AMENDED AND RESTATED
FIRST NORTHERN BANK OF DIXON OUTSIDE DIRECTORS
1997 NONSTATUTORY STOCK OPTION PLAN
TABLE OF CONTENTS
Page
1. ESTABLISHMENT AND PURPOSE..........................................1
2. DEFINITIONS........................................................1
(a) Bank......................................................1
(b) Board of Directors........................................1
(c) Change in Control.........................................1
(d) Code......................................................2
(e) Committee.................................................2
(f) Exchange Act..............................................2
(g) Exercise Price............................................2
(h) Fair Market Value.........................................2
(i) Nonstatutory Option.......................................2
(j) Option....................................................2
(k) Optionee..................................................2
(l) Outside Director..........................................2
(m) Plan......................................................3
(n) Service...................................................3
(o) Share.....................................................3
(p) Stock.....................................................3
(q) Stock Option Agreement....................................3
(r) Subsidiary................................................3
(s) Total and Permanent Disability............................3
3. ADMINISTRATION.....................................................3
(a) Committee Procedures......................................3
(b) Committee Responsibilities................................3
4. ELIGIBILITY........................................................4
(a) General Rule..............................................4
(b) Automatic Grant of Options................................4
5. STOCK SUBJECT TO PLAN..............................................5
(a) Basic Limitation..........................................5
(b) Additional Shares.........................................5
6. TERMS AND CONDITIONS OF OPTIONS....................................6
(a) Stock Option Agreement....................................6
(b) Number of Shares..........................................6
(c) Exercise Price............................................6
(d) Withholding Taxes.........................................6
(e) Nontransferability........................................6
(f) Exercise of Options Upon Termination of Service...........6
(g) No Rights as a Stockholder................................6
(h) Restrictions on Transfer of Shares........................6
7. PAYMENT FOR SHARES.................................................7
-i-
8. ADJUSTMENT OF SHARES...............................................7
(a) General...................................................7
(b) Reorganizations...........................................7
(c) Reservation of Rights.....................................7
9. LEGAL AND REGULATORY REQUIREMENTS..................................7
10. DURATION AND AMENDMENTS............................................8
(a) Term of the Plan..........................................8
(b) Right to Amend or Terminate the Plan......................8
(c) Effect of Amendment or Termination........................8
11. EXECUTION..........................................................8
-ii-
AMENDED AND RESTATED
FIRST NORTHERN BANK OF DIXON OUTSIDE DIRECTORS
1997 NONSTATUTORY STOCK OPTION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
---------- --------------------------
The Plan is being established to offer Outside Directors an opportunity to
acquire a proprietary interest in the success of the Bank, or to increase such
interest, by purchasing Shares of the Bank's Common Stock. The Plan provides for
the grant of Nonstatutory Options to purchase Shares.
SECTION 2. DEFINITIONS.
---------- ------------
(a) "Bank" shall mean First Northern Bank of Dixon, a California banking
----
corporation.
(b) "Board of Directors" shall mean the Board of Directors of the Bank, as
------------------
constituted from time to time.
(c) "Change in Control" shall mean the occurrence of any of the following
-----------------
events:
(i) Approval by the shareholders of the Bank of a merger or
consolidation of the Bank with or into another entity or any other
corporate reorganization, if either:
(A) The Bank is not the continuing or surviving entity; or
(B) More than 50% of the combined voting power of the Bank's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not shareholders of
the Bank immediately prior to such merger, consolidation or other
reorganization;
(ii) A change in the composition of the Board of Directors, as a result
of which fewer than one-half of the incumbent directors are directors who
either:
(A) Had been directors of the Bank 24 months prior to such change;
or
(B) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the
directors who had been directors of the Bank 24 months prior to such
change and who were still in office at the time of the election or
nomination; or
-1-
(iii) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) by the acquisition or aggregation of securities is or
becomes the beneficial owner, directly or indirectly, of securities of the
Bank representing 25% or more of the combined voting power of the Bank's
then outstanding securities ordinarily (and apart from rights accruing
under special circumstances) having the right to vote at elections of
directors (the "Base Capital Stock"); except that any change in the
relative beneficial ownership of the Bank's securities by any person
resulting solely from a reduction in the aggregate number of outstanding
shares of Base Capital Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until such person increases
in any manner, directly or indirectly, such person's beneficial ownership
of any securities of the Bank.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" shall mean the committee designated by the Board of
---------
Directors, which is authorized to administer the Plan under Section 3 hereof.
The Committee shall have membership composition which enables the Plan to
qualify under Rule 16b-3 with regard to the grant of Options or other rights
under the Plan to persons who are subject to Section 16 of the Exchange Act.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(g) "Exercise Price" shall mean the amount for which one Share may be
--------------
purchased upon exercise of an Option, as specified in the applicable Stock
Option Agreement in accordance with the terms of this Plan.
(h) "Fair Market Value" shall mean (i) the closing price of a Share on the
-----------------
principal exchange on which the Shares are trading, on the first trading day
immediately preceding the date on which the Fair Market Value is determined, or
(ii) if the Shares are not traded on an exchange but are quoted on the Nasdaq
National Market or a successor quotation system, the closing price on the first
trading day immediately preceding the date on which the Fair Market Value is
determined, or (iii) if the Shares are not traded on an exchange or quoted on
the Nasdaq National Market or a successor quotation system, the fair market
value of a Share, as determined by the Committee in good faith. Such
determination shall be conclusive and binding on all persons.
(i) "Nonstatutory Option" shall mean a stock option that is not described
-------------------
in Section 422 of the Code.
(j) "Option" shall mean a Nonstatutory Option granted under the Plan and
------
entitling the holder to purchase Shares.
(k) "Optionee" shall mean an individual who holds an Option.
--------
(l) "Outside Director" shall mean a member of the Board of Directors who is
----------------
not a common-law employee of the Bank or of a Subsidiary.
-2-
(m) "Plan" shall mean this Amended and Restated First Northern Bank of
----
Dixon Outside Directors 1997 Nonstatutory Stock Option Plan, as amended
from time to time.
(n) "Service" shall mean service on the Board of Directors whether or not
-------
as an Outside Director.
(o) "Share" shall mean one share of Stock, as adjusted in accordance with
-----
Section 8 (if applicable).
(p) "Stock" shall mean the Common Stock of the Bank.
-----
(q) "Stock Option Agreement" shall mean the agreement between the Bank and
----------------------
an Optionee which contains the terms, conditions and restrictions pertaining to
the Optionee's Option.
(r) "Subsidiary" shall mean any corporation, if the Bank and/or one or more
----------
other Subsidiaries own not less than fifty percent (50%) of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
(s) "Total and Permanent Disability" shall mean that the Optionee is unable
------------------------------
to serve on the Board of Directors due to the Optionee's disability. Total and
Permanent Disability shall be determined by the Bank in accordance with its Long
Term Disability Plan.
SECTION 3. ADMINISTRATION.
---------- ---------------
(a) Committee Procedures. The Board of Directors shall designate one of the
--------------------
members of the Committee as chairman. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.
(b) Committee Responsibilities. Subject to the provisions of the Plan, the
--------------------------
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the Bank, any
instrument required to carry out the purposes of the Plan;
(iv) To determine the eligibility of Optionees;
-3-
(v) Subject to Section 4(b), to prescribe the terms and conditions of
each Option and to specify the provisions of the Stock Option Agreement
relating to such Option;
(vi) Subject to Section 4(b), to amend any outstanding Stock Option
Agreement, subject to applicable legal restrictions and to the consent of
the Optionee who entered into such agreement;
(vii) To determine the disposition of each Option under the Plan in
accordance with any domestic relations order in the event of an Optionee's
divorce or dissolution of marriage;
(viii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Stock Option Agreement; and
(ix) Subject to Section 4(b), to take any other actions deemed
necessary or advisable for the administration of the Plan.
Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate.
All decisions, interpretations and other actions of the Committee shall be final
and binding on all Optionees and all persons deriving their rights from an
Optionee. No member of the Committee shall be liable for any action that he has
taken or has failed to take in good faith with respect to the Plan or any Option
to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
---------- ------------
(a) General Rule. Only Outside Directors shall be eligible to receive a
------------
grant of an Option under this Plan. Options may only be granted pursuant to the
provisions of Section 4(b) of this Plan. Only Nonstatutory Options will be
granted pursuant to this Plan.
(b) Automatic Grant of Options. Each Outside Director shall receive a
--------------------------
one-time grant of Options as described in this Section 4(b).
(i) Each Outside Director who is initially elected, or reelected at the
Bank's 1997 annual shareholders meeting shall automatically be granted an
Option to purchase 3,000 Shares (subject to adjustment under Section 8).
Thereafter, each individual who is initially elected or appointed as an
Outside Director shall be granted an Option to purchase 3,000 Shares
(subject to adjustment under Section 8).
(ii) All Options may be exercised to the extent that Shares have been
vested. All Shares shall vest as follows: Twenty percent (20%) shall be
vested on the date of grant. Thereafter, the Shares will vest annually at
a rate of 20 percent (20%) per year. All of the Shares shall be fully
vested on the fourth anniversary of the date of grant. No additional
Shares will vest after the Optionee's Service has terminated for any
reason.
-4-
(iii) Notwithstanding anything to the contrary in Section 4(b)(ii), all
Options granted to an Outside Director under Section 4(b)(i) shall become
fully vested and exercisable upon a Change in Control.
(iv) The Exercise Price under all Options granted to an Outside Director
under this Section 4(b) shall be equal to one hundred percent (100%) of
the Fair Market Value of a Share on the date of grant.
(v) All Options granted to an Outside Director under this Section
4(b) shall terminate on the earlier of:
(A) The fifth anniversary of the date of grant;
(B) The date which is one-year after the termination of the
Optionee's Service by reason of Total and Permanent Disability or
death, provided that during the one-year period following termination
of Service the Option shall be exercisable as to the vested portion
thereof;
(C) Immediately upon the termination of the Optionee's Service in
the event of the conviction of the Optionee of a felony, or a finding
by a court that the Optionee engaged in a fraudulent or dishonest act
or a gross abuse of authority regarding the Bank; or
(D) The date ninety (90) days after the termination of the
Optionee's service as an Outside Director for any other reason,
provided that during the 90-day period following termination of
Service the Option shall be exercisable as to the vested portion
thereof.
SECTION 5. STOCK SUBJECT TO PLAN.
---------- ----------------------
(a) Basic Limitation. Shares offered under the Plan shall be authorized but
----------------
unissued Shares. The aggregate number of Shares which may be issued under the
Plan upon exercise of Options shall not exceed 75,000 Shares, subject to
adjustment pursuant to Section 8. The number of Shares available for the grant
of Options to Outside Directors pursuant to Section 4(b) hereof shall equal the
number of Shares to be issued upon the exercise of Options granted thereunder.
The number of Shares which are subject to Options outstanding at any time under
the Plan shall not exceed the number of Shares which then remain available for
issuance under the Plan. The Bank, during the term of the Plan, shall at all
times reserve and keep available sufficient Shares to satisfy the requirements
of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
-----------------
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
-5-
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
---------- --------------------------------
(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
----------------------
evidenced by a Stock Option Agreement between the Optionee and the Bank. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. Subject to Section 4(b), the provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
----------------
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
--------------
Price as determined in accordance with Section 4(b)(iv). The Exercise Price
shall be payable in the form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
-----------------
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option. An Optionee may satisfy
all or part of the Optionee's withholding or income tax obligations by having
the Bank withhold all or a portion of any Shares that otherwise would be issued
to the Optionee or by surrendering all or a portion of any Shares that the
Optionee previously acquired. Such Shares shall be valued at their Fair Market
Value on the date when taxes otherwise would be withheld in cash. Any payment of
taxes by assigning Shares to the Bank may be subject to restrictions imposed by
the Committee.
(e) Nontransferability. During an Optionee's lifetime, the Optionee's
------------------
Option(s) shall be exercisable only by the Optionee and shall not be
transferable. In the event of an Optionee's death, the Optionee's Option(s)
shall not be transferable other than by will, beneficiary designation or by the
laws of descent and distribution.
(f) Exercise of Options Upon Termination of Service. Each Stock Option
-----------------------------------------------
Agreement shall set forth the extent to which the Optionee shall have the right
to exercise the Option following termination of the Optionee's Service with the
Bank and its Subsidiaries as set forth in Section 4(b)(iii), and may specify the
right to exercise the Option of any executors or administrators of the
Optionee's estate or any person who has acquired such Option(s) directly from
the Optionee by beneficiary designation, bequest or inheritance.
(g) No Rights as a Stockholder. An Optionee, or a transferee of an
--------------------------
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by the Optionee's Option until the date of the issuance of a stock
certificate for such Shares. No adjustments shall be made, except as provided in
Section 8.
(h) Restrictions on Transfer of Shares. Any Shares issued upon exercise of
-----------------------------------
an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal
-6-
and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any general restrictions that may apply to all
holders of Shares.
SECTION 7. PAYMENT FOR SHARES.
---------- -------------------
The entire Exercise Price shall be payable in lawful money of the United
States of America at the time when Options are exercised.
SECTION 8. ADJUSTMENT OF SHARES.
---------- ---------------------
(a) General. In the event of a subdivision of the outstanding Stock, a
-------
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Committee shall make appropriate
adjustments in one or more of (i) the number of Shares available for future
grants under Section 5, (ii) the number of Shares covered by each outstanding
Option or (iii) the Exercise Price under each outstanding Option.
(b) Reorganizations. In the event that the Bank is a party to a merger or
---------------
other reorganization, outstanding Options shall be subject to the agreement of
merger or reorganization. Such agreement may provide for the assumption of
outstanding Options by the surviving corporation or its parent or for their
continuation by the Bank (if the Bank is a surviving corporation); provided,
however, that if assumption or continuation of the outstanding Options is not
provided by such agreement then the Committee shall have the option of offering
the payment of a cash settlement equal to the difference between the amount to
be paid for one Share under such agreement and the Exercise Price, in all cases
without the Optionees' consent.
(c) Reservation of Rights. Except as provided in this Section 8, an
---------------------
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the Bank
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or Exercise Price of Shares subject to an
Option. The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL AND REGULATORY REQUIREMENTS.
--------- ----------------------------------
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations and the regulations of any stock exchange on which the Bank's
securities may then be listed, and the Bank has obtained the approval or
-7-
favorable ruling from any governmental agency which the Bank determines is
necessary or advisable.
SECTION 10. DURATION AND AMENDMENTS.
----------- ------------------------
(a) Term of the Plan. The Plan, as set forth herein, shall become effective
----------------
as of the date set forth below, subject to the approval of the Bank's
stockholders. In the event that the stockholders fail to approve the Plan within
twelve (12) months of its adoption by the Board of Directors, any Option grants
already made shall be null and void, and no additional Option grants shall be
made after such date. The Plan shall terminate automatically ten (10) years
after its original adoption by the Board of Directors and may be terminated on
any earlier date pursuant to Section 10(b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
------------------------------------
the Plan at any time and from time to time; provided, however, that any
amendment to Sections 4 or 5 of the Plan shall be subject to the approval of the
Bank's shareholders. Rights and obligations under any Option granted before
amendment of the Plan shall not be materially altered, or impaired adversely, by
such amendment, except with consent of the person to whom the Option was
granted. Except as otherwise provided in this Section 10(b), an amendment of the
Plan shall be subject to the approval of the Bank's stockholders only to the
extent required by applicable laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
----------------------------------
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 11. EXECUTION.
----------- ----------
To record the adoption of the Plan by the Board of Directors, the Bank has
caused its authorized officer to execute the same as of June 11, 1997.
FIRST NORTHERN BANK OF DIXON
By: /s/ Owen J. Onsum
------------------------------------
Its: President
-----------------------------------
-8-