<PAGE>   1
 
                                                                    EXHIBIT 10.1
 
                            1995 SEAMED CORPORATION
 
                    EMPLOYEE STOCK OPTION AND INCENTIVE PLAN
 
                                   ARTICLE 1.
 
                              PURPOSE AND DURATION
 
     1.1  Purpose. The purpose of the 1995 SeaMED Corporation Employee Stock
Option and Incentive Plan (the "Plan") is to further the growth, development and
financial success of SeaMED Corporation (the "Company") and its Subsidiaries by
aligning the personal interests of key employees, through the ownership of
shares of the Company's Common Stock and through other incentives, to those of
the Company's shareholders. The Plan is further intended to provide flexibility
to the Company in its ability to compensate key employees and to motivate,
attract and retain the services of such key employees who have the ability to
enhance the value of the Company and its Subsidiaries. In addition, the Plan
provides for incentive awards to key employees of Affiliates in those cases
where the success of the Company or its Subsidiaries may be enhanced by the
award of incentives to such persons.
 
     The Plan permits the granting of Stock Options, Stock Appreciation Rights
and Other Stock Based Awards.
 
     1.2  Duration. Subject to ratification by an affirmative vote of a majority
of the Shares present and entitled to vote at any meeting of shareholders of the
Company, the Plan, if so approved, shall be deemed effective with the approval
of the Board of Directors of the Company on October 26, 1995 (the "Effective
Date"), and shall remain in effect, subject to the right of the Board of
Directors to terminate the Plan at any time pursuant to Article 9 herein and the
availability of Shares subject to the Plan, until October 26, 2005 (the
"Termination Date"). No Award may be granted under the Plan on or after the
Termination Date, but Awards made prior to the Termination Date may be
exercised, vested or otherwise effectuated beyond that date unless otherwise
limited.
 
                                   ARTICLE 2.
 
                                  DEFINITIONS
 
     2.1  Definitions. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
 
     "Affiliate" means any corporation (other than a Subsidiary), partnership,
association, joint venture or other entity in which the Company or any
Subsidiary participates directly or indirectly in the decisions regarding the
management thereof or the production or marketing of products or services.
 
     "Award" means, individually or collectively, a grant under this Plan of
Stock Options, Stock Appreciation Rights or Other Stock Based Awards.
 
     "Award Agreement" means the document which evidences an Award and which
sets forth the terms, conditions and limitations relating to such Award.
 
     "Board" or "Board of Directors" means the Board of Directors of the
Company.
 
     "Change in Control" means (a) a merger or consolidation wherein the Company
is not the surviving corporation, which merger or consolidation is not between
or among the Company and any Affiliates or Subsidiaries, (b) a tender offer or
takeover bid for the Shares (other than a tender offer by the Company) subject
to the Exchange Act and the rules promulgated thereunder, (c) a sale of
substantially all the assets of the Company, and (d) the dissolution of the
Company.
 
                                       1
<PAGE>   2
 
     "Code" means the Internal Revenue Code of 1986, as amended from time to
time or any successor Code thereto.
 
     "Committee" means the group of three or more individuals administering the
Plan, which shall be the Compensation Committee of the Board (or such members of
the Compensation Committee, including at least two (2) Directors, who qualify as
both "disinterested persons" within the meaning of Rule 16b-3 under the Exchange
Act, or any successor rule thereto and "outside directors" under Section 162 of
the Code) or any other committee of the Board, consisting of at least two (2)
Directors and others, all of whom are "disinterested persons," and "outside
directors" and performing similar functions as appointed from time to time by
the Board and constituted so as to permit the Plan to comply with Rule 16b-3
under the Exchange Act, or any successor rule thereto and Section 162 of the
Code.
 
     "Company" means SeaMED Corporation, a Delaware corporation.
 
     "Consultant" means an individual who performs services for the Company, a
Subsidiary or any Affiliate as an independent contractor.
 
     "Director" means a member of the Board of Directors of Company.
 
     "Director Option" means a Nonqualified Stock Option granted to a Director,
as further described at Section 6.4.
 
     "Effective Date" means October 26, 1995.
 
     "Eligible Employee" means any executive, managerial, professional,
technical or administrative employee of the Company, any Subsidiary or any
Affiliate who is expected to contribute to its success.
 
     "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor Act thereto.
 
     "Fair Market Value" means the fair market value of the Company's Shares,
which shall be determined by the Board or, in the event that the Shares are
listed on any national exchange, over-the-counter, or other stock trading
market, then, as of any time, based upon the prevailing bid price of the Shares
as of such time.
 
     "Incentive Stock Options" or "ISO" means a Stock Option granted pursuant to
Article 6 herein, which is designated as an Incentive Stock Option and is
intended to meet the requirements of Section 422 of the Code.
 
     "Nonqualified Stock Option" or "NQSO" means a Stock Option granted pursuant
to Article 6 herein, which is not intended to be an Incentive Stock Option.
 
     "Other Stock Based Award" means an Award, granted pursuant to Article 6
herein, other than a Stock Option or SAR, that is paid with, valued in whole or
in part by reference to, or is otherwise based on Shares.
 
     "Participant" means an Eligible Employee or Consultant selected by the
Committee to receive an Award under the Plan, or a Director who receives
Director Options under the Plan.
 
     "Plan" means the 1995 SeaMED Corporation Employee Stock Option and
Incentive Plan.
 
   
     "Shares" means the issued or unissued shares of the common stock, no par
value, of the Company, and, as to the number of Shares reserved hereunder,
following amendment in 1997 refers to shares of common stock after taking into
account the one-for-five reverse stock split of July 1996.
    
 
     "Stock Appreciation Right" or "SAR" means the grant, pursuant to Article 6
herein, of a right to receive a payment from the Company, in the form of stock,
cash or a combination of both, equal to the difference between the Fair Market
Value of one or more Shares and the exercise price of such Shares under the
terms of such Stock Appreciation Right.
 
     "Stock Option" means the grant, pursuant to Article 6 herein, of a right to
purchase a specified number of Shares during a specified period at a designated
price, which may be either an Incentive Stock Option or a Nonqualified Stock
Option.
 
                                       2
<PAGE>   3
 
     "Subsidiary" means a corporation as defined in Section 424(f) of the Code
with the Company being treated as the employer corporation for purposes of this
definition.
 
     "Termination Date" means the earlier of the date on which all Shares
subject to the Plan have been purchased or acquired according to the Plan's
provisions, the date the Plan is terminated pursuant to Article 9, or October
26, 2005.
 
     "Withholding Event" means an event related to an Award which results in the
Participant being subject to taxation at the federal, state, local or foreign
level.
 
                                   ARTICLE 3.
 
                                 ADMINISTRATION
 
     3.1  Authority. The Plan shall be administered by the Committee which shall
have full and exclusive power, except as limited by law or by the Articles of
Incorporation or Bylaws of the Company, as amended, and subject to the
provisions herein, to:
 
          (a) select Eligible Employees and Consultants to whom Awards are
     granted;
 
          (b) determine the size and types of Awards;
 
          (c) determine the terms and conditions of such Awards in a manner
     consistent with the Plan;
 
          (d) determine whether, to what extent and under what circumstances,
     Awards may be settled, paid or exercised in cash, shares, or other Awards,
     or other property or canceled, forfeited or suspended;
 
          (e) construe and interpret the Plan and any agreement or instrument
     entered into under the Plan;
 
          (f) establish, amend or waive rules and regulations for the Plan's
     administration;
 
          (g) amend (subject to the provisions of Section 4.4 and Article 9
     herein) the terms and conditions, other than price (which amendment may be
     made only by the Board of Directors of the Company pursuant to Article 9),
     of any outstanding Award to the extent such terms and conditions are within
     its discretion;
 
          (h) provide in the terms of the Award Agreements for acceleration of
     exercise or removal of restrictions on exercise in the event of a Change in
     Control of the Company; and
 
          (i) make all other determinations which may be necessary or advisable
     for the administration of the Plan.
 
     All Awards hereunder shall be made by the Committee.
 
     3.2  Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive and binding on
all persons, including the Company, its Subsidiaries and Affiliates, its
shareholders, Participants, and their estates and beneficiaries.
 
                                   ARTICLE 4.
 
                           SHARES SUBJECT TO THE PLAN
 
     4.1  Number of Shares. Subject to adjustment as provided in Section 4.4
herein, no more than 500,000 Shares may be issued under the Plan, of which a
maximum of fifteen percent (15%) of such Shares may be issued pursuant to Other
Stock Based Awards. These Shares may consist, in whole or in part, of authorized
and unissued Shares, or of treasury Shares. No fractional Shares shall be issued
under the Plan; provided, however, that cash may be paid in lieu of any
fractional Shares in settlements of Awards under the Plan.
 
                                       3
<PAGE>   4
 
     For purposes of determining the number of Shares available for issuance
under the Plan:
 
          (a) The grant of an Award shall reduce the authorized pool of Shares
     by the number of Shares subject to such Award while such Award is
     outstanding, except to the extent that such an Award is in tandem with
     another Award covering the same or fewer Shares.
 
          (b) Any Shares tendered by a Participant in payment of the price of a
     Stock Option or stock option exercised under any other Company plan shall
     be credited to the authorized pool of Shares.
 
          (c) To the extent that any Shares covered by SARs are not issued upon
     the exercise of such SAR, the authorized pool of Shares shall be credited
     for such number of Shares.
 
          (d) To the extent that an Award is settled in cash or any form other
     than in Shares, the authorized pool of Shares shall be credited with the
     appropriate number of Shares represented by such settlement of the Award,
     as determined at the sole discretion of the Committee (subject to the
     limitation set forth in Section 4.2 herein).
 
          (e) If Shares are used to pay dividends and dividend equivalents in
     conjunction with outstanding Awards, an equivalent number of Shares shall
     be deducted from the Shares available for issuance.
 
     4.2  Lapsed Awards. If any Award granted under the Plan is canceled,
terminates, expires or lapses for any reason, any Shares subject to such Award
shall again be available for the grant of an Award under the Plan; except,
however, to the extent that such Award was granted in tandem with another Award,
any Shares issued pursuant to the exercise or settlement of such other Award
shall not be credited back. In the event that prior to the Award's cancellation,
termination, expiration, or lapse, the holder of the Award at any time received
one or more "benefits of ownership" pursuant to such Award (as defined by the
Securities and Exchange Commission, pursuant to any rule or interpretation
promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not be made available for regrant under the Plan.
 
     4.3  Effect of Acquisition. Any Awards granted by the Company in
substitution for awards or rights issued by a company whose shares or assets are
acquired by the Company or a Subsidiary shall not reduce the number of Shares
available for grant under the Plan.
 
     4.4  Adjustments in Authorized Shares. Subject to specific provisions in
any Award Agreement, in the event of any merger, reorganization, consolidation,
recapitalization, separation, spin-off, liquidation, stock dividend, split-up,
Share combination or other change in the corporate or capital structure of the
Company affecting the Shares, such adjustment shall be made in the number and
class of Shares which may be delivered under the Plan, and in the number and
class of and/or price of Shares subject to outstanding Awards granted under the
Plan, as may be determined to be appropriate and equitable by the Committee, in
its sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall always be a whole
number; and provided further that, with respect to Incentive Stock Options,
except with Board approval and in compliance with Article 9, no adjustment shall
be authorized by the Committee to the extent such adjustment would (i) cause the
Plan to violate Section 422 of the Code, or (ii) constitute a "modification"
within the meaning of Section 424(h)(3) of the Code, or any successor provision
thereto, with the effect that such modification, if applied, would be considered
the granting of a new option under Section 424(h)(1) of the Code, or any
successor provision thereto.
 
     4.5  Committee Determination. In determining the number of Shares available
for issuance under the Plan as contemplated by this Article 4, the Committee
shall interpret and apply the provisions of this Article so as to permit the
Plan to comply with Rule 16b-3 under the Exchange Act, or any successor rule
thereto.
 
                                   ARTICLE 5.
 
                                 PARTICIPATION
 
     5.1  Selection of Participants. Subject to the provisions of the Plan, the
Committee, from time to time, may select from all Eligible Employees and
Consultants, those to whom Awards shall be granted and shall
 
                                       4
<PAGE>   5
 
determine the nature and amount of each Award. No Eligible Employee or
Consultant shall have the right to receive an Award under the Plan, or, if
selected to receive an Award, the right to continue to receive same. Further, no
Participant shall have any rights, by reason of the grant of any award under the
Plan to continued employment by the Company or any Subsidiary or Affiliate.
There is no obligation for uniformity of treatment of Participants under the
Plan.
 
     5.2  Award Agreement. All Awards granted under the Plan shall be evidenced
by an Award Agreement that shall specify the terms, conditions, limitations and
such other provisions applicable to the Award as the Committee shall determine.
 
                                   ARTICLE 6.
 
                                     AWARDS
 
     Except as otherwise provided for in Section 3.1 herein, Awards may be
granted by the Committee to Eligible Employees, and Consultants in the case of
Awards other than Incentive Stock Options, at any time, and from time to time as
the Committee shall determine. The Committee shall have complete discretion in
determining the number of Awards to grant (subject to the Share limitations set
forth in Section 4.1 herein) and, consistent with the provisions of the Plan,
the terms, conditions and limitations pertaining to such Awards.
 
     The Committee may provide that the Participant shall have the right to
utilize Shares to pay all or any part of the purchase price of the exercise of
any Stock Option or option to acquire Shares under any other incentive
compensation plan of the Company, if permitted under such plan; provided,
however, that the number of Shares, bearing restrictive legends, if any, which
are used for such exercise, shall be subject to the same restrictions following
such exercise.
 
     6.1  Stock Options. Stock Options may be granted at an exercise price
established by the Compensation Committee, which, in the case of Incentive Stock
Options, shall not be less than one hundred percent (100%) of the Fair Market
Value of a Share on the date that the Stock Option is granted. In the case of
Director Options granted pursuant to Section 6.4 herein, the exercise price
shall be 100% of the Fair Market Value of a Share on the date the Director
Option is granted.
 
     In the case of an Incentive Stock Option granted to an Eligible Employee
who, at the time of grant, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company and its
Subsidiaries, the exercise price shall be not less than one hundred ten percent
(110%) of the Fair Market Value of a Share on the date the Incentive Stock
Option is granted, and the Incentive Stock Option by its terms shall not be
exercisable after the expiration of five (5) years from the date of grant.
 
     Except as provided in the preceding paragraph, a Stock Option may be
exercised at such times as may be specified in an Award Agreement, in whole or
in installments, which may be cumulative and shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no Stock
Option shall be exercisable later than ten (10) years after the date granted.
Prior to the exercise of a Stock Option, the holder thereof shall not have any
rights of a shareholder with respect to any of the Shares covered by the Stock
Option.
 
     Stock Options shall be exercised by the delivery of a written notice of
exercise to the Chief Financial Officer of the Company, or such other person as
may be specified by the Committee, that sets forth the number of Shares with
respect to which the Stock Option is to be exercised, accompanied by full
payment of the total Stock Option price and any required withholding taxes.
Payment shall be made either (a) in cash or its equivalent, (b) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total price of the Stock Option, or (c) by a combination of (a) and
(b). The Committee also may allow exercises to be made with the delivery of
payment as permitted under Federal Reserve Board Regulation T, subject to
applicable securities law restrictions, or by any other means which the
Committee determines to be consistent with the Plan's purpose and applicable
law. The Committee may provide that the exercise of a Stock Option, by tendering
previously acquired shares, will entitle the exercising Participant to
 
                                       5
<PAGE>   6
 
receive another Stock Option covering the same number of shares tendered and
with a price of no less than the Fair Market Value on the date of grant of such
replacement Stock Option.
 
     6.2  Stock Appreciation Rights. SARs may be granted, at a price which shall
not be less than one hundred percent (100%) of the Fair Market Value of a Share
on the date the SAR is granted, either in tandem with a Stock Option, such that
the exercise of the SAR or related Stock Option will result in a forfeiture of
the right to exercise the related Stock Option for an equivalent number of
shares, or independently of any Stock Option.
 
     An SAR may be exercised at such times as may be specified in an Award
Agreement, in whole or in installments, which may be cumulative and shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, that no SAR shall be exercisable later than ten (10) years after the
date granted.
 
     SARs shall be exercised by the delivery of a written notice of exercise to
the Chief Financial Officer of the Company, or such other person as may be
specified by the Committee, that sets forth the number of Shares with respect to
which the SAR is to be exercised.
 
     6.3  Other Stock Based Awards. Other Stock Based Awards may be granted to
such Eligible Employees, or Consultants where permitted by law, as the Committee
may select, at any time and from time to time as the Committee shall determine.
The Committee shall have complete discretion in determining the number of Shares
subject to such Awards (subject to the Share limitations set forth in Section
4.1 herein), the consideration for such Awards and the terms, conditions and
limitations pertaining to same including, without limitation, restrictions based
upon the achievement of specific business objectives, tenure, and other
measurements of individual or business performance, and/or restrictions under
applicable federal or state securities laws, and conditions under which same
will lapse. Such Awards may include the issuance of Shares in payment of amounts
earned under other incentive compensation plans of the Company. The terms,
restrictions and conditions of the Award need not be the same with respect to
each Participant.
 
     The Committee, at its sole discretion, may direct the Company to issue
Shares subject to such restrictive legends and/or stop transfer instructions as
the Committee deems appropriate.
 
     6.4  Director Options. Nonqualified Stock Options may be granted at the
discretion of the Board from time to time to each Director of the Company who is
not an Eligible Employee or Consultant (a "Director Option"), subject to the
following terms and conditions:
 
          (a) Each Director Option may be exercised any time after six (6)
     months from the date of its grant to ten (10) years from such date, at
     which time the Director Option shall lapse and be of no force and effect.
 
          (b) The exercise price of Director Options shall be one hundred
     percent (100%) of the Fair Market Value of a Share on the date of grant.
 
          (c) Director Options may be exercised only in whole.
 
                                   ARTICLE 7.
 
                       DIVIDENDS AND DIVIDEND EQUIVALENTS
 
     The Committee may provide that Awards earn dividends or dividend
equivalents. Such dividend equivalents may be paid currently or may be credited
to an account established by the Committee under the Plan in the name of the
Participant. In addition, dividends or dividend equivalents paid on outstanding
Awards or issued Shares may be credited to such account rather than paid
currently. Any crediting of dividends or dividend equivalents may be subject to
such restrictions and conditions as the Committee may establish, including
reinvestment in additional Shares or Share equivalents.
 
                                       6
<PAGE>   7
 
                                   ARTICLE 8.
 
                           DEFERRALS AND SETTLEMENTS
 
     Payment of Awards may be in the form of cash, Shares, other Awards, or in
such combinations thereof as the Committee shall determine at the time of grant,
and with such restrictions as it may impose. Payment may be made in a lump sum
or in installments as prescribed by the Committee. The Committee may also
require or permit Participants to elect to defer the issuance of Shares or the
settlement of awards in cash under such rules and procedures as it may establish
under the Plan. It may also provide that deferred settlements include the
payment or crediting of interest on the deferral amounts or the payment or
crediting of dividend equivalents on deferred settlements denominated in Shares.
 
                                   ARTICLE 9.
 
                    AMENDMENT, MODIFICATION AND TERMINATION
 
     9.1  Amendment, Modification and Termination. The Committee may terminate,
amend or modify the Plan at any time and from time to time, with the approval of
the Board of Directors. The termination, amendment or modification of the Plan
may be in response to changes in the Code, the Exchange Act, national securities
exchange regulations or for other reasons deemed appropriate by the Committee.
However, without the approval of the shareholders of the Company, no amendment
or modification may:
 
          (a) Materially increase the total amount of Shares which may be issued
     under the Plan, except as provided in Sections 4.3 and 4.4 herein; or
 
          (b) Cause the Plan not to comply with Rule 16b-3 under the Exchange
     Act, or any successor rule thereto.
 
     9.2  Awards Previously Granted. No termination, amendment or modification
of the Plan shall in any manner adversely affect any Award previously granted
under the Plan, without the written consent of the Participant. Any amendment
which would change the exercise price of any outstanding Awards (other than
pursuant to Section 4.4) must be approved by the Board of Directors.
 
                                  ARTICLE 10.
 
                                  WITHHOLDING
 
     10.1  Tax Withholding. The Company stall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
in cash or Shares having a Fair Market Value sufficient to satisfy federal,
state and local taxes (including the Participant's FICA obligation) required by
law to be withheld with respect to any Withholding Event which occurs because of
a grant, exercise or payment made under or as a result of the Plan.
 
     10.2  Share Withholding. Upon a Withholding Event, the Committee may
require one or more classes of Participants to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having a
Fair Market Value, on the date the tax is to be determined, equal to the amount
of withholding (federal, FICA, state or local) which is required by law. Absent
such a mandate, the Committee may allow a Participant to elect Share withholding
for tax purposes subject to such terms and conditions as the Committee shall
establish.
 
                                  ARTICLE 11.
 
                                TRANSFERABILITY
 
     No Award granted under the Plan may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code, or Title I of the Employee Retirement Income Security Act,
as
 
                                       7
<PAGE>   8
 
amended, or the rules thereunder. Further, all Awards granted to a Participant
under the Plan shall be exercisable during the Participant's lifetime only by
the Participant. Notwithstanding the foregoing, the designation of a beneficiary
by a Participant does not constitute a transfer.
 
                                  ARTICLE 12.
 
                                INDEMNIFICATION
 
     Each person who is or shall have been a member of the Committee, or of the
Board of Directors, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by such person in connection with or resulting from any
claim, action, suit or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by such person
in settlement thereof, with the Company's approval, or paid by such person in
satisfaction of any judgment in any such action, suit or proceeding against such
person, provided such person shall give the Company an opportunity, at its own
expense, to handle and defend the same before such person undertakes to handle
and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
 
                                  ARTICLE 13.
 
                                 UNFUNDED PLAN
 
     The Plan shall be unfunded and the Company shall not be required to
segregate any assets that may at any time be represented by Awards under the
Plan. Any liability of the Company to any person with respect to any Award under
the Plan shall be based solely upon any contractual obligations that may be
effected pursuant to the Plan. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property or assets
of the Company.
 
                                  ARTICLE 14.
 
                                   SUCCESSORS
 
     All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
 
                                  ARTICLE 15.
 
                           SECURITIES LAW COMPLIANCE
 
     The Plan is intended to comply with all applicable conditions of Rule 16b-3
or any successor rule thereto under the Exchange Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. Further, each Award shall be subject to the requirement that, if at
any time the Committee shall determine, in its sole discretion, that the
listing, registration or qualification of any Award under the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the grant or
settlement thereof, such Award may not be exercised or settled in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
 
                                       8
<PAGE>   9
 
                                  ARTICLE 16.
 
                              REQUIREMENTS OF LAW
 
     16.1  Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be require.
 
     16.2  Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
 
     16.3  Governing Law. To the extent not preempted by federal law, the Plan
and all Award Agreements, shall be construed in accordance with and governed by
the laws of the State of Washington.
 
                                       9