FIRST NORTHERN BANK OF DIXON
1997 STOCK OPTION PLAN
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. ESTABLISHMENT AND PURPOSE....................................1
SECTION 2. DEFINITIONS..................................................1
(a) Board of Directors...........................................1
(b) Change in Control............................................1
(c) Code.........................................................2
(d) Committee....................................................2
(e) Company......................................................2
(f) Employee.....................................................2
(g) Exchange Act.................................................2
(h) Exercise Price...............................................2
(i) Fair Market Value............................................2
(j) ISO..........................................................2
(k) Nonstatutory Option..........................................2
(l) Option.......................................................2
(m) Optionee.....................................................2
(n) Outside Director.............................................3
(o) Plan.........................................................3
(p) Service......................................................3
(q) Share........................................................3
(r) Stock........................................................3
(s) Stock Option Agreement.......................................3
(t) Subsidiary...................................................3
(u) Total and Permanent Disability...............................3
SECTION 3. ADMINISTRATION...............................................3
(a) Committee Procedures.........................................3
(b) Committee Responsibilities...................................3
SECTION 4. ELIGIBILITY..................................................4
(a) General Rule.................................................4
(b) Limitation On Grants.........................................4
(c) Ten-Percent Shareholders.....................................5
(d) Attribution Rules............................................5
(e) Outstanding Stock............................................5
SECTION 5. STOCK SUBJECT TO PLAN........................................5
(a) Basic Limitation.............................................5
(b) Additional Shares............................................5
SECTION 6. TERMS AND CONDITIONS OF OPTIONS..............................5
(a) Stock Option Agreement.......................................5
(b) Number of Shares.............................................5
(c) Exercise Price...............................................5
(d) Withholding Taxes............................................6
-i-
(e) Exercisability and Term......................................6
(f) Nontransferability...........................................6
(g) Exercise of Options Upon Termination of Service..............6
(h) No Rights as a Stockholder...................................6
(i) Modification, Extension and Renewal of Options...............6
(j) Restrictions on Transfer of Shares...........................7
SECTION 7. PAYMENT FOR SHARES...........................................7
(a) General Rule.................................................7
(b) Surrender of Stock...........................................7
SECTION 8. ADJUSTMENT OF SHARES.........................................7
(a) General......................................................7
(b) Reorganizations..............................................7
(c) Reservation of Rights........................................7
SECTION 9. LEGAL AND REGULATORY REQUIREMENTS............................8
SECTION 10. NO EMPLOYMENT RIGHTS.........................................8
SECTION 11. 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
SECTION 12. EXECUTION...................................................9
-ii-
FIRST NORTHERN BANK OF DIXON
1997 STOCK OPTION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
---------- --------------------------
The Plan is being established to offer selected key employees an
opportunity to acquire a proprietary interest in the success of the Company, or
to increase such interest, by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as ISOs intended to
qualify under Code section 422.
SECTION 2. DEFINITIONS.
---------- ------------
(a) "Board of Directors" shall mean the Board of Directors of the Company,
------------------
as constituted from time to time.
(b) "Change in Control" shall mean the occurrence of any of the following
-----------------
events:
(i) Approval by the shareholders of the Company of a
merger or consolidation of the Company with or into another entity or any
other corporate reorganization, if either:
(A) The Company is not the continuing or surviving entity; or
(B) More than 50% of the combined voting power of the Company's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not shareholders of
the Company 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 on-half of the incumbent directors are directors
who either:
(A) Had been directors of the Company 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 Company 24 months prior to
such change and who were still in office at the time of the election
or nomination; or
(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
Company representing 25% or more of the combined voting power of the
Company's then
-1-
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 Company's securities by any person result-
ing solely from a reduction in the aggregate number of outstanding shares
of Base Capital Stock, and any decrease thereafter in such person's owner-
ship 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 Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(d) "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.
(e) "Company" shall mean the First Northern Bank of Dixon, a California
-------
corporation.
(f) "Employee" shall mean any individual who is a common-law employee of
--------
the Company or of a Subsidiary. "Employee" shall not include an individual who
is an Outside Director.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
-------------
amended.
(h) "Exercise Price" shall mean the amount for which one Share may be
---------------
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(i) "Fair Market Value" shall mean (i) the closing price of a Share on the
------------------
principal exchange 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.
(j) "ISO" shall mean an employee incentive stock option described in Code
---
section 422.
(k) "Nonstatutory Option" shall mean an employee stock option that is not
--------------------
an ISO.
(l) "Option" shall mean an ISO or Nonstatutory Option granted under the
------
Plan and entitling the holder to purchase Shares.
(m) "Optionee" shall mean an individual who holds an Option.
--------
-2-
(n) "Outside Director" shall mean a member of the Board of Directors who is
----------------
not a common-law employee of the Company or of a Subsidiary.
(o) "Plan" shall mean this First Northern Bank of Dixon 1997 Stock Option
----
Plan, as amended from time to time.
(p) "Service" shall mean service as an Employee.
-------
(q) "Share" shall mean one share of Stock, as adjusted in accordance with
-----
Section 8 (if applicable).
(r) "Stock" shall mean the Common Stock of the Company.
-----
(s) "Stock Option Agreement" shall mean the agreement between the Company
-----------------------
and an Optionee which contains the terms, conditions and restrictions pertaining
to his Option.
(t) "Subsidiary" shall mean any corporation, if the Company 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.
(u) "Total and Permanent Disability" shall mean that the Optionee is unable
------------------------------
to work. Total and Permanent Disability shall be determined by the Company 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 Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
-3-
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, the vesting or duration of the
Option (including accelerating the vesting of the Option), to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option; (viii) To amend any outstanding Stock Option
Agreement, subject to applicable legal restrictions and to the consent of
the Optionee who entered into such agreement;
(ix) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration;
(x) 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;
(xi) To determine whether Options under the Plan will be granted in
replacement of other grants under an incentive or other compensation plan
of an acquired business;
(xii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Stock Option Agreement; and
(xiii) 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,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options under the Plan to
persons subject to Section 16 of the Exchange Act. 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 Employees shall be eligible for designation as
-------------
Optionees by the Committee. In addition, only individuals who are employed as
common-law employees by the Company or a Subsidiary shall be eligible for the
grant of ISOs.
(b) Limitation On Grants. No Employee shall be granted Options to purchase
--------------------
Shares during any fiscal year covering in excess of 25,000 Shares.
-4-
(c) Ten-Percent Shareholders. An Employee who owns more than ten percent
-------------------------
(10%) of the total combined voting power of all classes of outstanding stock of
the Company or any of its Subsidiaries shall not be eligible for the grant of an
ISO unless such grant satisfies the requirements of Code section 422(c)(5).
(d) Attribution Rules. For purposes of Subsection (c) above, in determining
-----------------
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for his brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries.
(e) Outstanding Stock. For purposes of Subsection (c) above, "outstanding
------------------
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
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 250,000 Shares, subject to
adjustment pursuant to Section 8. 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 Company,
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.
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 Company. 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. 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. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
--------------
Price. The Exercise Price of an ISO shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date of grant,
except as otherwise provided in Section 4(c). Subject to the preceding sentence,
the Exercise Price under any Option shall be determined by
-5-
the Committee at its sole discretion. The Exercise Price shall be payable
in one of the forms described in Sections 7(a) and (b).
(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 his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Shares that otherwise would be issued
to him or her or by surrendering all or a portion of any Shares that he or she
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 Company may be subject to restrictions imposed by the
Committee.
(e) Exercisability and Term. Options shall be exercisable within the times
-----------------------
or upon the events determined by the Committee as set forth in the Stock Option
Agreement. Options shall become fully exercisable as to all Shares subject to
such Option in the event that a Change in Control takes place with respect to
the Company. Subject to the preceding sentence, the Committee at its sole
discretion shall determine when all or any installment of an Option is to become
exercisable and when the Option is to expire; provided, however that the term of
any ISO shall not exceed ten (10) years.
(f) Nontransferability. During an Optionee's lifetime, his or her Option(s)
------------------
shall be exercisable only by him or her and shall not be transferable, unless
the Option agreement otherwise provides. In the event of an Optionee's death,
his or her Option(s) shall not be transferable other than by will, beneficiary
designation or by the laws of descent and distribution.
(g) 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
Company and its Subsidiaries, and 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. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of Service.
(h) 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 his 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.
(i) Modification, Extension and Renewal of Options. Within the limitations
-----------------------------------------------
of the Plan, the Committee may cancel, modify, extend or renew outstanding
Options or may accept the cancellation of outstanding Options (to the extent not
previously exercised) in return for the grant of new Options at the same or a
different price. The foregoing notwithstanding, no modification
-6-
of an Option shall, without the consent of the Optionee, impair his rights or
increase his obligations under such Option.
(j) 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 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.
---------- -------------------
(a) General Rule. The entire Exercise Price of Shares issued under the Plan
------------
shall be payable in lawful money of the United States of America at the time
when such options are exercised, except as provided in Subsection (b) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
-------------------
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or his representative for more than the maximum number of
months required by the Committee and which are surrendered to the Company in
good form for transfer. Such Shares shall be valued at their Fair Market Value
on the date when the new Shares are purchased under the Plan.
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 Company 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 Company (if the Company 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
Company 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 Company to
-7-
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 Company's
securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency which the Company determines is
necessary or advisable.
SECTION 10. NO EMPLOYMENT RIGHTS.
----------- ---------------------
No provision of the Plan, nor any Option granted under the Plan, shall be
construed to give any person any right to become, to be treated as, or to remain
an Employee. The Company and its Subsidiaries reserve the right to terminate any
person's Service at any time and for any reason.
SECTION 11. 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 Company'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 Subsection (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. 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. An amendment of the Plan shall be subject to the
approval of the Company'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.
-8-
SECTION 12. EXECUTION.
----------- ----------
To record the adoption of the Plan by the Board of Directors, the Company
has caused its authorized officer to execute the same as of February 27, 1997.
FIRST NORTHERN BANK OF DIXON
By /s/ Owen J. Onsum
---------------------------
Owen J. Onsum
Its President
--------------------------
-9-