WASHINGTON FEDERAL, INC.
                         2001 LONG-TERM INCENTIVE PLAN
 
                                   ARTICLE I
 
                           ESTABLISHMENT OF THE PLAN
 
     Washington Federal, Inc. (the "Corporation") hereby establishes this 2001
Long-Term Incentive Plan (the "Plan") upon the terms and conditions hereinafter
stated.
 
                                   ARTICLE II
 
                              PURPOSE OF THE PLAN
 
     The purpose of the Plan is to improve the growth and profitability of the
Corporation and its Subsidiary Companies by attracting and retaining qualified
personnel in key positions, providing such key Employees with a proprietary
interest in the Corporation as an incentive to contribute to the success of the
Corporation and its Subsidiary Companies and rewarding those key Employees for
outstanding performance and the attainment of targeted goals. All Incentive
Stock Options issued under this Plan are intended to comply with the
requirements of Section 422 of the Code, and the regulations thereunder, and all
provisions hereunder shall be read, interpreted and applied with that purpose in
mind.
 
                                  ARTICLE III
 
                                  DEFINITIONS
 
     3.01  "Award" means an Option, Stock Appreciation Right or Restricted
Shares granted pursuant to the terms of this Plan.
 
     3.02  "Award Agreement" means the agreement executed by a Participant in
connection with the granting of an Award.
 
     3.03  "Board" means the Board of Directors of the Corporation.
 
     3.04  "Code" means the Internal Revenue Code of 1986, as amended from time
to time or any successor statute thereto, together with any rules, regulations
and interpretations promulgated thereunder or with respect thereto.
 
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     3.05  "Committee" means a committee of two or more directors appointed by
the Board pursuant to Article IV hereof, none of whom shall be an Officer or
Employee of the Corporation or any Subsidiary Company, and each of whom shall be
a "non-employee director" within the meaning of Rule 16b-3 under the Exchange
Act and an "outside director" within the meaning of Section 162(m) of the Code.
 
     3.06  "Common Stock" means shares of the common stock, $1.00 par value per
share, of the Corporation.
 
     3.07  "Disability" means any physical or mental impairment which qualifies
an Employee for disability benefits under the applicable long-term disability
plan maintained by the Corporation or a Subsidiary Company, or, if no such plan
applies, which would qualify such Employee for disability benefits under the
long-term disability plan maintained by the Corporation if such Employee were
covered by that plan.
 
     3.08  "Effective Date" means September 24, 2001, the date on which this
Plan was adopted by the Board.
 
     3.09  "Employee" means any person who is employed by the Corporation or a
Subsidiary Company, including Officers, but not including directors who are not
also Officers of or otherwise employed by the Corporation or a Subsidiary
Company.
 
     3.10  "Exchange Act" means the Securities Exchange Act of 1934, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.
 
     3.11  "Fair Market Value" shall be equal to the fair market value per share
of the Corporation's Common Stock on the date an Award is granted. For purposes
hereof, the Fair Market Value of a share of Common Stock shall be the closing
sale price on the date in question of a share of Common Stock on the principal
United States securities exchange registered under the Exchange Act on which
such stock is listed, or, if such stock is not listed on any such exchange, the
closing sale price with respect to a share of such stock on the date in question
on the National Corporation of Securities Dealers Automated Quotation System or
any system then in use, or if no such quotations are available, the Fair Market
Value on the date in question of a share of such stock as determined by the
Board in good faith.
 
     3.12  "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be (and specifically
designates as) an incentive stock option within the meaning of Section 422 of
the Code.
 
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     3.13  "Non-Qualified Option" means any Option granted under this Plan which
is not an Incentive Stock Option.
 
     3.14  "Officer" means an Employee whose position in the Corporation or
Subsidiary Company is that of a corporate officer, as determined by the Board.
 
     3.15  "Option" means a right granted under this Plan to purchase Common
Stock.
 
     3.16  "Participant" means any individual who is selected from time-to-time
to receive an Award under the Plan.
 
     3.17  "Restricted Shares" means the restricted shares of Common Stock
granted pursuant to the provisions of Section 8.11 of the Plan and the relevant
Restricted Share Award Agreement.
 
     3.18  "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Company, or, if no such plan is applicable,
which would constitute "retirement" under the Corporation's Employee Retirement
Plan, if such individual were a participant in that Plan.
 
     3.19  "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.10.
 
     3.20  "Subsidiary Companies" means those subsidiaries of the Corporation
which meet the definition of "subsidiary corporations" set forth in Section
424(f) of the Code, at the time of granting of the Award in question.
 
                                   ARTICLE IV
 
                           ADMINISTRATION OF THE PLAN
 
     4.01  Duties of the Committee.  The Plan shall be administered and
interpreted by the Committee as appointed from time to time by the Board
pursuant to Section 4.02 of the Plan. The Committee shall have all of the powers
allocated to it in this and other Sections of the Plan. The interpretation and
construction by the Committee of any provisions of the Plan or of any Award
granted under it shall be final and binding. The Committee shall act by vote or
written consent of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. It may
appoint one of its members to be chairman and any person, whether or not a
member, to be its secretary or agent. The Committee shall
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report its actions and decisions to the Board at appropriate times but in no
event less than one time per Plan Year. The Committee may designate persons
other than members of the Committee to carry out the day-to-day ministerial
administration of the Plan under such conditions and limitations as it may
prescribe, except that the Committee may not delegate its authority with regard
to the selection for participation in the Plan and/or the granting of any Awards
to Employees.
 
     4.02  Role of the Board.  The members of the Committee shall be appointed
by, and will serve at the pleasure of, the Board. The Board from time to time
may remove members from, or add members to, the Committee, provided the
Committee shall continue to consist of two or more members of the Board, none of
whom shall be an Officer or Employee of the Corporation or any Subsidiary
Company, and each of whom shall be a "non-employee director" within the meaning
of Rule 16b-3 under the Exchange Act and an "outside director" within the
meaning of the Section 162(m) of the Code.
 
     4.03  Revocation for Misconduct.  The Board may by resolution immediately
revoke, rescind and terminate any Option or Restricted Share Award, or portion
thereof, to the extent not yet vested, or any Stock Appreciation Right, to the
extent not yet exercised, previously granted or awarded under this Plan to an
Employee who is discharged from the employ of the Corporation or a Subsidiary
Company for cause, which, for purposes hereof, shall mean termination because of
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, or
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order.
 
     4.04  Limitation on Liability.  No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Awards granted under it. If a member of the Board or the
Committee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him
in such capacity under or with respect to the Plan, the Corporation shall
indemnify such member against all liabilities and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in the best interests
of the Corporation and its Subsidiary Companies and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
 
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     4.05  Compliance with Law and Regulations.  The Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised and no Restricted Shares of Common Stock may be issued if such
exercise or the issuance of such shares of Common Stock would be contrary to
applicable laws and regulations.
 
     4.06  Restriction on Transfer.  The Corporation may place a legend upon any
certificate representing shares purchased or received pursuant to an Award
granted hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
 
                                   ARTICLE V
 
                                  ELIGIBILITY
 
     Awards may be granted to key Employees of the Corporation and its
Subsidiary Companies. The designation of an Employee as a key Employee shall be
left to the discretion of the Committee. Awards may not be granted to
individuals who are not Employees of either the Corporation or its Subsidiary
Companies.
 
                                   ARTICLE VI
 
                        COMMON STOCK COVERED BY THE PLAN
 
     6.01  Option Shares.  The aggregate number of shares of Common Stock for
which Awards may be granted under the Plan, subject to adjustment as provided in
Article IX shall be 2,800,000. None of such shares shall be the subject of more
than one Award at any time. If any Awards expire unexercised or are forfeited,
surrendered, canceled, terminated or settled in cash in lieu of Common Stock,
the shares of Common Stock which were theretofore subject (or potentially
subject) to such Awards shall again be available for Awards under the Plan to
the extent of such expiration, forfeiture, surrender, cancellation, termination
or settlement of such Awards.
 
     6.02  Source of Shares.  The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares or shares purchased by
the
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Corporation from shareholders in public or private transactions for use under
the Plan.
 
                                  ARTICLE VII
 
                DETERMINATION OF AWARDS, NUMBER OF SHARES, ETC.
 
     The Committee shall, in its discretion, determine from time to time which
key Employees will be granted Awards under the Plan, the number of shares of
Common Stock subject to each Award, whether each Option will be an Incentive
Stock Option or a Non-Qualified Option, the exercise price of such Option and
the terms of any Award of Restricted Shares. In making all such determinations
there shall be taken into account the duties, responsibilities and performance
of each respective Employee, his present and potential contributions to the
growth and success of the Corporation, his salary and such other factors as the
Committee shall deem relevant to accomplishing the purposes of the Plan.
 
                                  ARTICLE VIII
 
                   OPTION AND STOCK APPRECIATION RIGHT TERMS
 
     Each Option granted under the Plan shall be on the following terms and
conditions:
 
     8.01  Stock Option Agreement.  The proper Officers of the Corporation and
each Participant shall execute a Stock Option Award Agreement which shall set
forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Committee in each instance shall deem appropriate, provided they are not
inconsistent with the terms, conditions and provisions of this Plan. Each
Participant shall receive a copy of his executed Stock Option Award Agreement.
 
     8.02  Option Exercise Price.
 
     (a) Incentive Stock Options.  The per share price at which the subject
Common Stock may be purchased upon exercise of an Incentive Stock Option shall
be no less than one hundred percent (100%) of the Fair Market Value of a share
of Common Stock at the time such Incentive Stock Option is granted, except as
provided in Section 8.09(b) below.
 
     (b) Non-Qualified Options.  The per share price at which the subject Common
Stock may be purchased upon exercise of a Non-Qualified Option shall be no less
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than one hundred percent (100%) of the Fair Market Value of a share of Common
Stock at the time such Non-Qualified Option is granted.
 
     8.03  Vesting and Exercise of Options.
 
     (a) General Rules.  Incentive Stock Options and Non-Qualified Options shall
become vested and exercisable at the rate and to the extent specified by the
Committee, provided, however, that in the case of any Option exercisable within
the first six months following the date the Option is granted, the shares of
Common Stock received upon exercise of such Option may not be sold or disposed
of by the Participant for the first six months following the date of grant.
Notwithstanding the foregoing, no vesting shall occur on or after a
Participant's employment with the Corporation and all Subsidiary Companies is
terminated for any reason other than his death, Disability or Retirement. In
determining the number of shares of Common Stock with respect to which Options
are vested and/or exercisable, fractional shares will be rounded down to the
nearest whole number.
 
     (b) Accelerated Vesting Upon Death or Disability.  Unless the Committee
shall specifically state otherwise at the time an Option is granted, all Options
granted under this Plan shall become vested and exercisable in full on the date
a Participant terminates his employment with the Corporation or a Subsidiary
Company because of his death or Disability.
 
     (c) Accelerated Vesting for Changes in Control.  Notwithstanding the
general rule described in Section 8.03(a), all outstanding Options shall become
immediately vested and exercisable in the event there is an actual or threatened
change in control of the Corporation.
 
          (1) Change in Control.  A "change in control of the Corporation" shall
     mean a change in control of a nature that would be required to be reported
     in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
     under the Exchange Act, whether or not the Corporation in fact is required
     to comply with Regulation 14A thereunder: provided that, without
     limitation, such a change in control shall be deemed to have occurred if
     (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
     Exchange Act), other than the Corporation, is or becomes the "beneficial
     owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
     indirectly, of securities of the Corporation representing 25% or more of
     the combined voting power of the Corporation's then outstanding securities,
     or (ii) during any period of twenty-four consecutive months during the term
     of an Option, individuals who at the beginning of such period constitute
     the Board of the Corporation cease for any reason to constitute at least a
     majority thereof, unless the election, or the
 
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     nomination for election by the Corporation's stockholders, of each director
     who was not a director at the date of grant has been approved in advance by
     directors representing at least two-thirds of the directors then in office
     who were directors at the beginning of the period.
 
          (2) Threatened Change in Control.  A "threatened change in control of
     the Corporation" shall mean any set of circumstances which in the opinion
     of the Board, as expressed through a resolution, poses a real, substantial
     and immediate possibility of leading to a change in control of the
     Corporation as defined in clause (1) above.
 
     8.04  Duration of Options.
 
     (a) General Rule.  Except as provided in Sections 8.04(b) and 8.09, each
Option or portion thereof shall be exercisable at any time on or after it vests
and becomes exercisable until the earlier of (i) ten (10) years after its date
of grant, or (ii) three (3) months after the date on which the Participant
ceases to be employed by the Corporation and all Subsidiary Companies, unless
the Committee in its discretion decides to extend such period of exercise upon
termination of employment from three (3) months to a period not exceeding five
(5) years. In no event, however, shall any Option be exercisable more than ten
(10) years from the date it was granted.
 
     (b) Exceptions for Terminations Due to Death, Disability or Retirement.  If
a Participant dies while in the employ of the Corporation or a Subsidiary
Company or terminates employment with the Corporation or a Subsidiary Company as
a result of Disability or Retirement without having fully exercised his Options,
the Participant or the executors, administrators, legatees or distributees of
his estate shall have the right, during the twelve-month period following the
earlier of his death, Disability or Retirement, to exercise such Options to the
extent vested on the date of such death, Disability or Retirement. In no event,
however, shall any Option be exercisable more than ten (10) years from the date
it was granted.
 
     8.05  Nonassignability.  Options shall not be transferable by a Participant
except by will or the laws of descent or distribution, and during a
Participant's lifetime shall be exercisable only by such Participant.
 
     8.06  Manner Of Exercise.  Options may be exercised in part or in whole and
at one time or from time to time. The procedures for exercise shall be set forth
in the written Stock Option Agreement provided for in Section 8.01 above.
 
     8.07  Payment for Shares.  Payment in full of the purchase price for shares
of Common Stock purchased pursuant to the exercise of any Option shall be made
to
 
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the Corporation upon exercise of the Option. All shares sold under the Plan
shall be fully paid and nonassessable. Payment for shares may be made by the
Participant in cash or, at the discretion of the Committee, by delivering shares
of Common Stock (including shares acquired pursuant to the exercise of an
Option) already owned by the Participant for at least six (6) months or other
property equal in Fair Market Value to the purchase price of the shares to be
acquired pursuant to the Option, by withholding some of the shares of Common
Stock which are being purchased upon exercise of an Option, by any combination
of the foregoing, or by any other form of payment acceptable to the Committee.
 
     8.08  Voting and Dividend Rights.  No Participant shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
 
     8.09  Additional Terms Applicable to Incentive Stock Options.  All Options
issued under the Plan as Incentive Stock Options will be subject, in addition to
the terms detailed in Sections 8.01 - 8.08 above, to those contained in this
Section 8.09.
 
     (a) Notwithstanding any contrary provisions contained elsewhere in this
Plan, the aggregate Fair Market Value, determined as of the time an Incentive
Stock Option is granted, of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by the Participant during any
calendar year, under this Plan and stock options that satisfy the requirements
of Section 422 of the Code under any other stock option plan or plans maintained
by the Corporation (or any parent or Subsidiary Company), shall not exceed
$100,000.
 
     (b) Limitation of Ten Percent Stockholders.  The price at which shares of
Common Stock may be purchased upon exercise of an Incentive Stock Option granted
to an individual who, at the time such Incentive Stock Option is granted, owns,
directly or indirectly, more than ten percent (10%) of the total combined voting
power of all classes of stock issued to stockholders of the Corporation or any
Subsidiary Company, shall be no less than one hundred and ten percent (110%) of
the Fair Market Value of a share of the Common Stock of the Corporation at the
time of grant, and such Incentive Stock Option shall by its terms not be
exercisable after the earlier of the date determined under Section 8.03 or the
expiration of five (5) years from the date such Incentive Stock Option is
granted.
 
     (c) Notice of Disposition; Withholding; Escrow.  A Participant shall
immediately notify the Corporation in writing of any sale, transfer, assignment
or other disposition (or action constituting a disqualifying disposition within
the meaning of
 
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Section 421 of the Code) of any shares of Common Stock acquired through exercise
of an Incentive Stock Option, within two (2) years after the grant of such
Incentive Stock Option or within one (1) year after the acquisition of such
shares, setting forth the date and manner of disposition, the number of shares
disposed of and the price at which such shares were disposed of. The Corporation
shall be entitled to withhold from any compensation or other payments then or
thereafter due to the Participant such amounts as may be necessary to satisfy
any withholding requirements of federal or state law or regulation and, further,
to collect from the Participant any additional amounts which may be required for
such purpose. The Committee may, in its discretion, require shares of Common
Stock acquired by a Participant upon exercise of an Incentive Stock Option to be
held in an escrow arrangement for the purpose of enabling compliance with the
provisions of this Section 8.09(c).
 
     8.10  Stock Appreciation Rights.
 
     (a) General Terms and Conditions.  The Committee may, but shall not be
obligated to, authorize the Corporation, on such terms and conditions as it
deems appropriate in each case, to grant rights to Participants to surrender an
exercisable Option, or any portion thereof, in consideration for the payment by
the Corporation of an amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the Option, or portion thereof, surrendered
over the exercise price of the Option with respect to such shares (any such
authorized surrender and payment being hereinafter referred to as a "Stock
Appreciation Right"). Such payment, at the discretion of the Committee, may be
made in shares of Common Stock valued at the then Fair Market Value thereof, or
in cash, or partly in cash and partly in shares of Common Stock.
 
     The terms and conditions set with respect to a Stock Appreciation Right may
include (without limitation), subject to the other provisions of this Section
8.10 and the Plan: the period during which, date by which or event upon which
the Stock Appreciation Right may be exercised; the method for valuing shares of
Common Stock for purposes of this Section 8.10; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and
cancellation of the Stock Appreciation Right; and arrangements for income tax
withholding. The Committee shall have the complete discretion to determine
whether, when and to whom Stock Appreciation Rights may be granted.
 
     (b) Time Limitations.  Any election by a Participant to exercise a Stock
Appreciation Right provided pursuant to this Section 8.10 shall be made only
during the period beginning on the third business day following the release for
publication of quarterly or annual financial information required to be prepared
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and disseminated by the Corporation pursuant to the requirements of the Exchange
Act and ending on the twelfth business day following such date. The aforesaid
release date shall be deemed to have occurred when the specified financial data
appears on or in a wire service, financial news service or newspaper of general
circulation or is otherwise first made publicly available.
 
     If a holder of a Stock Appreciation Right terminates service with the
Corporation as an Officer or Employee, the Stock Appreciation Right may be
exercised only within the period, if any, within which the Option to which it
relates may be exercised.
 
     (c) Effects of Exercise of Stock Appreciation Rights or Options.  Upon the
exercise of a Stock Appreciation Right, the number of shares of Common Stock
available under the Option to which it relates shall decrease by a number equal
to the number of shares for which the Stock Appreciation Right was exercised.
Upon the exercise of an Option, any related Stock Appreciation Right shall
terminate as to any number of shares of Common Stock subject to the Stock
Appreciation Right that exceeds the total number of shares for which the Option
remains unexercised.
 
     (d) Time of Grant.  A Stock Appreciation Right may be granted concurrently
with the Option to which it relates or at any time thereafter prior to the
exercise or expiration of such Option.
 
     (e) Non-Transferable.  The holder of a Stock Appreciation Right may not
transfer or assign the Stock Appreciation Right otherwise than by will or in
accordance with the laws of descent and distribution, and during a holder's
lifetime a Stock Appreciation Right may be exercisable only by the holder.
 
     (f) Tandem Incentive Stock Option -- Stock Appreciation Right.  Whenever an
Incentive Stock Option and a Stock Appreciation Right authorized hereunder are
granted together and the exercise of one affects the right to exercise the
other, the following requirements apply:
 
          (1) The Stock Appreciation Right shall expire no later than the
     expiration of the underlying Incentive Stock Option;
 
          (2) The payment available under the Stock Appreciation Right may not
     exceed the difference between the exercise price of the underlying Option
     and the Fair Market Value of the Common Stock subject to the underlying
     Option at the time the Stock Appreciation Right is exercised;
 
          (3) The Stock Appreciation Right is transferable only when the
     underlying Incentive Stock Option is transferable, and under the same
     conditions;
 
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          (4) The Stock Appreciation Right may be exercised only when the
     underlying Incentive Stock Option is eligible to be exercised; and
 
          (5) The Stock Appreciation Right may be exercised only when the Fair
     Marker Value of the Common Stock subject to the Option exceeds the exercise
     price of the Common Stock subject to the Option.
 
     8.11  Restricted Shares.
 
     (a) Terms and Conditions.  Grants of Restricted Shares shall be subject to
the terms and conditions set forth in this Section 8.11 and any additional terms
and conditions, not inconsistent with the express terms and provisions of the
Plan, as the Committee shall set forth in the relevant Restricted Share Award
Agreement. Restricted Shares may be granted alone or in addition to any other
Awards under the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of Restricted Shares to be granted to a Participant and the
Committee may provide or impose different terms and conditions on any particular
Restricted Share grant made to any Participant. With respect to each Participant
receiving an Award of Restricted Shares, there shall be issued a stock
certificate (or certificates) in respect of such Restricted Shares. Such stock
certificate(s) shall be registered in the name of such Participant, shall be
accompanied by a stock power duly executed by such Participant, and shall bear,
among other required legends, the following legend:
 
          "The transferability of this certificate and the shares of
          stock represented hereby are subject to the terms and
          conditions (including, without limitation, forfeiture
          events) contained in the Washington Federal, Inc. 2001
          Long-Term Incentive Plan and an Award Agreement entered into
          between the registered owner hereof and Washington Federal,
          Inc. Copies of such Plan and Award Agreement are on file in
          the office of the Secretary of Washington Federal, Inc., 425
          Pike Street, Seattle, Washington 98101. Washington Federal,
          Inc. will furnish to the recordholder of the certificate,
          without charge and upon written request at its principal
          place of business, a copy of such Plan and Award Agreement.
          Washington Federal, Inc. reserves the right to refuse to
          record the transfer of this certificate until all such
          restrictions are satisfied, all such terms are complied with
          and all such conditions are satisfied."
 
     Such stock certificate evidencing such shares shall, in the sole discretion
of the Committee, be deposited with and held in custody by the Corporation until
the
 
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restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.
 
     (b) Restricted Share Grants.  A grant of Restricted Shares is an Award of
shares of Common Stock granted to a Participant, subject to such restrictions,
terms and conditions as the Committee deems appropriate, including, without
limitation, (1) restrictions on the sale, assignment, transfer, hypothecation or
other disposition of such shares, (2) the requirement that the Participant
deposit such shares with the Corporation while such shares are subject to such
restrictions, and (3) the requirement that such shares be forfeited upon
termination of employment for specified reasons within a specified period of
time or for other reasons (including, without limitation, the failure to achieve
designated performance goals). Each Participant receiving an Award of Restricted
Shares under the Plan shall enter into an Award Agreement with the Company in a
form specified by the Committee. Each such Participant shall agree to the
restrictions, terms, and conditions of the Award set forth therein and in the
Plan.
 
     (c) Restriction Period.  In accordance with Sections 8.11(a) and 8.11(b)
and 8.2 of the Plan and unless otherwise determined by the Committee (in its
sole discretion) at any time and from time to time, Restricted Shares shall only
become unrestricted and vested in the Participant in accordance with such
vesting schedule relating to such Restricted Shares, if any, as the Committee
may establish in the relevant Award Agreement (the "Restriction Period"). During
the Restriction Period, such stock shall be and remain unvested and a
Participant may not sell, assign, transfer, pledge, encumber or otherwise
dispose of or hypothecate such Award. Upon satisfaction of the vesting schedule
and any other applicable restrictions, terms and conditions, the Participant
shall be entitled to receive payment of the Restricted Shares or a portion
thereof, as the case may be, as provided in Section 8.11(d) of the Plan.
 
     (d) Payment of Restricted Share Grants.  After the satisfaction and/or
lapse of the restrictions, terms and conditions established by the Committee in
respect of a grant of Restricted Shares, a new certificate, without the legend
set forth in Section 8.11(a) of the Plan, for the number of shares of Common
Stock which are no longer subject to such restrictions, terms and conditions
shall, as soon as practicable thereafter, be delivered to the Participant.
 
     (e) Shareholder Rights.  A Participant shall have, with respect to the
shares of Common Stock underlying a grant of Restricted Shares, all of the
rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Shares shall be treated as
additional Restricted Shares and
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shall be subject to the same restrictions and other terms and conditions that
apply to the unvested Restricted Shares in respect of which such stock dividends
are issued.
 
     (f) Accelerated Vesting for Changes in Control.  Unless otherwise provided
in the applicable Award Agreement, all restrictions, terms and conditions
applicable to all Restricted Shares then outstanding shall be deemed lapsed and
satisfied as of the date of an actual or threatened change in control of the
Corporation (as defined in Section 8.03(c)).
 
                                   ARTICLE IX
 
                  CHANGES IN CAPITALIZATION AND OTHER MATTERS
 
     9.01  No Corporate Action Restriction.  The existence of the Plan, any
Award Agreement and/or the Awards granted hereunder shall not limit, affect or
restrict in any way the right or power of the Board or the shareholders of the
Corporation to make or authorize (a) any adjustment, recapitalization,
reorganization or other changes in the Corporation's or any Subsidiary Company's
capital structure or its business, (b) any merger, consolidation or change in
the ownership of the Corporation or any Subsidiary Company, (c) any issue of
bonds, debentures, capital, preferred or prior preference stocks ahead of or
affecting the Corporation's or any Subsidiary Company's capital stock or the
rights thereof, (d) any dissolution or liquidation of the Corporation or any
Subsidiary Company, (e) any sale or transfer of all or any part of the
Corporation's or any Subsidiary Company's assets or business, or (f) any other
corporate act or proceeding by the Corporation or any Subsidiary Company. No
Participant, beneficiary or any other person shall have any claim against any
member of the Board or the Committee, the Corporation or any Subsidiary Company,
or any Employees, Officers, shareholders or agents of the Corporation or any
Subsidiary Company, as a result of any such action.
 
     9.02  Recapitalization Adjustments.  In the event that the Board determines
that any dividend or other distribution (whether in the form of cash, Common
Stock, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, Change in Control or exchange of Common Stock or other
securities of the Corporation, or other corporate transaction or event affects
the Common Stock such that an adjustment is determined by the Board, in its sole
discretion, to be necessary or appropriate in order to prevent dilution or
enlargement of benefits or potential benefits intended to be made available
under the Plan, the Board may, in such manner as it in good faith deems
equitable, adjust any or all of (i) the number
 
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of shares of Common Stock or other securities of the Corporation (or number and
kind of other securities or property) with respect to which Awards may be
granted, (ii) the number of shares of Common Stock or other securities of the
Corporation (or number and kind of other securities or property) subject to
outstanding Awards, and (iii) the exercise price with respect to any Stock
Option, or make provision for an immediate cash payment to the holder of an
outstanding Award in consideration for the cancellation of such Award.
 
     9.03  Mergers.  If the Corporation enters into or is involved in any
merger, reorganization, Change in Control or other business combination with any
person or entity (a "Merger Event"), the Board may, prior to such Merger Event
and effective upon such Merger Event, take such action as it deems appropriate,
including, but not limited to, replacing such Stock Options and/or Stock
Appreciation Rights with substitute stock options and/or stock appreciation
rights in respect of the shares, other securities or other property of the
surviving corporation or any affiliate of the surviving corporation on such
terms and conditions, as to the number of shares, pricing and otherwise, which
shall substantially preserve the value, rights and benefits of any affected
Stock Options or Stock Appreciation Rights granted hereunder as of the date of
the consummation of the Merger Event. Notwithstanding anything to the contrary
in the Plan, if any Merger Event or Change in Control occurs, the Corporation
shall have the right, but not the obligation, to cancel each Participant's Stock
Options and/or Stock Appreciation Rights and to pay to each affected Participant
in connection with the cancellation of such Participant's Stock Options and/or
Stock Appreciation Rights, an amount equal to the excess of the Fair Market
Value, as determined by the Board, of the Common Stock underlying any
unexercised Stock Options or Stock Appreciation Rights (whether then exercisable
or not) over the aggregate exercise price of such unexercised Stock Options
and/or Stock Appreciation Rights. Upon receipt by an affected Participant of any
such substitute stock options, stock appreciation rights (or payment) as a
result of any such Merger Event, such Participant's affected Stock Options
and/or Stock Appreciation Rights for which such substitute options and/or stock
appreciation rights (or payment) were received shall be thereupon cancelled
without the need for obtaining the consent of any such affected Participant.
 
                                   ARTICLE X
 
                     AMENDMENT AND TERMINATION OF THE PLAN
 
     The Board may, by resolution, at any time terminate, amend or revise the
Plan with respect to any shares of Common Stock as to which Awards have not been
granted, subject to any required stockholder approval or any stockholder
approval
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which the Board may deem to be advisable for any reason, such as for the purpose
of obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the Participant, alter
or impair any Award previously granted under the Plan as specifically authorized
herein. The Board may not (a) make any change that would disqualify the Plan or
any other plan of the Corporation or any Subsidiary Company intended to be so
qualified, from the benefits provided under Sections 422 and 162(m) of the Code,
or any successor provisions thereto, or (b) increase the number of shares of
Common Stock available for Award, pursuant to Section 6.01 without shareholder
approval.
 
                                   ARTICLE XI
 
                               EMPLOYMENT RIGHTS
 
     Neither the Plan nor the grant of any Awards hereunder nor any action taken
by the Committee or the Board in connection with the Plan shall create any right
on the part of any Employee of the Corporation or a Subsidiary Company to
continue in the employ of the Corporation or a Subsidiary Company.
 
                                  ARTICLE XII
 
                                  WITHHOLDING
 
     The Corporation shall have the right to deduct from any payment or
settlement under the Plan, including, without limitation, the exercise of any
Stock Option or Stock Appreciation Right, or the delivery, transfer or vesting
of any Common Stock or Restricted Shares, any federal, state, local or other
taxes of any kind which the Committee, in its sole discretion, deems necessary
to be withheld to comply with the Code and/or any other applicable law, rule or
regulation. Shares of Common Stock may be used to satisfy any such tax
withholding. Such Common Stock shall be valued based on the Fair Market Value of
such stock as of the date the tax withholding is required to be made, such date
to be determined by the Committee. In addition, the Corporation shall have the
right to require payment from a Participant to cover any applicable withholding
or other employment taxes due upon any payment or settlement under the Plan.
 
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                                  ARTICLE XIII
 
                        EFFECTIVE DATE OF THE PLAN; TERM
 
     13.01  Effective Date of the Plan.  This Plan shall become effective on the
Effective Date, and Awards may be granted hereunder on or after the Effective
Date and prior to the termination of the Plan, However, no Option or Stock
Appreciation Right may be exercised and no Restricted Shares may vest unless
this Plan is approved by a vote of the holders of a majority of the outstanding
voting shares of the Corporation at a meeting of stockholders of the Corporation
held within twelve (12) months following adoption of this Plan by the Board.
 
     13.02  Term of Plan.  Unless sooner terminated, the Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
 
                                  ARTICLE XIV
 
                                 MISCELLANEOUS
 
     14.01  Governing Law.  To the extent not governed by federal law, this Plan
shall be construed under the laws of the State of Washington.
 
     14.02  Pronouns.  Whenever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
 
     14.03  Code Section 162(m) Compliance.  Restricted Shares, and other Awards
subject to performance criteria that are intended to be "qualified
performance-based compensation" within the meaning of Section 162(m) of the Code
shall be paid solely on account of the attainment of one or more
pre-established, objective performance goals within the meaning of Section
162(m) and the regulations thereunder. Until otherwise determined by the
Committee, the performance goals shall be the attainment of pre-established
levels of any of net income, market price per share, earnings per share, return
on equity, return on capital employed and/or cash flow. The payout of any such
Award to a Covered Employee may be reduced, but not increased, based on the
degree of attainment of other performance criteria or otherwise at the
discretion of the Committee. For purposes of the Plan, "Covered Employee" has
the same meaning as set forth in Section 162(m) of the Code.
 
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