratable portion of such Borrowing, the
     Agent may assume that such Lender has made such portion available to the
     Agent on the date of such Borrowing in accordance with subsection (1) of
     this Section 2.8(b) and the Agent may, in reliance upon such assumption,
     make available to the Borrower on such date a corresponding amount. If and
     to the extent that such Lender shall not have so made such ratable portion
     available to the Agent, such Lender and the Borrower severally agree to
     repay to the Agent forthwith on demand such corresponding amount together
     with interest thereon, for each day from the date such amount is made
     available to the Borrower until the date such amount is repaid to the
     Agent, at (i) in the case of the Borrower, the interest rate applicable at
     the time to such Borrowing and (ii) in the case of such Lender, the Federal
     Funds Rate. If such Lender shall repay to the Agent such corresponding
     amount, such amount so repaid shall constitute such Lender's pro rata share
     of such Borrowing for purposes of this Agreement. The failure of any Lender
     to make available its pro rata share of any Borrowing shall not relieve any
     other Lender of its obligation, if any, hereunder, to make available its
     pro rata share of such Borrowing on the date of such Borrowing, but no
     Lender shall be responsible for the failure of any other Lender to make
     available its pro rata share of any Borrowing on the date of any Borrowing.

                    (c)  Term Facility B Notes. The Term Facility B Loans made
                         ---------------------
     by the Lenders pursuant hereto shall be evidenced by promissory notes of
     the Borrower, substantially in the form of Exhibit L (the "Term Facility B
                                                ---------       ---------------
     Notes"), payable to the order of each Lender and representing the
     -----
     obligation of the Borrower to pay the unpaid principal amount of the Term
     Facility B Loans made by that Lender, with interest thereon as prescribed
     in Section 2.3. Each Lender is hereby authorized to record in its books and
     records and on any schedule annexed to its Term Facility B Note, the date
     and amount of the Term Facility B Loans made by that Lender and the date
     and amount of each payment of principal thereof, and in the case of LIBO
     Rate Loans, the Interest Period and interest rate with respect thereto, and
     any such recordation shall constitute prima facie evidence of the accuracy
     of the information so recorded; provided that failure by any Lender to
     effect such recordation shall not affect the Borrower's obligations
     hereunder. Prior to the transfer of a Term Facility B Note, the
     transferring Lender shall record such information on any schedule annexed
     to and forming a part of such Term Facility B Note.

                                       6

<PAGE>

                   (d)  Term Facility B Commitment Fee. The Borrower agrees to
                        ------------------------------
     pay to the Agent for the ratable benefit of the Lenders a commitment fee
     (the "Term Facility B Commitment Fee") on the average daily unused portion
           ------------------------------
     of the Term Facility B Commitments, from December 21, 2001 until the Term
     Facility B Commitment Termination Date, at the rate of (i) 0.50% per annum
     for so long as the average daily aggregate balance of Borrower's direct
     deposit accounts maintained with the Agent for any quarter is less than
     $300,000, (ii) 0.30% per annum for so long as the average daily aggregate
     balance of Borrower's direct deposit accounts maintained with the Agent for
     any quarter is equal to or greater than $300,000 but less than $600,000,
     and (iii) 0.15% per annum for so long as the average daily aggregate
     balance of Borrower's direct deposit accounts maintained with the Agent for
     any quarter is equal to or greater than $600,000, payable in arrears on the
     last day of each calendar quarter commencing on the first such date
     occurring after December 21, 2001. The Term Commitment Fee shall be
     calculated on the basis of a 360-day year for the actual days elapsed, and
     shall be non-refundable.

          (i)  Section 6.2(a) is amended to read as follows:

               (a) Direct Contribution Margin to Coinstar Processing Revenue.
                   ---------------------------------------------------------
     Permit the ratio of Direct Contribution Margin to Coinstar Processing
     Revenue to be less than 0.52 to 1.0 as of the last day of any calendar
     month from and after December 21, 2001.

          (j)  Section 6.2(b) is amended to read as follows:

               (b) Modified Fixed Charge Ratio. Permit the ratio of (a) the
                   ---------------------------
     difference of Consolidated EBITDA minus Consolidated Capital Expenditures
                                       -----
     to (b) Consolidated Total Debt Service to be less than 1.40 to 1.0 as of
     the last day of any calendar month from and after December 21, 2001.

          (k)  Section 6.2(c) is amended to read as follows:

               (c) Consolidated EBITDA to Consolidated Total Debt Service.
                   ------------------------------------------------------
     Permit the ratio of Consolidated EBITDA to Consolidated Total Debt Service
     to be less than 2.0 to 1.0 as of the last day of any calendar month from
     and after December 21, 2001.

          (l)  Section 6.2(d) is amended to read as follows:

               (d) Consolidated Total Debt to Consolidated EBITDA. Permit the
                   ----------------------------------------------
     ratio of Consolidated Total Debt to Consolidated EBITDA to be greater than:
     (i) 2.50 to 1.0 as of the last day of any calendar month during the period
     from December 21, 2001 through June 30, 2002; or (ii) 2.25 to 1.0 as of the
     last day of any calendar month from and after July 1, 2002.

                                       7

<PAGE>

          (m)  Section 6.2(e) is amended to read as follows:

               (e)  Adjusted Quick Ratio. Permit the ratio of Quick Assets to
                    --------------------
     Current Liabilities to be less than: (i) 1.10 to 1.0 as of the last day of
     any calendar month through December 31, 2001; (ii) 1.25 to 1.0 as of the
     last day of any calendar month during the period from January 1, 2002
     through June 30, 2002; (iii) 1.40 to 1.0 as of the last day of any calendar
     month during the period from July 1, 2002 through September 30, 2002; or
     (iv) 1.50 to 1.0 as of the last day of any calendar month from and after
     October 1, 2002.

          (n)  Section 6.2(z) is amended to read as follows:

               (z)  Restrictions on Transfers to Subsidiaries; Restrictions on
                    ----------------------------------------------------------
     Expenditures for Electronic Commerce. Notwithstanding any other provisions
     ------------------------------------
     of this Agreement to the contrary, allow the total aggregate amounts of any
     (a) consideration given in any Acquisition from a Domestic Subsidiary or a
     Foreign Person pursuant to Section 6.2(k)(ii)(iv), (b) loans to,
     Investments in, or guaranties of the obligations of any Domestic or Foreign
     Subsidiaries pursuant to Section 6.2(l)(v), (c) Contingent Liabilities in
     favor of any Domestic or Foreign Subsidiaries pursuant to Section
     6.2(m)(iv), (d) sales, leases, or transfers of assets to Domestic or
     Foreign Subsidiaries pursuant to Section 6.2(n)(iii), (e) amounts
     transferred to any Domestic or Foreign Subsidiaries from and after December
     21, 2001, and (f) amounts expended or used by the Borrower or any
     Subsidiary for the development of electronic commerce or internet-related
     business, in each case individually or in the aggregate, to exceed
     $16,000,000 at any time.

          (o)  Exhibit F is deleted and replaced with Exhibit F hereto.
               ---------                              ---------

          (p)  Exhibit G is deleted and replaced with Exhibit G hereto.
               ---------                              ---------

          (q)  Exhibit L shall be in the form of Exhibit L hereto.
               ---------                         ---------

     3.   Consent and Limited Waiver with respect to Redemption of Notes under
          --------------------------------------------------------------------
Indenture. Subject to the terms and conditions contained herein, and in reliance
---------
on the representations and warranties of the Borrower set forth herein, Lenders
hereby (a) consent to the redemption by Borrower of certain of its 13% Senior
Subordinated Discount Notes due 2006 issued pursuant to the Indenture dated as
of October 1, 1996, between the Borrower and The Bank of New York, as Trustee,
and (b) waive the provisions of Section 6.2(r) of the Credit Agreement with
respect to such redemption; provided that (i) at the time of and immediately
                            --------
following any such redemption there shall exist no condition or event that
constitutes an Event of Default or Potential Event of Default; (ii) the Borrower
shall not use any proceeds of Revolving Loans for the redemption of such Notes,
(iii) the Term Facility B Loans shall be used solely for the redemption of such
Notes, and (iv) the total consideration paid in redemption of such Notes shall
not exceed Fifty Million Dollars ($50,000,000) in the aggregate during the term
of the Credit Agreement. Without limiting the generality of the provisions of
Section 9.1 of the Credit Agreement, the consent and waiver set forth herein
shall be limited precisely as written, and nothing in this Agreement shall be
deemed to (i) constitute a waiver of compliance by the Borrower with Section
6.2(r) of the Credit Agreement in any other instance, or (ii) constitute a
waiver of any other Event of Default or other failure by Borrower to perform in
accordance with the Loan Documents or this Agreement, or (iii) prejudice any
right or remedy that the Lender may now have or may have in the future under or
in connection with the Credit Agreement or the Loan Documents.

                                       8

<PAGE>

     4.   Limited Waiver with respect to Tangible Net Worth Covenant. Subject to
          ----------------------------------------------------------
the terms and conditions contained herein, and in reliance on the
representations and warranties of the Borrower set forth herein, Lenders hereby
waive the Borrower's obligation to comply with Section 6.2(e) of the Credit
Agreement as of September 30, 2001. Without limiting the generality of the
provisions of Section 9.1 of the Credit Agreement, the waiver set forth herein
shall be limited precisely as written, and nothing in this Agreement shall be
deemed to (i) constitute a waiver of compliance by the Borrower with Section
6.2(e) in any other instance, or (ii) constitute a waiver of any other Event of
Default or other failure by Borrower to perform in accordance with the Loan
Documents or this Agreement, or (iii) prejudice any right or remedy that the
Lender may now have or may have in the future under or in connection with the
Credit Agreement or the Loan Documents.

     5.   Updated Exhibits. On or before January 9, 2002, the Borrower shall
          ----------------
deliver to the Agent updated Exhibits A, B and C to the Intellectual Property
                             ----------  -     -
Security Agreement, and deliver any schedules or notices required pursuant to
Section 6.1(i) of the Credit Agreement.

     6.   Conditions to Effectiveness.
          ---------------------------

     This Amendment shall become effective as of December 21, 2001 (the
"Effective Date"), only upon:

          (a)  receipt by the Agent of the following (each of which shall be in
form and substance satisfactory to the Agent and its counsel):

               (i)   counterparts of this Amendment duly executed on behalf of
the Borrower and the Lenders;

               (ii)  copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower, authorizing the execution and delivery of
this Amendment;

               (iii) a promissory note in favor of Comerica Bank-California, in
the form of Exhibit L hereto;
            ---------

               (iv)  control agreements by certain Persons;

               (v)   a stock pledge agreement with respect to Coinstar
International, Inc., and certificates representing the pledged shares referred
to therein, accompanied by undated stock powers executed in blank;

          (b)  receipt by Comerica Bank-California of a nonrefundable commitment
fee in the amount of $35,000;

                                       9

<PAGE>

          (c) Borrower shall have deposited at least $10,000,000 in one or more
deposit accounts with Comerica Bank-California;

          (d) completion of such other matters and delivery of such other
agreements, documents and certificates as the Agent or any Lender may reasonably
request.

     7.   Representations and Warranties. In order to induce the Lenders to
          ------------------------------
enter into this Amendment, the Borrower represents and warrants to the Lenders
that the following statements are true, correct and complete as of the effective
date of this Amendment:

          (a) Corporate Power and Authority. The Borrower has all requisite
              -----------------------------
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement"). The
Certificate of Incorporation and Bylaws of the Borrower have not been amended
since the copies previously delivered to the Lenders.

          (b) Authorization of Agreements. The execution and delivery of this
              ---------------------------
Amendment and the performance by the Borrower of the Amended Agreement have been
duly authorized by all necessary corporate action on the part of the Borrower.

          (c) No Conflict. The execution and delivery by the Borrower of this
              -----------
Amendment do not and will not contravene (i) any law or any governmental rule or
regulation applicable to the Borrower, except to the extent not resulting in a
Material Adverse Effect, (ii) the Certificate of Incorporation or Bylaws of the
Borrower, (iii) any order, judgment or decree of any court or other agency of
government binding on the Borrower, or (iv) any material agreement or instrument
binding on the Borrower, except to the extent not resulting in a Material
Adverse Effect.

          (d) Governmental Consents. The execution and delivery by the Borrower
              ---------------------
of this Amendment and the performance by the Borrower of the Amended Agreement
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body (except routine reports required
pursuant to the Securities and Exchange Act of 1934, as amended, which reports
will be made in the ordinary course of business).

          (e) Binding Obligation. This Amendment and the Amended Agreement have
              ------------------
been duly executed and delivered by the Borrower and are the binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws and equitable principles relating to or affecting creditors' rights.

          (f) Incorporation of Representations and Warranties From Credit
              -----------------------------------------------------------
Agreement. Subject to compliance by Borrower with Section 5 of this Amendment,
---------
the representations and warranties contained in Section 5.1 of the Credit
Agreement are correct on and as of the effective date of this Amendment as
though made on and as of such date (except to the extent they relate
specifically to any earlier date, in which case such representations and
warranties shall continue to have been correct as of such date).

                                       10

<PAGE>

        (g) Absence of Default. No event has occurred and is continuing or will
            ------------------
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.

     8. Miscellaneous.
        -------------

        (a) Reference to and Effect on the Credit Agreement and the Other Loan
            ------------------------------------------------------------------
Documents.
---------

            (i)   On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to the "Credit Agreement," "thereunder," "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Amended Agreement.

            (ii)  Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.

            (iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the Agent
or Lenders under the Credit Agreement or any of the other Loan Documents.

        (b) Fees and Expenses. All costs and expenses of the Agent and Lenders,
            -----------------
including, but not limited to, reasonable attorneys' fees, incurred by the Agent
and Lenders in the preparation and negotiation of this Amendment constitute
costs and expenses in connection with the amendment and restructuring of the
Loan Documents, and as such are payable by the Borrower in accordance with
Section 9.5 of the Credit Agreement.

        (c) Headings. Section and subsection headings in this Amendment are
            --------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

        (d) Applicable Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
            --------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

        (e) Counterparts. This Amendment may be executed in any number of
            ------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

                      [REMAINDER INTENTIONALLY LEFT BLANK]

                                       11

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                             BORROWER:

                                             COINSTAR, INC.

                                             By: /s/ Diane L. Renihan

                                             Title: CFO

                                             AGENT:

                                             COMERICA BANK-CALIFORNIA, SUCCESSOR
                                             IN INTEREST TO IMPERIAL BANK

                                             By: /s/ Jeff Roberts

                                             Title: Asst. Vice President

                                             LENDER:

                                             COMERICA BANK-CALIFORNIA, SUCCESSOR
                                             IN INTEREST TO IMPERIAL BANK

                                             By: /s/ Jeff Roberts

                                             Title: Asst. Vice President

                                       12

<PAGE>

                                    EXHIBIT F

                        [FORM OF COMPLIANCE CERTIFICATE]
                             COMPLIANCE CERTIFICATE

         1. This Compliance Certificate ("Compliance Certificate") is executed
and delivered by Coinstar, Inc., a Delaware corporation (the "Borrower") to
Comerica Bank-California, successor in interest to Imperial Bank (the "Agent")
pursuant to Section 6.1(a)(iv)(B) of the Credit Agreement dated as of February
19, 1999 among the Borrower, the financial institutions named therein and the
Agent. Any terms used herein and not defined herein shall have the meanings
defined in the Credit Agreement. This Compliance Certificate covers the
Borrower's:

               Calendar month ended _________, 19__
               Fiscal quarter ended _________, 19__
               Fiscal year ended ________, 19__

         2. The following paragraphs set forth calculations in compliance with
obligations pursuant to Section 6.2(a), (b), (c), (d), (e), (f), (g) and (z) of
the Credit Agreement, as of the end of the fiscal period set forth in paragraph
1 hereof.

          A.    Direct Contribution Margin to Coinstar
                --------------------------------------
                Processing Revenue (Sec. 6.2(a)):
                ---------------------------------

                (a)   Direct Contribution Margin                     $__________

                (b)   Coinstar Processing Revenue                    $__________

                Ratio (a) : (b)                                      ___________

                Minimum Permitted Ratio:                             0.52 to 1.0

          B.    Modified Fixed Charge Ratio (Sec. 6.2(b)):
                ------------------------------------------

                (a)   Consolidated EBITDA minus
                                          -----
                Consolidated Capital Expenditures                    $__________

                (b)   Consolidated Total Debt Service                ___________

                Ratio (a) : (b)                                      ___________

                 Minimum Permitted Ratio:                            1.40 to 1

          C.    Consolidated EBITDA to Consolidated Total
                -----------------------------------------
                Debt Service (Sec. 6.2(c)):
                ---------------------------

                (a)   Consolidated EBITDA                            $__________

                (b)   Consolidated Total Debt Service                $__________

                Ratio (a) to (b)                                     ___________

                Minimum Permitted Ratio:                             2.0 to 1.0

                                      F-1

<PAGE>

          D.   Consolidated Total Debt to Consolidated
               ---------------------------------------
               EBITDA (Sec. 6.2(d)):
               ---------------------

               (a)   Consolidated Total Debt                         $__________

               (b)   Consolidated EBITDA                             $__________

               Ratio (a) to (b)                                      ___________

               Maximum Permitted Ratio: (i) 2.50 to 1.0 as of
               the last day of any calendar month during the
               period from December 21, 2001 through June 30,
               2002; or (ii) 2.25 to 1.0 as of the last day
               of any calendar month from and after July 1, 2002.

          E.   Adjusted Quick Ratio (Sec. 6.2(e)):
               ----------------------------------

               (a)      Quick Assets                                 $__________

               (b)      Current Liabilities                          $__________

               Ratio (a) to (b)                                      ___________

               Minimum Permitted Ratio: (i) 1.10 to 1.0 as of
               the last day of any calendar month through
               December 31, 2001; (ii) 1.25 to 1.0 as of the last
               day of any calendar month during the period from
               January 1, 2002 through June 30, 2002; (iii) 1.40
               to 1.0 as of the last day of any calendar month
               during the period from July 1, 2002 through
               September 30, 2002; or (iv) 1.50 to 1.0 as of the
               last day of any calendar month from and after
               October 1, 2002.

          F.   Transfers to Subsidiaries; Electronic Commerce
               ----------------------------------------------
               (Sec. 6.2(z))
               -------------

               (a)      Acquisitions from Domestic Subsidiaries or   $__________
               Foreign Persons

               (b)      Loans to, Investments in, guarantees of      $__________
               obligations of Domestic or Foreign Subsidiaries

                                       F-2

<PAGE>

                (c)    Contingent Liabilities in favor of          $__________
                Domestic or Foreign Subsidiaries

                (d)    Sales, leases, transfers of assets to       $__________
                Domestic or Foreign Subsidiaries

                (e)    Amounts transferred to Domestic or          $__________
                Foreign Subsidiaries prior to closing

                (f)    Amounts used for Electronic Commerce        $__________
                or Internet Related Business

                Total:                                             $__________

                Total must not exceed $16,000,000

     3. The undersigned has reviewed the terms of the Credit Agreement and has
made, or caused to be made under his/her supervision, a review in reasonable
detail of the transactions and condition of the Borrower and its Domestic
Subsidiaries during the fiscal period covered by this Compliance Certificate.
The undersigned does not (either as a result of such review or otherwise) have
any knowledge of the existence as of the date of this Compliance Certificate of
any condition or event that constitutes an Event of Default or a Potential Event
of Default, with the exception set forth below in response to which the Borrower
is taking or proposes to take the following actions (if none, so state):

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

     4. The undersigned hereby certifies that the representations and warranties
contained in the Agreement and the other Loan Documents are true and correct in
all material respects on and as of the date hereof (except to the extent they
relate specifically to any earlier date, in which case such representations and
warranties shall continue to have been correct as of such date).

                                      F-3

<PAGE>

     5. This Compliance Certificate is executed on _______________, ____ by the
Chief Executive Officer, Chief Financial Officer, Treasurer or Controller of the
Borrower. The undersigned hereby certifies that each and every matter contained
herein is derived from the Borrower's books and records and is, to the best
knowledge of the undersigned, true and correct.

                                     COINSTAR, INC.,
                                     A Delaware corporation

                                     By: ____________________________

                                     Title: _________________________

                                      F-4

<PAGE>

                                    EXHIBIT G

                                  PRICING GRID

     The "Applicable Margin" shall mean the variable number of percentage points
          -----------------
determined in accordance with the grid set forth below, based upon the
Borrower's ratio of Consolidated EBITDA to Consolidated Total Debt Service as at
the end of each fiscal quarter (the "Consolidated Debt Service Coverage Ratio"),
as determined by the Agent with reference to the Borrower's most recently
delivered financial statements and Compliance Certificate. The Applicable Margin
shall be adjusted on a quarterly basis, effective five (5) Business Days
following Agent's receipt of Borrower's financial statements, Compliance
Certificate and reports on Form 10-Q as required to be submitted pursuant to
Section 6.1(a); provided that if Borrower shall not have timely delivered such
                --------
financial statements, reports on Form 10-Q and Compliance Certificate in
accordance with Section 6.1(a), then commencing on the date upon which such
financial statements should have been delivered and continuing until such
financial statements are actually delivered, it shall be assumed for purposes of
determining said rates that Borrower's Consolidated Debt Service Coverage Ratio
is less than or equal to 1.50 to 1.0.

--------------------------------------------------------------------------------
Level   Ratio of Consolidated        Applicable Margin    Applicable Margin for
        EBITDA to                    for LIBO Rate Loans  Base Rate Loans
        Consolidated Total Debt
        Service
--------------------------------------------------------------------------------
I.      Less than or equal           3.50%                2.00%
        to 1.50 to 1.0
--------------------------------------------------------------------------------
II.     Less than or equal           3.00%                1.50%
        to 1.75 to 1.0 but greater
        than 1.50 to 1.0
--------------------------------------------------------------------------------
III.    Less than or equal to 2.0    2.50%                1.00%
        to 1.0 but greater
        than 1.75 to 1.0
--------------------------------------------------------------------------------
IV.     Greater than 2.0 to 1.0      2.00%                0.50%
--------------------------------------------------------------------------------

                                       G-1

<PAGE>

                                    EXHIBIT L
                                 COINSTAR, INC.

                               TERM FACIITY B NOTE

                                                            San Jose, California
$12,000,000                                                    December 21, 2001

     FOR VALUE RECEIVED, Coinstar, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of Comerica Bank-California (the
 --------
"Lender") the principal amount of Twelve Million Dollars ($12,000,000), or, if
 ------
less, the aggregate amount of Term Facility B Loans (as defined in the Credit
Agreement referred to below) made by the Lender to the Borrower pursuant to the
Credit Agreement referred to below. Each Term Facility B Loan shall be payable
in sixteen (16) equal quarterly installments on the last day of March, June,
September and December of each year, commencing on the first of such days to
occur after the date such Term Facility B Loan is made, and ending on the Term
Facility B Maturity Date (as defined in the Credit Agreement). All unpaid
amounts of principal and interest shall be due and payable in full on the Term
Facility B Maturity Date.

     The Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Credit Agreement.
Notwithstanding any other limitations contained in this Note, Lender does not
intend to charge and the Borrower shall not be required to pay any interest or
other fees or charges in excess of the maximum permitted by applicable law. Any
payments in excess of such maximum shall be refunded to the Borrower or credited
against principal.

     All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Agent described in the Credit Agreement. Until notified of the
transfer of this Note, the Borrower shall be entitled to deem the Lender or such
person who has been so identified by the transferor in writing to the Borrower
as the holder of this Note, as the owner and holder of this Note. Each of the
Lender and any subsequent holder of this Note agrees that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make notation of any payment
made on this Note shall not limit or otherwise affect the obligation of the
Borrower hereunder with respect to payments of principal or interest on this
Note.

     This Note is referred to in, and is entitled to the benefits of, the Credit
Agreement dated as of February 19, 1999 (the "Credit Agreement") among the
                                              ----------------
Borrower, the financial institutions named therein and Comerica Bank-California,
successor in interest to Imperial Bank as Agent. The Credit Agreement, among
other things (i) provides for the making of advances (the "Loans") by the Lender
                                                           -----
to the Borrower on the date hereof in an aggregate amount not to exceed at any
time outstanding the U.S. dollar amounts stated therein, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.

                                       L-1

<PAGE>

     The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.

     No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.

     The Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note. The
Borrower hereby consents to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.

     This Note shall be governed by, and construed in accordance with, the laws
of the state of California without giving effect to its choice of law doctrine.

     IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above written.

                                           Coinstar, Inc.

                                           By: ________________________

                                           Title: _____________________

                                      L-2

<PAGE>

                                 COINSTAR, INC.

                              TERM FACILITY B NOTE

                                                            San Jose, California
$12,000,000                                                    December 21, 2001

     FOR VALUE RECEIVED, Coinstar, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of Comerica Bank-California (the
 --------
"Lender") the principal amount of Twelve Million Dollars ($12,000,000), or, if
 ------
less, the aggregate amount of Term Facility B Loans (as defined in the Credit
Agreement referred to below) made by the Lender to the Borrower pursuant to the
Credit Agreement referred to below. Each Term Facility B Loan shall be payable
in sixteen (16) equal quarterly installments on the last day of March, June,
September and December of each year, commencing on the first of such days to
occur after the date such Term Facility B Loan is made, and ending on the Term
Facility B Maturity Date (as defined in the Credit Agreement). All unpaid
amounts of principal and interest shall be due and payable in full on the Term
Facility B Maturity Date.

     The Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Credit Agreement.
Notwithstanding any other limitations contained in this Note, Lender does not
intend to charge and the Borrower shall not be required to pay any interest or
other fees or charges in excess of the maximum permitted by applicable law. Any
payments in excess of such maximum shall be refunded to the Borrower or credited
against principal.

     All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Agent described in the Credit Agreement. Until notified of the
transfer of this Note, the Borrower shall be entitled to deem the Lender or such
person who has been so identified by the transferor in writing to the Borrower
as the holder of this Note, as the owner and holder of this Note. Each of the
Lender and any subsequent holder of this Note agrees that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make notation of any payment
made on this Note shall not limit or otherwise affect the obligation of the
Borrower hereunder with respect to payments of principal or interest on this
Note.

     This Note is referred to in, and is entitled to the benefits of, the Credit
Agreement dated as of February 19, 1999 (the "Credit Agreement") among the
                                              ----------------
Borrower, the financial institutions named therein and Comerica Bank-California,
successor in interest to Imperial Bank as Agent. The Credit Agreement, among
other things (i) provides for the making of advances (the "Loans") by the Lender
                                                           -----
to the Borrower on the date hereof in an aggregate amount not to exceed at any
time outstanding the U.S. dollar amounts stated therein, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.

                                        1

<PAGE>

     The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.

     No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.

     The Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note. The
Borrower hereby consents to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.

     This Note shall be governed by, and construed in accordance with, the laws
of the state of California without giving effect to its choice of law doctrine.

     IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above written.

                                                Coinstar, Inc.

                                                By: /s/ Diane L. Renihan

                                                Title: CFO

                                       2

<PAGE>

                             STOCK PLEDGE AGREEMENT
                             ----------------------

     THIS STOCK PLEDGE AGREEMENT is entered into as of December 21, 2001, by and
among COINSTAR, INC., a Delaware corporation (the "Borrower") and COMERICA
BANK-CALIFORNIA, SUCCESSOR IN INTEREST TO IMPERIAL BANK (the "Agent").

                                    Recitals
                                    --------

     A. Borrower, certain financial institutions (each, a "Lender" and
collectively, the "Lenders"), and Agent have entered into a Credit Agreement
dated as of February 19, 1999, as amended (said Credit Agreement, as it may
hereafter be amended from time to time, being the "Credit Agreement," the terms
defined in the Credit Agreement and not otherwise defined herein being used
herein as defined in the Credit Agreement), pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Borrower.

     B. Borrower has asked Agent and Lenders to amend the Credit Agreement, and
they have agreed, provided, among other things, Borrower enters into this
Agreement. To secure the Secured Obligations, as defined in the Security
Agreement, Borrower has agreed to pledge to Agent the shares of stock listed on
Exhibit A hereto (the "Shares").
---------

     NOW, THEREFORE, Borrower and Agent agree as follows:

     1.   Pledge of Securities.
          --------------------

          (a) Borrower hereby pledges, assigns and delivers to Agent, for the
benefit of Agent and Lenders, and grants to Agent, for the benefit of Agent and
Lenders, a security interest in the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing
(all hereinafter called the "Pledged Collateral"), as security for the prompt
performance of all of Borrower's Secured Obligations, as defined in the Security
Agreement (the "Secured Indebtedness").

          (b) The term "Pledged Collateral" shall also include any securities,
instruments or distributions of any kind issuable, issued or received by
Borrower upon conversion of, in respect of, or in exchange for any other Pledged
Collateral, including, but not limited to, those arising from a stock dividend,
stock split, reclassification, reorganization, merger, consolidation, sale of
assets or other exchange of securities or any dividends or other distributions
of any kind upon or with respect to the Pledged Collateral.

          (c) The certificate or certificates for the securities included in the
Pledged Collateral, accompanied by an instrument of assignment duly executed in
blank by Borrower, have been, or will be immediately upon the subsequent receipt
thereof by Borrower, delivered by Borrower to Agent. Borrower shall cause the
books of each corporation whose stock is part of the Pledged Collateral to
reflect the pledge of the Shares. Upon the occurrence of an Event of Default
hereunder, Agent may effect the transfer of any securities included in the
Pledged

                                       3

<PAGE>

Collateral into the name of Agent and cause new certificates representing
such securities to be issued in the name of Agent. Borrower will execute and
deliver such documents, and take or cause to be taken such actions, as Agent may
reasonably request to perfect or continue the perfection of Agent's security
interest in the Pledged Collateral.

     2.   Representations, Warranties and Covenants. Borrower represents and
          -----------------------------------------
warrants to and covenants with Agent that:

          (a) The Pledged Collateral is owned by Borrower free and clear of any
security interests, liens or encumbrances;

          (b) Borrower has full power and authority to create a first lien on
the Pledged Collateral in favor of Agent and no disability or contractual
obligation exists which would prohibit Borrower from pledging the Pledged
Collateral pursuant to this Pledge Agreement, and Borrower will not assign,
create or permit to exist any other claim to, lien or encumbrance upon, or
security interest in any of the Pledged Collateral;

          (c) There are no subscriptions, warrants or other options exercisable
with respect to the Shares;

          (d) The Shares represent the percentage of the issued and outstanding
stock of the Subsidiary listed on Exhibit A, there are no agreements that
                                  ---------
require such Subsidiary to issue any additional shares of such Subsidiaries, and
there are no outstanding options to purchase such additional shares;

          (e) The Shares have been duly authorized and validly issued, and are
fully paid and non-assessable; and

          (f) Except as set forth in the Schedule, the Pledged Collateral is not
the subject of any present or threatened suit, action, arbitration,
administrative or other proceeding, and Borrower knows of no reasonable grounds
for the institution of any such proceedings.

     All the above representations and warranties shall survive the making of
this Agreement.

     3.   Voting Prior to Demand. Unless an Event of Default (as defined below)
          ----------------------
shall have occurred and be continuing, Borrower shall be entitled to exercise
all voting rights with respect to the Pledged Collateral and to give consents,
waivers and ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights of Borrower to
vote and give consents, waiver and ratifications shall upon notice to Borrower
cease in case such an Event of Default hereunder shall occur and be continuing.

     4.   Events of Default. Each of the following shall constitute an event of
          -----------------
default ("Event of Default") hereunder:

          (a) The occurrence of an Event of Default under the Credit Agreement;
or

                                        4

<PAGE>

          (b) The breach of any provision of this Agreement by Borrower or the
failure by Borrower to observe or perform any of the provisions of this
Agreement.

5.        Agent's Remedies Upon Default.
          -----------------------------

          (a) Upon the occurrence and during the continuance of an Event of
Default, Agent shall have the right to exercise all such rights as a secured
party under the Uniform Commercial Code of the State of California as it, in its
sole judgment, shall deem necessary or appropriate, including the right to sell
all or any part of the Pledged Collateral at one or more public or private sales
upon ten (10) days' written notice to Borrower, and any such sale or sales may
be made for cash, upon credit, or for future delivery, and in connection
therewith, Agent may grant options, provided that any such terms or options
shall, in the best judgment of Agent, be extended only in order to obtain the
best possible price.

          (b) Borrower recognizes that Agent may be unable to effect a public
sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended ("Act"), so
that Agent may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Pledged Collateral for their own account, for investment and
without a view to the distribution or resale thereof. Borrower understands that
private sales so made may be at prices and on other terms less favorable to the
seller than if the Pledged Collateral were sold at public sales, and agrees that
Agent has no obligation to delay the sale of any of the Pledged Collateral for
the period of time necessary (even if Agent would agree), to register such
securities for sale under the Act. Borrower agrees that private sales made under
the foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.

          (c) After the sale of any of the Pledged Collateral, Agent may deduct
all reasonable legal and other expenses and attorney's fees for preserving,
collecting, selling and delivering the Pledged Collateral and for enforcing its
rights with respect to the Secured Indebtedness, and shall apply the residue of
the proceeds to the Secured Indebtedness in such manner as Agent in its
reasonable discretion shall determine, and shall pay the balance, if any to
Borrower.

     6.   Release of Pledged Collateral. The pledge of and grant of a security
          -----------------------------
interest in the Pledged Collateral pursuant to this Agreement shall be of no
further force or effect and, subject to the terms of the Credit Agreement, the
Pledged Collateral shall be returned to Borrower upon payment in full of the
Secured Obligations.

     7.   Miscellaneous.
          -------------

          (a) All notices, consents, approvals and other communications required
or permitted hereunder shall be addressed to the receiving party at the address
set forth below its signature. All such communications shall be delivered
personally or by facsimile or by courier or sent by first class mail, postage
prepaid. Communications by mail shall be deemed delivered upon receipt.

                                       5

<PAGE>

          (b) This Agreement shall be construed in accordance with, and the
rights of the parties shall be governed by, the law of the State of California.

          (c) This Agreement may not be amended or modified except by a written
instrument signed by Agent and Borrower.

          (d) This Agreement and the agreements and instruments executed in
connection therewith constitute the entire agreement between Agent and Borrower
with respect to the subject matter hereof and supersede all prior agreements,
understandings, offers and negotiations, oral or written.

          (e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which shall together constitute
one and the same document.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.

                                            Borrower:

                                            COINSTAR, INC.

                                            By: /s/ Diane L. Renihan

                                            Title: CFO

                                            Agent:

                                            COMERICA BANK-CALIFORNIA,
                                            SUCCESSOR IN INTEREST TO
                                            IMPERIAL BANK

                                            By: /s/  Jeff Roberts

                                            Title: Asst. Vice President

                                       6

<PAGE>

                                    EXHIBIT A
                                    ---------

                                     Shares
                                     ------

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Stock Issuer          Class of           Stock               Par Value          Number of Shares    Percentage of
------------          --------           -----               ---------          ----------------    -------------
                      Stock              Certificate                                                Outstanding
                      -----              -----------                                                -----------
                                         No(s)                                                      Shares
                                         -----                                                      ------
<S>                   <C>               <C>                  <C>                <C>                 <C>
----------------------------------------------------------------------------------------------------------------------
Coinstar
International,
Inc.                  Common Stock                                              650                 65%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7

<PAGE>

                      ASSIGNMENT SEPARATE FROM CERTIFICATE
                      ------------------------------------

          FOR VALUE RECEIVED, COINSTAR, INC., a Delaware corporation, hereby
sells, assigns and transfers unto _____________ (________________) shares of the
_____________ stock of COINSTAR INTERNATIONAL, INC., a Canadian corporation (the
"Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No. _________ herewith, and does hereby irrevocably
constitute and appoint ______________________ its attorney to transfer the said
stock on the books of the Company with full power of substitution in the
premises.

                                                 COINSTAR, INC.

Dated:_____________, ____                        By: /s/ Diane L. Renihan

                                                 Name: Diane L. Renihan

                                                 Title:  CFO

     In Presence of:

     /s/ Donald Dewey
     ----------------

                                       8

<PAGE>

                         CORPORATE RESOLUTIONS TO BORROW

     I, the undersigned Secretary or Assistant Secretary of Coinstar, Inc. (the
"Corporation"), HEREBY CERTIFY that the Corporation is organized and existing
under and by virtue of the laws of the State of Delaware.

     I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation and Bylaws of the
Corporation, each of which is in full force and effect on the date hereof.

     I FURTHER CERTIFY that at a meeting of the Directors of the Corporation (or
by other duly authorized corporate action in lieu of a meeting), duly called and
held, at which a quorum was present and voting, the following resolutions were
adopted.

     BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:

          NAMES                  POSITIONS               ACTUAL SIGNATURES

Diane L. Renihan             CFO                     /s/ Diane L. Renihan
--------------------------   ------------------      --------------------------

__________________________   __________________      __________________________

__________________________   __________________      __________________________

__________________________   __________________      __________________________

__________________________   __________________      __________________________

acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:

     Execute Amendment. To execute and deliver to the Agent and the Lenders that
certain Seventh Amendment to Credit Agreement, Consent and Limited Waiver dated
as of December 21, 2001 among the Corporation, the financial institutions listed
on the signature pages thereof (the "Lenders"), and Comerica Bank-California,
successor in interest to Imperial Bank, as agent for the Lenders (the "Agent"),
in substantially the form attached hereto (the "Amendment").

     Borrow Money. To borrow from time to time from Lenders on such terms as may
be agreed upon between the officers, employees, or agents and Bank, such sum or
sums of money as in their judgment should be borrowed, without limitation,
including such sums as are specified in that certain Credit Agreement dated as
of February 19, 1999, as amended from time to time (the "Credit Agreement").

                                       9

<PAGE>

     Execute Notes. To execute and deliver to the Lenders the promissory note or
notes of the Corporation, on Lenders' forms, at such rates of interest and on
such terms as may be agreed upon, evidencing the sums of money so borrowed or
any indebtedness of the Corporation to Lenders, and also to execute and deliver
to Lenders one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, or any portion of
the notes.

     Grant Security. To grant a security interest to the Agent, for the benefit
of the Lenders, in the Collateral described in that certain security agreement
(the "Security Agreement") dated concurrently with the Credit Agreement, among
the Corporation and the Agent, and related intellectual property security
agreement (the "Intellectual Property Security Agreement") which security
interest shall secure all of the Corporation's obligations, as described in the
Security Agreement and other documents executed in connection therewith and/or
acknowledged thereby.

     Negotiate Items. To draw, endorse, and discount with Lenders all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with the Agent or any Lender, or
to cause such other disposition of the proceeds derived therefrom as they may
deem advisable.

     Letters of Credit; Foreign Exchange. To execute letters of credit
applications, foreign exchange agreements and other related documents pertaining
to the Lenders' issuance of letters of credit and foreign exchange contracts.

     Issue Notice to Trustee. To issue and deliver to the Trustee under the
Indenture relating to the Corporation's 13% Senior Subordinated Discount Notes
due 2006 a notice designating the Debt under Section 2.1 of the Credit Agreement
as "Designated Senior Debt" for purposes of the Indenture.

     Further Acts. From time to time to take such additional actions and to
execute and deliver such additional certificates, instruments, notices and
documents, and from time to time to amend the Credit Agreement, the Security
Agreement, the Intellectual Property Security Agreement and any related
instrument or document in such manner as may be required by the forms thereof or
applicable law or as such officer may deem necessary, advisable or proper in
order to carry out and perform the obligations of the Corporation under the
Credit Agreement, the Security Agreement and the Intellectual Property Security
Agreement or under any other instrument or document executed pursuant to or in
connection with such agreements; such officer's approval thereof to be
conclusively evidenced by the performance of any such action or the execution
and delivery of any such certificate, instrument, notice, or document.

     BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and the Lenders may rely on these Resolutions until written notice of
their revocation shall have been delivered to and received by the Lenders. Any
such notice shall not affect any of the Corporation's agreements or commitments
in effect at the time notice is given.

                                       10

<PAGE>

     I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

     IN WITNESS WHEREOF, I have hereunto set my hand on December 21, 2001 and
attest that the signatures set opposite the names listed above are their genuine
signatures.

                                              CERTIFIED TO AND ATTESTED BY:

                                              X  /s/ M. Carol Lewis

-------------------------------------------------------------------------------

                                       11

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