EXHIBIT 4.1

WASHINGTON
MUTUAL, INC.

2003
EQUITY INCENTIVE PLAN

SECTION
1. PURPOSES OF THE PLAN

        The
purposes of the Washington Mutual, Inc. 2003 Equity Incentive Plan (the
"Plan") are (a) to promote the long-term interests of Washington
Mutual, Inc. (the "Company") and its shareholders by strengthening the
Company's ability to attract, motivate and retain employees, officers,
directors, consultants, agents, advisors and independent contractors and
(b) to provide additional incentive for those persons through stock
ownership and other incentives to improve operations, increase profits and
strengthen the mutuality of interest between those persons and the Company's
shareholders.

SECTION
2. DEFINITIONS

      As
used in the Plan:

        "Acquisition
Price" means the fair market value of the securities, cash or other
property, or any combination thereof, receivable upon consummation of a Company
Transaction in respect of a share of Common Stock.

        "Award"
means any Option, Stock Appreciation Right, Restricted Stock, Stock Unit,
Performance Share, Performance Unit, dividend equivalent, cash-based award or
other incentive payable in cash or in shares of Common Stock as may be
designated by the Committee from time to time under the Plan.

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

        "Cause,"
unless otherwise defined in the instrument evidencing the Award or in a written
employment, services or other agreement between the Participant and the Company
or a Related Company, means (a) conviction of any felony or a misdemeanor
involving moral turpitude (including forgery, fraud, theft or embezzlement), or
conviction or entry into a pretrial diversion or similar program in connection
with prosecution for an offense involving dishonesty, breach of trust or money
laundering, or (b) dishonesty, fraud, theft of property of the Company or a
Related Company, willful destruction of property of the Company or a Related
Company, physical attack on an employee, customer, agent or director of the
Company or a Related Company, willful malfeasance in the performance of duties
or willful misconduct materially injurious to the Company or a Related Company,
in each case as determined by the chief human resources officer of the Company
or other person performing that function or, in the case of directors and
executive officers, the Committee, whose determinations shall be conclusive and
binding.

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        "Code"
means the Internal Revenue Code of 1986, as amended from time to time.

        "Committee"
has the meaning set forth in Section 3.1.

        "Common
Stock" means the common stock, no par value, of the Company.

        "Company"
means Washington Mutual, Inc., a Washington corporation.

        "Company
Transaction," unless otherwise defined in the instrument
evidencing the Award or in a written employment, services or other agreement
between the Participant and the Company or a Related Company, means consummation
of either

    (a)       
a merger or consolidation of the Company with or into any other company or other
entity or

    (b)       
a sale, lease, exchange or other transfer in one transaction or a series of
related transactions undertaken with a common purpose of all or substantially
all of the Company's then outstanding securities or all or substantially all of
the Company's assets;

        provided,
however, that a Company Transaction shall not include a Related Party
Transaction.

        "Covered
Employee" means a "covered employee" as that term is defined
in Section 162(m)(3) of the Code, or any successor provision.

        "Disability,"
unless otherwise defined by the Committee or in the instrument evidencing the
Award or in a written employment, services or other agreement between the
Participant and the Company or a Related Company, means a mental or physical
impairment of the Participant that is expected to result in death or that has
lasted or is expected to last for a continuous period of 12 months or more
and that causes the Participant to be unable to perform his or her material
duties for the Company or a Related Company and to be engaged in any substantial
gainful activity, in each case as determined by the chief human resources
officer of the Company or other person performing that function or, in the case
of directors and executive officers, the Committee, whose determinations shall
be conclusive and binding.

        "Effective
Date" has the meaning set forth in Section 18.

        "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to
time.

        "Extraordinary
Items" means (a) extraordinary, unusual and/or nonrecurring items
of gain or loss, (b) gains or losses on the disposition of a business,
(c) changes in tax or accounting regulations or laws, or (d) the effects of
a merger or acquisition, all of which must be identified in the audited
financial statements, including footnotes, or the Management's Discussion and
Analysis section of the Company's annual report.

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        "Fair
Market Value" means the closing price for the Common Stock on the New
York Stock Exchange during regular session trading for a single trading day as
reported for such day in The Wall Street Journal or such other source the
Committee deems reliable. The applicable trading day for determining Fair Market
Value (a) in connection with the grant of Awards shall be the trading day
immediately preceding the Grant Date and (b) otherwise shall be as
determined by the Committee in its sole discretion. If no reported price for the
Common Stock exists for the applicable trading day, then such price on the last
preceding date for which such price exists shall be determinative of Fair Market
Value.

        "Grant
Date" means the date on which the Committee completes the corporate
action authorizing the grant of an Award or such later date specified by the
Committee, provided that conditions to the exercisability or vesting of Awards
shall not defer the Grant Date.

        "Incentive
Stock Option" means an Option granted with the intention that it
qualify as an "incentive stock option" as that term is defined in
Section 422 of the Code or any successor provision.

        "Nonemployee
Director" has the meaning set forth in Rule 16b-3 promulgated under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission.

        "Nonqualified
Stock Option" means an Option other than an Incentive Stock Option.

        "Option"
means a right to purchase Common Stock granted under Section 7.

        "Participant"
means any eligible person set forth in Section 5 to whom an Award is granted.

        "Performance
Criteria" has the meaning set forth in Section 11.1.

        "Performance
Share" has the meaning set forth in Section 10.1.

        "Performance
Unit" has the meaning set forth in Section 10.2.

        "Plan"
means the Washington Mutual, Inc. 2003 Equity Incentive Plan.

        "Related
Company" means any entity that is directly or indirectly controlled by
the Company or any entity in which the Company has a significant equity
interest, as determined by the Committee.

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        "Related
Party Transaction" means (a) a merger or consolidation of the
Company in which the holders of the outstanding voting securities of the Company
immediately prior to the merger or consolidation hold at least a majority of the
outstanding voting securities of the Successor Company immediately after the
merger or consolidation; (b) a sale, lease, exchange or other transfer of
all or substantially all of the Company's assets to a majority-owned subsidiary
company; (c) a transaction undertaken for the principal purpose of
restructuring the capital of the Company, including but not limited to,
reincorporating the Company in a different jurisdiction or creating a holding
company, so long as, immediately after the transaction, at least a majority of
the outstanding securities of the successor company are held by holders of the
outstanding voting securities of the Company immediately prior to the
transaction; or (d) a corporate dissolution or liquidation.

        "Restricted
Stock" means an Award of shares of Common Stock granted under
Section 9, the rights of ownership of which may be subject to restrictions
prescribed by the Committee.

        "Retirement,"
unless otherwise defined by the Committee or in the instrument evidencing the
Award or in a written employment, services or other agreement between the
Participant and the Company or a Related Company, means Termination of Service
on or after the date the Participant reaches age 55 and has served, as
applicable, either (a) ten years as an employee of the Company or a Related
Company or (b) five years as a member of the Board.

        "Securities
Act" means the Securities Act of 1933, as amended from time to time.

        "Stock
Appreciation Right" has the meaning set forth in Section 8.1.

        "Stock
Unit" means an Award granted under Section 9 denominated in units of
Common Stock.

        "Successor
Company" means the surviving company, the successor company or its
parent, as applicable, in connection with a Company Transaction.

        "Termination
of Service," means a termination of employment or service
relationship with the Company or a Related Company for any reason, whether
voluntary or involuntary, including by reason of death, Disability or
Retirement. Any question as to whether and when there has been a Termination of
Service for the purposes of an Award and the cause of such Termination of
Service shall be determined by the chief human resources officer of the Company
or other person performing that function or, in the case of directors and
executive officers, the Committee, whose determinations shall be conclusive and
binding. Transfer of a Participant's employment or service relationship between
Related Companies, or between the Company and any Related Company, shall not be
considered a Termination of Service for purposes of an Award. Unless the
Committee determines otherwise, a Termination of Service shall be deemed to
occur if the Participant's employment or service relationship is with an entity
that has ceased to be a Related Company.

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SECTION
3. ADMINISTRATION


3.1
Administration of the Plan

        The
Plan shall be administered by the Human Resources Committee of the Board, or any
successor thereto; provided, however, that with respect to Nonemployee
Directors, the Plan shall be administered by the Governance Committee of the
Board, or any successor thereto. Notwithstanding the foregoing, the Board may
delegate the responsibility for administering the Plan with respect to
designated classes of eligible persons to different committees consisting of two
or more members of the Board, subject to such limitations as the Board deems
appropriate. Members of any committee shall serve for such term as the Board may
determine, subject to removal by the Board at any time. To the extent consistent
with applicable law, the Board or the Human Resources Committee may authorize
one or more senior executive officers of the Company to grant Awards to
designated classes of eligible persons, within limits specifically prescribed by
the Board or the Human Resources Committee, as applicable; provided, however,
that no such officer shall have or obtain authority to grant Awards to himself
or herself or to any person subject to the reporting requirements of Section 16
of the Exchange Act. All references in the Plan to the "Committee"
shall be, as applicable, to the Human Resources Committee, the Governance
Committee, or any other committee or officer to whom the Board or the Human
Resources Committee has delegated authority to administer the Plan.

        Notwithstanding
the foregoing, the chief human resources officer of the Company or other person
performing that function shall be authorized, in addition to the Committee, to
determine the effect on the vesting of an Award of a Company-approved leave of
absence or a Participant's working less than full-time.


3.2
Administration and Interpretation by Committee

        Except
for the terms and conditions explicitly set forth in the Plan, the Committee
shall have full power and exclusive authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to (a) select the eligible persons as set
forth in Section 5 to whom Awards may from time to time be granted under the
Plan; (b) determine the type or types of Award to be granted to each
Participant under the Plan; (c) determine the number of shares of Common
Stock to be covered by each Award granted under the Plan; (d) determine the
terms and conditions of any Award granted under the Plan; (e) approve the forms
of agreements for use under the Plan; (f) determine whether, to what extent
and under what circumstances Awards may be settled in cash, shares of Common
Stock or other property or canceled or suspended; (g) determine whether, to
what extent and under what circumstances cash, shares of Common Stock, other
property and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the Participant; (h) interpret
and administer the Plan and any instrument or agreement entered into under the
Plan; (i) establish such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and
(j) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan. Decisions
of the Committee shall be final, conclusive and binding on all persons,
including the Company, any Participant, any shareholder and any eligible person.
A majority of the members of the Committee may determine its actions and fix the
time and place of its meetings.

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SECTION
4. STOCK SUBJECT TO THE PLAN


4.1
Authorized Number of Shares

        Subject
to adjustment from time to time as provided in Section 15.1, the maximum
number of shares of Common Stock available for issuance under the Plan shall be

    (a)       
29,035,000 shares plus

    (b)       
(i) any authorized shares not issued or subject to outstanding awards under
the Company's Equity Incentive Plan and the 1994 Stock Option Plan (the
"Prior Plans") as of the Effective Date and (ii) any shares
subject to outstanding awards under the Prior Plans as of the Effective
Date that on or after the Effective Date cease for any reason to be subject to
such awards (other than by reason of exercise or settlement of the awards to the
extent they are exercised for or settled in vested and nonforfeitable shares),
up to an aggregate maximum of 55,745,000 shares.


4.2 Share
Usage

    (a)       
Shares of Common Stock covered by an Award shall not be counted as used unless
and until they are actually issued and delivered to a Participant. If any Award
lapses, expires, terminates or is canceled prior to the issuance of shares
thereunder or if shares of Common Stock are issued under the Plan to a
Participant and are thereafter reacquired by the Company, the shares subject to
such Awards and the reacquired shares shall again be available for issuance
under the Plan. Any shares of Common Stock tendered by a Participant or retained
by the Company as full or partial payment to the Company for the purchase price
of an Award or to satisfy tax withholding obligations in connection with an
Award shall be available for the Awards under the Plan. The number of shares
available for issuance under the Plan shall not be reduced to reflect any
dividends or dividend equivalents that are reinvested into additional shares or
credited as additional Restricted Stock, Stock Units, Performance Shares or
Performance Units. All shares issued under the Plan may be either authorized and
unissued shares or issued shares reacquired by the Company.

    (b)       
The Committee shall have the authority to grant Awards as an alternative to or
as the form of payment for grants or rights earned or due under other
compensation plans or arrangements of the Company.

    (c)       
Notwithstanding the foregoing, the maximum number of shares that may be issued
upon the exercise of Incentive Stock Options shall equal the aggregate share
number stated in Section 4.1, subject to adjustment as provided in
Section 15.1; and provided, further, that for purposes of Section 4.3,
any such shares shall be counted in accordance with the requirements of
Section 162(m) of the Code.

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4.3
Limitations

    (a)       
Subject to adjustment as provided in Section 15.1, no Participant shall be
eligible to receive in any one calendar year Awards relating to more than
5,000,000 shares of Common Stock.

    (b)       
Subject to adjustment as provided in Section 15.1 and without regard to Options
or Stock Appreciations Rights: (i) the maximum aggregate number of shares that
may be issued pursuant to non-performance based Awards shall not exceed
13,000,000, and (ii) the maximum aggregate number of shares that may be issued
pursuant to Awards that either contain no restrictions or are subject to
restrictions based solely on continuous employment or services for less than
three years (except where Termination of Service occurs by reason of death,
Retirement, or Disability) shall not exceed 4,350,000.


SECTION
5. ELIGIBILITY

        An
Award may be granted to any employee, officer or director of the Company or a
Related Company whom the Committee from time to time selects. An Award may also
be granted to any consultant, agent, advisor or independent contractor who
renders bona fide services to the Company or any Related Company that
(a) are not in connection with the offer and sale of the Company's
securities in a capital-raising transaction and (b) do not directly or
indirectly promote or maintain a market for the Company's securities.


SECTION
6. AWARDS


6.1 Form
and Grant of Awards

        The
Committee shall have the authority, in its sole discretion, to determine the
type or types of Awards to be granted under the Plan. Such Awards may be granted
either alone, in addition to or in tandem with any other type of Award.


6.2
Evidence of Awards

        Awards
granted under the Plan shall be evidenced by a written instrument that shall
contain such terms, conditions, limitations and restrictions as the Committee
shall deem advisable and are not inconsistent with the Plan.


6.3 Ten
Percent Limitation on Ownership

        Unless
requisite approvals are obtained from the primary federal regulator(s) of the
Company's banking subsidiary or subsidiaries, no person shall be eligible to
receive any Award that, if exercised (in the case of Options) or otherwise
settled in shares of Common Stock, would result in such person's holding
beneficially or of record in excess of 10% of the outstanding voting stock of
the Company.

 

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6.4
Deferrals

        The
Committee may permit or require a Participant to defer receipt of the payment of
any Award. If any such deferral election is permitted or required, the
Committee, in its sole discretion, shall establish rules and procedures for such
payment deferrals, which may include provisions for the payment or crediting of
interest, or dividend equivalents, including converting such credits to deferred
stock unit equivalents.


SECTION
7. OPTIONS


7.1 Grant
of Options

        The
Committee may grant Options designated as Incentive Stock Options or
Nonqualified Stock Options.


7.2 Option
Exercise Price

        The
exercise price for shares purchased under an Option shall be as determined by
the Committee, but shall not be less than the Fair Market Value of the Common
Stock for the Grant Date, except in the case of substitute awards issued by the
Company in connection with a Company Transaction or a Related Company
Transaction. In no event shall the Committee cancel any outstanding Option for
the purpose of reissuing the Option to the Participant at a lower exercise price
or reduce the exercise price of an outstanding Option.


7.3 Term of
Options

        Subject
to earlier termination in accordance with the terms of the Plan and the
instrument evidencing the Option, the maximum term of an Option shall be as
established for that Option by the Committee or, if not so established, shall be
ten years from the Grant Date.


7.4
Exercise of Options

        The
Committee shall establish and set forth in each instrument that evidences an
Option the time at which, or the installments in which, the Option shall vest
and become exercisable, any of which provisions may be waived or modified by the
Committee at any time. To the extent an Option has vested and become
exercisable, the Option may be exercised in whole or from time to time in part
by delivery to the Company of a written stock option exercise agreement or
notice, in a form and in accordance with procedures established by the
Committee, setting forth the number of shares with respect to which the Option
is being exercised, the restrictions imposed on the shares purchased under such
exercise agreement, if any, and such representations and agreements as may be
required by the Committee, accompanied by payment in full as described in
Section 7.5. An Option may be exercised only for whole shares and may not
be exercised for less than a reasonable number of shares at any one time, as
determined by the Committee.

 

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7.5 Payment
of Exercise Price

        The
exercise price for shares purchased under an Option shall be paid in full to the
Company by delivery of consideration equal to the product of the Option exercise
price and the number of shares purchased. Such consideration must be paid before
the Company will issue the shares being purchased and must be in a form or a
combination of forms acceptable to the Committee for that purchase, which forms
may include

    (a)       
cash;

    (b)       
check or wire transfer;

    (c)       
tendering (either actually or by attestation) shares of Common Stock already
owned by the Participant, provided that the shares have been held for the
minimum period required by applicable accounting rules to avoid a charge to the
Company's earnings for financial reporting purposes or were not acquired from
the Company as compensation;

    (d)       
to the extent permitted by applicable law, delivery of a properly executed
exercise notice, together with irrevocable instructions to a brokerage firm
designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise, all
in accordance with the regulations of the Federal Reserve Board; or

    (e)       
such other consideration as the Committee may permit in its sole discretion.


7.6
Post-Termination Exercises

        The
Committee shall establish and set forth in each instrument that evidences an
Option whether the Option shall continue to be exercisable, and the terms and
conditions of such exercise, after a Termination of Service, any of which
provisions may be waived or modified by the Committee at any time.

        A
Participant's change in status from an employee to a consultant, agent, advisor
or independent contractor, or a change in status from a consultant, agent,
advisor or independent contractor to an employee, shall not be considered a
Termination of Service for purposes of this Section 7.

 

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7.7
Incentive Stock Options

        The
terms of any Incentive Stock Options shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision, and any
regulations promulgated thereunder. Individuals who are not employees of the
Company or one of its parent or subsidiary corporations (as such terms are
defined for purposes of Section 422 of the Code) may not be granted Incentive
Stock Options. To the extent that the aggregate Fair Market Value of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year exceeds $100,000 or, if
different, the maximum limitation in effect at the time of grant under the Code
(the Fair Market Value being determined as of the Grant Date for the Option),
such portion in excess of $100,000 shall be treated as Nonqualified Stock
Options. This provision shall be applied by taking Incentive Stock Options into
account in the order in which they were granted.


SECTION
8. STOCK APPRECIATION RIGHTS


8.1 Grant
of Stock Appreciation Rights

        The
Committee may grant stock appreciation rights ("Stock Appreciation
Rights" or "SARs") to Participants at any time. An SAR may be
granted in tandem with an Option or alone ("freestanding"). The grant
price of a tandem SAR shall be equal to the exercise price of the related
Option, and the grant price of a freestanding SAR shall be equal to the Fair
Market Value of the Common Stock for the Grant Date. An SAR may be exercised
upon such terms and conditions and for the term as the Committee may determine,
in its sole discretion; provided, however, that, subject to earlier termination
in accordance with the terms of the Plan and the instrument evidencing the SAR,
the term of a freestanding SAR shall be as established for that SAR by the
Committee or, if not so established, shall be ten years, and in the case of a
tandem SAR, (a) the term shall not exceed the term of the related Option
and (b) the tandem SAR may be exercised for all or part of the shares
subject to the related Option upon the surrender of the right to exercise the
equivalent portion of the related Option, except that the tandem SAR may be
exercised only with respect to the shares for which its related Option is then
exercisable.


8.2 Payment
of SAR Amount

        Upon
the exercise of an SAR, a Participant shall be entitled to receive payment from
the Company in an amount determined by multiplying: (a) the difference
between the Fair Market Value of the Common Stock for the date of exercise over
the grant price by (b) the number of shares with respect to which the SAR
is exercised. At the discretion of the Committee, the payment upon exercise of
an SAR may be in cash, in shares of Common Stock of equivalent value, in some
combination thereof or in any other manner approved by the Committee in its sole
discretion.

 

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SECTION
9. RESTRICTED STOCK AND STOCK UNITS


9.1 Grant
of Restricted Stock and Stock Units

        The
Committee may grant Restricted Stock and Stock Units on such terms and
conditions and subject to such repurchase or forfeiture restrictions, if any
(which may be based on continuous service with the Company or a Related Company
or the achievement of any of the Performance Criteria set forth in Section
11.1), as the Committee shall determine in its sole discretion, which terms,
conditions and restrictions shall be set forth in the instrument evidencing the
Award.


9.2
Issuance of Shares

        Upon
the satisfaction of any terms, conditions and restrictions prescribed with
respect to Restricted Stock or Stock Units, or upon a Participant's release from
any terms, conditions and restrictions of Restricted Stock or Stock Units, as
determined by the Committee, and subject to the provisions of Section 13,
(a) the shares of Restricted Stock covered by each Award of Restricted
Stock shall become freely transferable by the Participant and (b) Stock
Units shall be paid in cash, shares of Common Stock or a combination of cash and
shares of Common Stock as the Committee shall determine in its sole discretion.
Any fractional shares subject to such Awards shall be paid to the Participant in
cash.


9.3
Dividends and Distributions

        Participants
holding shares of Restricted Stock or Stock Units may, if the Committee so
determines, be credited with dividends paid with respect to the underlying
shares or dividend equivalents while they are so held in a manner determined by
the Committee in its sole discretion. The Committee may apply any restrictions
to the dividends or dividend equivalents that the Committee deems appropriate.
The Committee, in its sole discretion, may determine the form of payment of
dividends or dividend equivalents, including cash, shares of Common Stock,
Restricted Stock or Stock Units.


9.4 Waiver
of Restrictions

        Notwithstanding
any other provisions of the Plan, the Committee, in its sole discretion, may
waive the repurchase or forfeiture period and any other terms, conditions or
restrictions on any Restricted Stock or Stock Unit under such circumstances and
subject to such terms and conditions as the Committee shall deem appropriate;
provided, however, that the Committee may not adjust performance goals for any
Restricted Stock or Stock Unit intended to be exempt under Section 162(m)
of the Code for the year in which the Restricted Stock or Stock Unit is settled
in such a manner as would increase the amount of compensation otherwise payable
to a Participant.

 

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SECTION
10. PERFORMANCE SHARES AND PERFORMANCE UNITS


10.1 Grant
of Performance Shares

        The
Committee may grant Awards of performance shares ("Performance
Shares") and designate the Participants to whom Performance Shares are to
be awarded and determine the number of Performance Shares, the length of the
performance period and the other terms and conditions of each such Award. Each
Award of Performance Shares shall entitle the Participant to a payment in the
form of shares of Common Stock upon the attainment of performance goals and
other terms and conditions specified by the Committee. Notwithstanding
satisfaction of any performance goals, the number of shares issued under an
Award of Performance Shares may be adjusted on the basis of such further
consideration as the Committee shall determine, in its sole discretion. However,
the Committee may not, in any event, increase the number of shares earned upon
satisfaction of any performance goal by any Covered Employee. The Committee, in
its discretion, may make a cash payment equal to the Fair Market Value of the
Common Stock otherwise required to be issued to a Participant pursuant to an
Award of Performance Shares.


10.2 Grant
of Performance Units

        The
Committee may grant Awards of performance units ("Performance Units")
and designate the Participants to whom Performance Units are to be awarded and
determine the number of Performance Units and the terms and conditions of each
such Award. Performance Units shall entitle the Participant to a payment in cash
upon the attainment of performance goals and other terms and conditions
specified by the Committee. Notwithstanding the satisfaction of any performance
goals, the amount to be paid under an Award of Performance Units may be adjusted
on the basis of such further consideration as the Committee shall determine, in
its sole discretion. However, the Committee may not, in any event, increase the
amount earned under Performance Unit Awards upon satisfaction of any performance
goal by any Covered Employee, and the maximum amount earned by such Covered
Employee in any calendar year may not exceed $1,000,000. The Committee, in its
discretion, may substitute actual shares of Common Stock for the cash payment
otherwise required to be made to a Participant pursuant to a Performance Unit.


SECTION
11. PERFORMANCE GOALS


11.1 Awards
Subject to Performance Goals

        Awards
of Restricted Stock, Stock Units, Performance Shares, Performance Units and
other Awards made pursuant to the Plan may be made subject to the attainment of
performance goals relating to one or more business criteria within the meaning
of Section 162(m) of the Code: return on average common shareholders'
equity; return on average equity; total shareholder return; stock price
appreciation; efficiency ratio (other expense as a percentage of other income
plus net interest income); net operating expense (other income less other
expense); earnings per diluted share of Common Stock; per share earnings before
transaction-related expense; per share earnings after deducting
transaction-related expense; return on average assets; ratio of nonperforming to
performing assets; return on an investment in an affiliate; net interest income;
net interest margin; ratio of common equity to total assets; regulatory
compliance metrics; and customer service metrics (the "Performance
Criteria"). Performance Criteria may be stated in absolute terms or
relative to comparison companies or indices to be achieved during a period of
time.

 

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11.2 Use
and Calculation of Performance Criteria

        Any
Performance Criteria may be used to measure the performance of the Company as a
whole or any business unit of the Company. Any Performance Criteria may include
or exclude Extraordinary Items. Performance Criteria shall be established by the
Committee and shall be derived from the Company's audited financial statements,
including footnotes, or the Management's Discussion and Analysis section of the
Company's annual report. The Committee may not in any event increase the amount
of compensation payable to a Covered Employee upon the satisfaction of any
Performance Criteria.


SECTION
12. OTHER STOCK OR CASH-BASED AWARDS

        In
addition to the Awards described in Sections 7 through 10, and subject to the
terms of the Plan, the Committee may grant other incentives payable in cash or
in shares of Common Stock under the Plan as it determines to be in the best
interests of the Company and subject to such other terms and conditions as it
deems appropriate.


SECTION
13. WITHHOLDING

        The
Company may require the Participant to pay to the Company the amount of any
taxes that the Company is required by applicable federal, state, local or
foreign law to withhold with respect to the grant, vesting or exercise of an
Award. The Company shall not be required to issue any shares of Common Stock
under the Plan until such obligations are satisfied.

        The
Committee may permit or require a Participant to satisfy all or part of his or
her tax withholding obligations by (a) paying cash to the Company,
(b) having the Company withhold an amount from any cash amounts otherwise
due or to become due from the Company to the Participant, (c) having the
Company withhold a number of shares of Common Stock that would otherwise be
issued to the Participant (or become vested in the case of Restricted Stock),
having a Fair Market Value equal to the tax withholding obligations, or
(d) surrendering a number of shares of Common Stock the Participant already
owns, having a Fair Market Value equal to the tax withholding obligations. The
value of any shares so withheld may not exceed the employer's minimum required
tax withholding rate, and the value of any shares so tendered may not exceed
such rate to the extent the Participant has owned the tendered shares for less
than six months, if such limitations are required to avoid a charge to the
Company's earnings for financial reporting purposes under applicable accounting
rules. The value of any shares withheld or surrendered may not exceed the
employer's minimum tax withholding obligation and, to the extent such shares
were acquired by the Participant from the Company as compensation, the shares
must have been held for the minimum period required by applicable accounting
rules to avoid a charge to the Company's earnings for financial reporting
purposes.

 

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SECTION
14. ASSIGNABILITY

        No
Award or interest in an Award may be sold, assigned, pledged (as collateral for
a loan or as security for the performance of an obligation or for any other
purpose) or transferred by the Participant or made subject to attachment or
similar proceedings otherwise than by will or by the applicable laws of descent
and distribution, except to the extent a Participant designates one or more
beneficiaries on a Company-approved form who may exercise the Award or receive
payment under the Award after the Participant's death. During a Participant's
lifetime, an Award may be exercised only by the Participant. Notwithstanding the
foregoing and to the extent permitted by Section 422 of the Code, the
Committee, in its sole discretion, may permit a Participant to assign or
transfer an Award; provided, however, that any Award so assigned or transferred
shall be subject to all the terms and conditions of the Plan and the instrument
evidencing the Award.


SECTION
15. ADJUSTMENTS


15.1
Adjustment of Shares

        In
the event, at any time or from time to time, a stock dividend, stock split,
spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in
(a) the outstanding shares of Common Stock, or any securities exchanged
therefor or received in their place, being exchanged for a different number or
kind of securities of the Company or any other company or (b) new,
different or additional securities of the Company or any other company being
received by the holders of shares of Common Stock, then the Committee shall make
proportional adjustments in (i) the maximum number and kind of securities
available for issuance under the Plan; (ii) the maximum number and kind of
securities issuable as Incentive Stock Options as set forth in Section 4.2;
(iii) the maximum number and kind of securities that may be issued to an
individual in any one calendar year as set forth in Section 4.3; (iv) the
maximum number and kind of securities that may be made subject to the different
types of Awards available under the Plan; and (v) the number and kind of
securities that are subject to any outstanding Award and the per share price of
such securities, without any change in the aggregate price to be paid therefor.

        The
determination by the Committee as to the terms of any of the foregoing
adjustments shall be conclusive and binding.

        Notwithstanding
the foregoing, the issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services rendered, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, outstanding Awards. Also notwithstanding the foregoing, a dissolution or
liquidation of the Company or a Company Transaction shall not be governed by
this Section 15.1 but shall be governed by Sections 15.2 and 15.3,
respectively.

 

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15.2
Dissolution or Liquidation

        To
the extent not previously exercised or settled, and unless otherwise determined
by the Committee in its sole discretion, Options and Stock Units shall terminate
immediately prior to the dissolution or liquidation of the Company. To the
extent a forfeiture provision or repurchase right applicable to an Award has not
been waived by the Committee, the Award shall be forfeited immediately prior to
the consummation of the dissolution or liquidation.


15.3
Company Transaction

      15.3.1
Options

        In
the event of a Company Transaction, except as otherwise provided in the
instrument evidencing an Option or in any other written agreement between a
Participant and the Company or a Related Company, each outstanding Option shall
terminate, provided that, immediately prior to any such Company Transaction, the
vesting of all Options held by a Participant shall accelerate and the
Participant shall have the right to exercise his or her Options in whole or in
part whether or not the vesting requirements set forth in the instrument
evidencing the Option have been satisfied. Notwithstanding the foregoing, the
Committee, in its sole discretion, may instead provide that a Participant's
outstanding Options shall terminate upon consummation of such Company
Transaction and that each such Participant shall receive, in exchange therefor,
a cash payment equal to the amount (if any) by which (a) the Acquisition
Price multiplied by the number of shares of Common Stock subject to such
outstanding Options (whether or not then exercisable) exceeds (b) the
aggregate exercise price for such Options. Also notwithstanding the foregoing,
the Committee, in its sole discretion, may instead provide that Options shall be
assumed or that an equivalent option or right shall be substituted by a
Successor Company, in which case the amount and price of such assumed or
substituted options shall be determined by adjusting the amount and price of the
Options in the same proportion as used for determining the number of shares of
stock of the Successor Company the holders of shares of Common Stock receive in
such Company Transaction, and the vesting schedule set forth in the instrument
evidencing the Option shall continue to apply to the assumed or substituted
options.

      15.3.2
Restricted Stock

        In
the event of a Company Transaction, except as otherwise provided in the
instrument evidencing the Award and unless otherwise provided in any written
agreement between a Participant and the Company or a Related Company, the
vesting of shares subject to Restricted Stock that is based on continuous
service with the Company or a Related Company shall accelerate, and the
forfeiture provisions to which such shares are subject shall lapse, if and to
the same extent that the vesting of outstanding Options accelerates in
connection with the Company Transaction. If unvested Options are to be assumed
or substituted by a Successor Company without acceleration upon the occurrence
of a Company Transaction, the terms and conditions of the foregoing Awards shall
continue with respect to shares of the Successor Company that may be issued in
exchange or upon settlement of such Awards, and the number of shares subject to
such assumed or substituted restricted stock awards shall be adjusted in the
same manner as provided in Section 15.3.1 for Options.

 

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15.4
Further Adjustment of Awards

        Subject
to Sections 15.2 and 15.3, the Committee shall have the discretion,
exercisable at any time before a sale, merger, consolidation, reorganization,
liquidation, dissolution or change in control of the Company, as defined by the
Committee, to take such further action as it determines to be necessary or
advisable with respect to Awards. Such authorized action may include (but shall
not be limited to) establishing, amending or waiving the type, terms, conditions
or duration of, or restrictions on, Awards so as to provide for earlier, later,
extended or additional time for exercise, lifting restrictions and other
modifications, and the Committee may take such actions with respect to all
Participants, to certain categories of Participants or only to individual
Participants. The Committee may take such action before or after granting Awards
to which the action relates and before or after any public announcement with
respect to such sale, merger, consolidation, reorganization, liquidation,
dissolution or change in control that is the reason for such action.


15.5
Limitations

        The
grant of Awards shall in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.


15.6 No
Fractional Shares

        In
the event of any adjustment in the number of shares covered by any Award, each
such Award shall cover only the number of full shares resulting from such
adjustment.


SECTION
16. AMENDMENT AND TERMINATION


16.1
Amendment, Suspension or Termination of the Plan

        The
Board or the Human Resources Committee of the Board may amend, suspend or
terminate the Plan or any portion of the Plan at any time and in such respects
as it shall deem advisable; provided, however, that, to the extent required by
applicable law, regulation or stock exchange rule, shareholder approval shall be
required for any amendment to the Plan.

 

16



 


16.2 Term
of the Plan

        Unless
sooner terminated as provided herein, the Plan shall terminate ten years from
the Effective Date. Notwithstanding the foregoing, no Incentive Stock Options
may be granted more than ten years after the earlier of (a) the adoption of
the Plan by the Board and (b) the Effective Date.

        After
the Plan is terminated, no future Awards may be granted, but Awards previously
granted shall remain outstanding in accordance with their applicable terms and
conditions and the Plan's terms and conditions.


16.3
Consent of Participant

        The
amendment, suspension or termination of the Plan or a portion thereof or the
amendment of an outstanding Award shall not, without the Participant's consent,
materially adversely affect any rights under any Award theretofore granted to
the Participant under the Plan. Any change or adjustment to an outstanding
Incentive Stock Option shall not, without the consent of the Participant, be
made in a manner so as to constitute a "modification" that would cause
such Incentive Stock Option to fail to continue to qualify as an Incentive Stock
Option. Notwithstanding the foregoing, any adjustments made pursuant to
Sections 15.1 through 15.3 shall not be subject to these restrictions.


SECTION
17. GENERAL


17.1 No
Individual Rights

        No
individual or Participant shall have any claim to be granted any Award under the
Plan, and the Company has no obligation for uniformity of treatment of
Participants under the Plan.

        Furthermore,
nothing in the Plan or any Award granted under the Plan shall be deemed to
constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Company or limit in any way the
right of the Company or any Related Company to terminate a Participant's
employment or other relationship at any time, with or without Cause.


17.2
Issuance of Shares

        Notwithstanding
any other provision of the Plan, the Company shall have no obligation to issue
or deliver any shares of Common Stock under the Plan or make any other
distribution of benefits under the Plan unless, in the opinion of the Company's
counsel, such issuance, delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act or the laws of any state or foreign jurisdiction) and the
applicable requirements of any securities exchange or similar entity.

 

17



 

        The
Company shall be under no obligation to any Participant to register for offering
or resale or to qualify for exemption under the Securities Act, or to register
or qualify under the laws of any state or foreign jurisdiction, any shares of
Common Stock, security or interest in a security paid or issued under, or
created by, the Plan, or to continue in effect any such registrations or
qualifications if made. The Company may issue certificates for shares with such
legends and subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or desirable for
compliance by the Company with federal, state and foreign securities laws. The
Company may also require such other action or agreement by the Participants as
may from time to time be necessary to comply with applicable securities laws.

        To
the extent the Plan or any instrument evidencing an Award provides for issuance
of stock certificates to reflect the issuance of shares of Common Stock, the
issuance may be effected on a noncertificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock exchange.


17.3
Indemnification

        Each
person who is or shall have been a member of the Board, or a Committee appointed
by the Board, or an officer of the Company to whom authority was delegated in
accordance with Section 3 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 him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be a party or in which
he or she 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 him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit or proceeding
against him or her; provided that he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf, unless such loss,
cost, liability or expense is a result of his or her own willful misconduct or
except as expressly provided by statute.

        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 of any
power that the Company may have to indemnify them or hold them harmless.


17.4 No
Rights as a Shareholder

        Unless
otherwise provided by the Committee or in the instrument evidencing the Award or
in a written employment agreement, no Option or Award denominated in units shall
entitle the Participant to any cash dividend, voting or other right of a
shareholder unless and until the date of issuance under the Plan of the shares
that are the subject of such Award.

 

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17.5
Compliance With Laws and Regulations

        Notwithstanding
anything in the Plan to the contrary, the Committee, in its sole discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to Participants who are officers or directors subject to
Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other Participants. Additionally, in
interpreting and applying the provisions of the Plan, any Option granted as an
Incentive Stock Option pursuant to the Plan shall, to the extent permitted by
law, be construed as an "incentive stock option" within the meaning of
Section 422 of the Code.


17.6
Participants in Other Countries

        The
Committee shall have the authority to adopt such modifications, procedures and
subplans as may be necessary or desirable to comply with provisions of the laws
of other countries in which the Company or any Related Company may operate to
ensure the viability of the benefits from Awards granted to Participants
employed in such countries, to comply with applicable foreign laws and to meet
the objectives of the Plan.


17.7 No
Trust or Fund

        The
Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.


17.8
Successors

        All
obligations of the Company under the Plan with respect to Awards 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 the business and/or assets of the
Company.


17.9
Severability

        If
any provision of the Plan or any Award is determined to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws,
or, if it cannot be so construed or deemed amended without, in the Committee's
determination, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and effect.

 

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17.10
Choice of Law

        The
Plan, all Awards granted thereunder and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the laws of the
United States, shall be governed by the laws of the State of Washington without
giving effect to principles of conflicts of law.


SECTION
18. EFFECTIVE DATE

        The
Plan shall become effective (the "Effective Date") immediately
following shareholder approval of the Plan.

        Adopted
by the Board on __________, 2003, and approved by the Company's shareholders on
__________, 2003.

 

 

 

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PLAN
ADOPTION AND AMENDMENTS/ADJUSTMENTS

SUMMARY PAGE


	Date
               of Board

               Action	Action	Section/Effect

               of Amendment	Date
               of Shareholder

               Approval
	________,
               2003	Initial
               Plan Adoption		_________,
               2003