--------------------------------------------------------------------------------

Exhibit 10.16
 
FIRST NORTHERN BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

SECTION 1
PURPOSE AND EFFECTIVE DATE

The purpose of the First Northern Bank Supplemental Executive Retirement Plan
(the “Plan”) is to provide retirement income benefits to certain highly
compensated employees of First Northern Bank of Dixon, a California-chartered,
FDIC-insured bank with it main office in Dixon, California (“Company”) and its
Subsidiaries that supplement such employees’ Social Security benefits and
benefits provided under the First Northern Bank of Dixon Profit Sharing/401(k)
Plan and specified other employee benefit plans maintained by the Company.

The Plan shall be effective as of December 21, 2006. Amendments that may be made
to the Plan from time to time shall apply to individuals participating in this
Plan who perform work as Employees after the effective date applicable to such
amendments.

SECTION 2
DEFINITIONS

2.01 Actuarial Equivalent. “Actuarial Equivalent” (or “Actuarially Equivalent”)
means a benefit having the same value as another benefit which such benefit
replaces based upon the mortality table and discount rate used by the Company to
determine such value.

2.02 Board. “Board” means the Board of the Company.

2.03 Code. “Code” means the Internal Revenue Code of 1986, as amended from time
to time.

2.04 Compensation Committee. “Compensation Committee” means the Compensation
Committee of the Board.

2.05 Disability. “Disability” means a physical or mental impairment which has
been determined by the Social Security Administration to have rendered the
Participant totally and permanently disabled. The term “Disability” shall be
interpreted in a manner consistent with Section 409A of the Code. The
Participant must submit such evidence as the Plan Administrator deems necessary
to verify the Participant’s Disability.

2.06 Disability Retirement Date. “Disability Retirement Date” means the date on
which a Participant has been deemed to have incurred a Disability while in
active employment of the Company.

2.07 Early Retirement Date. “Early Retirement Date” means the first date on
which a Participant terminates employment with the Company after completing at
least ten (10) years of Service, reaching (5) years of Participation Service,
and attaining age fifty-five (55), but prior to the Participant’s Normal
Retirement Date.

2.08 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

2.09 Final Average Compensation. “Final Average Compensation” means the result
of (a) plus (b) as defined below:

 
(a)
The aggregate of a Participant’s salary during the final three full calendar
years of Service, divided by thirty-six (36).

 
(b)
The average of the ratios for each of the final seven (7) full calendar years of
Service of the participant’s annual bonus paid over the Participant’s salary
paid, then multiplied by the amount in (a) above. In the event the Participant
does not have seven (7) full calendar years of Service, zero will be used as the
ratio for each full year not served.

2.10 Normal Retirement Age. “Normal Retirement Age” means age 65.

2.11 Normal Retirement Date. “Normal Retirement Date” means the date the
Participant retires on or after their Normal Retirement Age.

--------------------------------------------------------------------------------

2.12 Participant. “Participant” means an employee of the Company who satisfies
the requirements of Section 3 of the Plan.

2.13 Participation Date. “Participation Date” means the date an employee of the
Company is approved by the Compensation Committee of the Board to be a
Participant of this Plan. If an employee participated in a supplemental
arrangement preceding this Plan, the Participation Date will be the date the
Participant was approved to participate in the preceding plan.

2.14 Participation Service. “Participation Service” means the period of Service
starting with the Participation Date and continuing through the termination of
such employment, including paid leaves of absence, but excluding any unpaid
leaves of absence or other unpaid breaks in service except to the extent
required to be included under applicable law.

2.15 Plan Administrator. “Plan Administrator” means the Company.

2.16 Profit Sharing Benefit. “Profit Sharing Benefit” means as of any
calculation date the monthly benefit payable monthly over the same period as the
benefit payable from this Plan that is Actuarially Equivalent to a hypothetical
account balance equal to the sum of (a) and (b) below:

 
(a)
The annual amounts contributed by the Company (excluding any amounts deferred by
the Participant) to the First Northern Bank Profit Sharing/401(k) Plan (or any
other defined contribution arrangement in which the Participant received
contributions from the Company), plus

 
(b)
Interest on the hypothetical amounts in (a) above assuming the amounts were
contributed on December 31st of each year and interest was earned at the
Treasury Rate for such calendar year. In the event interest is projected beyond
the period of active employment, the Treasury Rate in effect during the calendar
year of termination will be used for such projection. In determining the benefit
that is Actuarially Equivalent to the hypothetical balance, the Treasury Rate in
effect during the calendar year of termination will be used.

2.17 Salary. “Salary” means with respect to any individual the sum of (i) the
amount paid to such individual as base salary from the Company plus any base
salary amounts deferred by such individual under the First Northern Bank Profit
Sharing/401(k) Plan and under the First Northern Bank Voluntary Deferred
Compensation Plan. Deferred amounts shall be considered to have been received at
such times and in such amounts as would have applied if no deferral had been
elected by the individual.

2.18 Separation from Service. “Separation from Service” means the Participant’s
service as an executive and independent contractor to the Company and any member
of a controlled group, as defined in Code section 414, terminates for any
reason, other than because of a leave of absence approved by the Company or the
Participant’s death.

2.19 Service. “Service” means the period during which an Employee is employed by
the Company commencing with the Employee’s first day of employment and
continuing through the termination of such employment, including paid leaves of
absence, but excluding any unpaid leaves of absence or other unpaid breaks in
service except to the extent required to be included under applicable law.

2.20 Social Security Benefit. “Social Security Benefit” means one-half of the
estimated monthly primary insurance amount that an Employee is or would be
entitled to receive commencing at age 65 under the Social Security Act, whether
or not the Employee applies for or actually receives such benefit at such age or
at any earlier or later age. The Social Security Benefit shall be calculated as
of January 1st in the year of termination assuming level future earnings to age
65 and no future increases in CPI or National Average Wage. The Social Security
Benefit shall be calculated assuming a Participant has earned amounts exceeding
the Social Security taxable wage base in every year possible. Alternatively, the
Participant may submit records from the Social Security Administration
specifying actual social security earnings which will then be used.

2.21 Target Retirement Percentage. “Target Retirement Percentage" shall equal
the following:

 
(a)
For the CEO - 2.5% multiplied by Service, but limited to 50%.

 
(b)
Other Participants - 2.0% multiplied by Service, but limited to 50%.

2

--------------------------------------------------------------------------------

2.22 Treasury Rate. “Treasury Rate” means the three year average of the market
yield on U.S. Treasury securities at a 10-year constant maturity. The Plan
Administrator shall choose the U.S. Treasury rate to be used in the calculation
of the Treasury Rate annually on or close to the 1st day of each calendar year.
The Treasury Rate is applicable for the full calendar year. If the treasury
rates used in the calculation of the Treasury Rate ceases to be available, then
the Plan Administrator may select any comparable published rate as a
replacement.

SECTION 3
PARTICIPATION AND VESTING

3.1 Eligibility. Eligibility to participate in the Plan is limited to a select
group of management or highly compensated employees of the Company that are
designated, from time to time, by the Board.

3.2 Participation. An employee’s participation in the Plan shall be effective
upon notification of such person by Company of eligibility to participate,
completion of a Participation Agreement by such person, and acceptance of the
Participation Agreement by the Company. Except as modified by paragraph 3.3
below, participation in the Plan shall continue as long as the Participant is
eligible to receive benefits under the Plan.

3.3 Change in Employment Status. If the Board determines that a Participant’s
employment performance is no longer at a level which deserves reward through
participation in this Plan, but does not terminate the Participant’s employment
with the Company, participation herein and eligibility to receive benefits
hereunder shall be limited. The benefit payable to such Participant upon
eventual termination of employment shall be determined at the date of
termination for eligibility and vesting determinations. However, the monthly
benefit payable to the Participant shall be calculated based on the
Participant’s Service and Final Average Compensation as of the date of the
change in employment status.

3.4 Vesting. A Participant whose employment with Employer terminates because of
Normal Retirement, Early Retirement, Disability, or Death shall be 100% vested
in the benefits described herein. Upon any other termination of employment, the
Participant and the Participant’s Beneficiaries shall not be eligible to receive
any benefits under the Plan, except as may be provided in the Participation
Agreement between the Company and the Participant.

3.5 Discharge for Cause. Notwithstanding any other provisions of this Plan, no
benefit shall be paid hereunder if a Participant’s employment with the Company
has been terminated for “cause.” A termination for cause is a termination based
upon the occurrence of any one of the following events:

 
(a)
The Participant’s willful and intentional violation of any state or federal
banking or securities laws, or of the Bylaws, rules, policies or resolutions of
the Company, or the rules or regulations of the Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency, or other regulatory
agency or governmental authority having jurisdiction over the Company, which in
the opinion of the Board has or might have a material adverse effect upon the
Company;

 
(b)
The Participant’s conviction of (i) any felony or (ii) a crime involving moral
turpitude, or the Participant’s willful and intentional commission of a
fraudulent or dishonest act; or

 
(c)
The Participant’s willful and intentional disclosure, without authority, of any
secret or confidential information concerning the Company or any customer of the
Company, or taking any action which the Board determines, in its sole discretion
and subject to good faith, fair dealing and reasonableness, constitutes unfair
competition with or induces any customer to breach any contract with the
Company.

SECTION 4
BENEFITS

4.1 Normal Retirement Benefit. The Normal Retirement Benefit payable under this
Plan to a Participant who retires on a Normal Retirement Date shall be a monthly
benefit payable for 120 months plus 6 months for each full year of Service over
10 years (limited to 180 months total) and shall be equal to (a) less (b), but
not less than zero:

 
(a)
The Participant’s Target Retirement Percentage multiplied by the Participant’s
Final Average Compensation.

 
(b)
The sum of 1. and 2. below:

3

--------------------------------------------------------------------------------

 
1.
The Participant’s Social Security Benefit, multiplied by the ratio (limited to
1.0) of the Participant’s Service to 25; and

 
2.
The Participant’s Profit Sharing Benefit on January 1st of the year of
termination.

Benefit payments shall commence on the first day of the month after the month in
which the Participant’s Separation from Service occurs. If when the
Participant’s Separation from Service occurs the Participant is a specified
employee within the meaning of Code section 409A, benefits for the first six
months after Separation from Service shall be delayed and shall instead be paid
on the first day of the seventh month after the month in which Separation from
Service occurs. Should benefit payments be delayed due to the requirements of
law or administration, the first payment will be the accumulated value of the
delayed payments with interest to the payment date using the Treasury Rate, plus
the payment due in that month.

4.2 Early Retirement Benefit. The Early Retirement Benefit payable under this
Plan to a Participant who retires on an Early Retirement Date shall be a monthly
benefit payable for 120 months plus 6 months for each full year of Service over
10 years (limited to 180 months total) and shall be equal to (a) less (b) less
(c), but not less than zero:

 
(a)
The Participant’s Target Retirement Percentage multiplied by the Participant’s
Final Average Compensation and further multiplied by the factor described in
(d).

 
(b)
The Participant’s Social Security multiplied by the ratio (limited to 1.0) of
the Participant’s Service to 25 and further multiplied by the factor described
in (d); and

 
(c)
The Participant’s Profit Sharing Benefit on January 1st of the year of
termination.

 
(d)
Early Commencement Factor - The early commencement factor is 1.0 minus the
product of 0.41667% multiplied by the number of full calendar months that early
retirement precedes the Participant’s Normal Retirement Age.

 
Benefit payments shall commence on the first day of the month after the month in
which the Participant’s Separation from Service occurs. If when the
Participant’s Separation from Service occurs the Participant is a specified
employee within the meaning of Code section 409A, benefits for the first six
months after Separation from Service shall be delayed and shall instead be paid
on the first day of the seventh month after the month in which Separation from
Service occurs. Should benefit payments be delayed due to the requirements of
law or administration, the first payment will be the accumulated value of the
delayed payments with interest to the payment date using the Treasury Rate, plus
the payment due in that month.

4.3 Disability Retirement Benefit. The Disability Retirement Benefit payable
under this Plan is the same benefit that would be paid in 4.2 above with the
following modifications: (1) the Early Commencement Factor described in (d)
shall not be less than 0.50 and (2) the Participant shall be eligible for the
benefit without regard to any age or service requirement. Benefit payments shall
commence on the first day of the month after the month in which the
Participant’s Separation from Service occurs. If when the Participant’s
Separation from Service occurs the Participant is a specified employee within
the meaning of Code section 409A, benefits for the first six months after
Separation from Service shall be delayed and shall instead be paid on the first
day of the seventh month after the month in which Separation from Service occurs
Should benefit payments be delayed due to the requirements of law or
administration, the first payment will be the accumulated value of the delayed
payments with interest to the payment date using the Treasury Rate, plus the
payment due in that month.

4.4 Benefits Payable Upon Death. If a Participant dies while actively employed,
the benefit payable to the Participant’s Beneficiary shall be the same benefit
and paid for the same duration as the benefit the Participant would have
received had the Participant become eligible for benefits under section 4.3
above on the date of the Participant’s death and then died before receiving the
first payment. The benefit shall be paid to the Beneficiary at the same time the
benefit would have been paid to the Participant under section 4.3, disregarding
the potential six-month delay required under Code section 409A for
separation-from-service benefits paid to a specified employee. If a Participant
dies after termination of employment, the Participant’s Beneficiary shall be
entitled to receive benefits in the same amount and for the same duration that
the Participant would have received had the Participant survived to receive all
payments due. The benefit shall be paid to the Beneficiary at the same time the
benefit would have been paid to the Participant, disregarding the potential
six-month delay required under Code section 409A for separation-from-service
benefits paid to a specified employee.

4.5 Income Tax Withholding. The Company shall withhold from any amount paid
under this Plan any and all federal, state and local income taxes and any other
taxes that are required to be withheld from such payment under applicable law.

4

--------------------------------------------------------------------------------

4.6 FICA Tax Withholding. The Company shall withhold from a Participant’s other
compensation and/or from the first payments to be made under this Plan, the
Participant’s share of FICA and other employment taxes imposed on the value of
the benefits payable from this Plan when such taxes, in the sole judgment of the
Company, are required to be withheld under applicable law. If any law provides
the Company discretion as to the timing of tax withholding, the Company shall
have the sole right determine when taxes shall be withheld.

4.7 Unfunded Status and Source of Benefit Payments. The Plan is intended to be
unfunded for purposes of both ERISA and the Code. The Plan does not require any
segregated or separate assets. The benefits provided under the Plan shall be
paid solely from the general assets of the Company.

SECTION 5
BENEFICIARY DESIGNATION

5.1 Beneficiary Designation. Each Participant shall have the right, at any time,
to designate any person or persons as their Beneficiary or Beneficiaries (both
primary as well as secondary). Each Beneficiary designation shall be in a
written form prescribed by the Plan Administrator, and will be effective only
when filed with the Plan Administrator during the Participant’s lifetime.

5.2 Amendments; Marital Status. A Participant may change Beneficiary designation
without the consent of any designated Beneficiary by filing a new Beneficiary
designation with the Plan Administrator. The filing of a new Beneficiary
designation form will cancel all Beneficiary designations previously filed. If a
Participant’s compensation is community property, any Beneficiary designation
shall be valid or effective only as permitted under applicable law.
 
5.3 No Participant Designation. In the absence of an effective Beneficiary
designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant’s benefits, the
Participant’s designated Beneficiary shall be deemed to be the Participant’s
estate.

5.4 Effect of Payment. The payment to the deemed Beneficiary shall completely
discharge the Company’s obligations under this Plan.

SECTION 6
ADMINISTRATION

6.1 Administration. This Plan shall be administered by the Plan Administrator.
The Plan Administrator is authorized to interpret this Plan and make all
determinations which it deems necessary or advisable for its administration,
which interpretations and determinations shall be conclusive on all affected
parties, unless and until reversed, amended or withdrawn by the Plan
Administrator. This Plan shall be administered as an unfunded employee pension
benefit plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
and is not intended to meet the qualification requirements of Section 401 of the
Code or the requirements of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA.

6.2 Agents and Specialists. The Plan Administrator may appoint one or more
persons or agents to aid it in carrying out its duties as Plan Administrator and
a named fiduciary, and may delegate such of its powers and duties or powers as
it deems desirable to such persons or agents. Such persons and agents may be,
but are not required to be, officers of the Company or other Employees. The Plan
Administrator may employ such counsel, auditors, actuaries and other specialists
and such clerical, medical and other services as the Plan Administrator may
require in carrying out the provisions of the Plan.

6.3 Application for Benefits. The Plan Administrator may require any applicant
for a retirement benefit under this Plan to furnish it with such documents, data
or information as the Plan Administrator may consider reasonably necessary or
desirable. To the greatest extent possible, it is the intent of the Plan and its
administrative procedures that any benefits payable to a Participant or
Beneficiary be processed automatically by the Plan Administrator without the
necessity of the Participant or Beneficiary filing any formal claim for
benefits, other than such elections or notifications as may be required under
the Plan.

5

--------------------------------------------------------------------------------

6.4 Claims Procedure.

 
(a)
If a Participant or beneficiary believes he or she is entitled to benefits under
the Plan and that such benefits have been denied to him or her, such Participant
or beneficiary shall file a claim to benefits in writing with the Plan
Administrator, setting forth the reason for and including any evidence
supporting such claim. The Plan Administrator shall review any such claim and
shall render a decision with respect thereto and shall notify the claimant of
such decision within ninety (90) days following the Plan Administrator’s receipt
of such claim, unless the Plan Administrator determines that special
circumstances require an extension of time for processing the claim. In no event
shall any such extension exceed ninety (90) days following the end of the
initial ninety (90)-day period (i.e., the total period may not exceed one
hundred eighty (180) days). If the Plan Administrator extends the time for
processing a claim, the Plan Administrator shall give the claimant written
notice of the extension within ninety (90) days of the Plan Administrator’s
receipt of the claim. The notice of extension shall indicate the special
circumstances requiring the extension of time and the date by which the Plan
Administrator expects to render a decision on the claim. If the Plan
Administrator denies any benefit claim, notice of the denial shall set forth the
following information in a manner calculated to be understood by the claimant:

 
1.
The specific reason or reasons for the denial;

 
2.
Reference to the specific Plan provisions on which the denial is based;

 
3.
A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; and

 
4.
A description of the Plan’s appeal procedures and the time limits applicable to
such procedures, including a statement of the claimant’s right to bring a civil
action under Section 502(a) of ERISA if the appeal is denied.

 
(b)
Any denial of a claim to benefits may be appealed by a Participant or
beneficiary for a reexamination of the claim by the Plan Administrator. Any such
appeal must be filed in writing with the Plan Administrator within ninety (90)
days following the Participant’s receipt of the written notice of denial. The
written notice of appeal shall set forth grounds on which the appeal for
reexamination of the claim is based. If written notice of the appeal is not
submitted to the Plan Administrator within such ninety (90)-day period, the Plan
Administrator’s original decision on the claim will become final. In the event
such an appeal is timely filed, the Plan Administrator shall reexamine the claim
and shall afford the participant or beneficiary an opportunity to present
written comments, documents, records and other information relating to such
claim. In such event, the claimant shall be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits. The Plan
Administrator’s review on appeal shall take into account all comments,
documents, records and other information submitted by the claimant relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination. The decision of the Plan
Administrator with respect to any claim appealed to it for reexamination shall
be made within a reasonable time, but not later than sixty (60) days after
receipt of the request for review, unless the Plan Administrator determines that
special circumstances require an extension of time for processing the appeal. In
no event shall any such extension exceed sixty (60) days following the end of
the initial sixty (60)-day period (i.e., the total period may not exceed one
hundred twenty (120) days). If the Plan Administrator extends the time for
processing an appeal, the Plan Administrator shall give the claimant written
notice of the extension within sixty (60) days of the Plan Administrator’s
receipt of the claim. The notice of extension shall indicate the special
circumstances requiring the extension of time and the date by which the Plan
Administrator expects to render a decision on the appeal. If the Plan
Administrator denies any benefit claim on appeal, notice of the denial shall set
forth the following information in a manner calculated to be understood by the
claimant:

 
1.
The specific reason or reasons for the denial;

 
2.
Reference to the specific Plan provisions on which the denial is based;

 
3.
A statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits; and

 
4.
A statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA.

6

--------------------------------------------------------------------------------

 
(c)
The determination of the Plan Administrator with respect to any claim or appeal
filed hereunder shall be conclusive and binding on all affected parties.

 
(d)
It is the duty of a Participant or beneficiary to keep the Plan Administrator or
the Company informed of his or her current address and of any other changes in
status or other factors which may affect his or her entitlement to benefits
under this Plan and the processing of any claim in accordance with the automatic
procedures contemplated in the Plan. In the event the Plan Administrator or
Company is not kept so informed and as a result the claim to benefits cannot be
processed automatically, the participant or beneficiary must file a claim to
benefits in writing in accordance with the procedures set forth in Section
6.4(a) above.

SECTION 7
MISCELLANEOUS

7.1 Applicable Law. All matters respecting the validity, effect, interpretation
and administration of this Plan shall be determined in accordance with ERISA, as
it applies to unfunded employee pension benefit plans maintained primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees, and, to the extent state law is not pre-empted
by ERISA, the laws of the State of California applicable to contracts wholly
executed and performed in such state.

7.2 Amendment or Discontinuance of the Plan. The Company expects to continue
this Plan, but reserves the right to amend or terminate it in whole or in part
at any time, to any extent and in any manner that the Company in its sole
discretion may consider advisable, necessary or desirable. Each such amendment
or termination shall be adopted by action of the Board taken at a duly held
meeting of the Board, taken by written consent of the Board or taken in any
other manner permitted under the Company’s articles of incorporation or bylaws
or permitted under corporate law applicable to the Company. The Board may
delegate (by reference to a specific amendment or class of amendments or
otherwise) to any officer of the Company the authority to adopt any amendment or
amendments (but not any plan termination) on behalf of the Board. Each amendment
shall be duly adopted and in full force and effect when the action of the Board
adopting such amendment is taken (if such amendment is adopted by the Board) or
when signed by an officer of the Company who has authority to do so pursuant to
the provisions of this Section

7.2 (if such amendment is adopted by such an officer). Upon any termination or
partial termination of this Plan, the rights of all affected Participants and
their Beneficiaries to benefits then accrued under this Plan shall be fully
vested and non-forfeitable. No amendment or termination of this Plan shall
adversely affect the rights of a Participant with respect to his or her accrued
benefit under the Plan determined as of the date of adoption of the amendment
with such accrued benefit being determined based on the benefit due to the
participant on the amendment date had no amendment been adopted and the
Participant had voluntarily terminated their employment. For the purpose of this
section 7.2, the accrued benefit shall be determined assuming the date of
amendment or discontinuance of the Plan is an Early Retirement Date for each
Participant, disregarding the Early Retirement Date conditions stated in section
2.07.

7.3 Attorneys’ Fees and Costs. If any legal action or other proceeding is
brought to collect any payment, to enforce any right, or to clarify any right
under this Plan, the successful or prevailing party or parties shall be entitled
to recover reasonable attorney’s fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.

7.4 No Trust or Fiduciary Relationship Created. Nothing contained in this Plan,
and no action taken pursuant to the provisions of this Plan, shall create or be
construed to create a trust of any kind or a fiduciary relationship between the
Company or the Plan Administrator and any Participant or Beneficiary.

7.5 No Guarantee of Employment. No provision in this Plan shall be deemed or
construed to impair or affect in any manner whatsoever the right of the Company
in its discretion at any time to employ persons as Employees, to discharge or
terminate the Service of any Participant or Employee, or to retire any
Participant or Employee, and every such right shall remain with the Company as
if this Plan were not in existence and had not been established.

7.6 Prohibition against Certain Payments. Notwithstanding any provision of the
Plan to the contrary, no Participant shall be entitled to receive, and the
Company shall not pay, any amount under this Plan that is prohibited by Federal
Deposit Insurance Corporation Rules and Regulations, 12 CFR Part 359 (Golden
Parachute and Indemnification Payments).

7

--------------------------------------------------------------------------------

7.7 Indemnification. The Company, through insurance or otherwise, shall
indemnify and defend any Board member, Company officer, Employee, Plan
Administrator, and agent or representative of any Plan Administrator to whom the
Plan Administrator has delegated administrative or fiduciary duties against any
and all claims, losses, damages, expenses, including counsel fees, incurred by
the person or agent and any liability, including any amounts paid in settlement
with the Company’s approval, arising from the action or failure to act of the
person or agent or Company, except when the same is judicially determined to be
attributable to the gross negligence or willful misconduct of such person or
agent. The right of indemnity described in the preceding sentence shall be
conditioned upon (a) the timely receipt of notice by the Company of any claim
asserted against the person or agent, which notice, in the event of a lawsuit
shall be given within ten (10) days after receipt by the person or agent of the
complaint, and (b) the receipt by the Company of an offer from person or agent
of an opportunity to participate in the settlement or defense of such claim.

7.8 Assignments Prohibited. The interest hereunder, whether vested or not, of
any Participant, contingent annuitant, or beneficiary shall not be subject to
alienation, assignment, encumbrance, attachment, garnishment, execution,
sequestration or other legal or equitable process, or transferability by
operation of law in event of bankruptcy, insolvency or otherwise.

IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed for and
on behalf of the Company by its duly authorized officers on this the 21st day of
December, 2006.

 
FIRST NORTHERN BANK
       
By:
         
Title:
 

8

--------------------------------------------------------------------------------

 
PARTICIPATION AGREEMENT
FOR
OWEN J. ONSUM

--------------------------------------------------------------------------------

 
This Participation Agreement is entered into as of this 31st day of December,
2006, by and between First Northern Bank of Dixon, a California-chartered,
FDIC-insured bank with it main office in Dixon, California (“Company”) and Owen
J. Onsum (the “Executive”).

Whereas, the Executive has contributed substantially to the success of the
Company and its parent corporation, First Northern Community Bancorp, and the
Company desires that the Executive continue its employ,

Whereas, the Board has in accordance with Section 3.1 of the First Northern Bank
of Dixon Supplemental Executive Retirement Plan (the “Plan”) nominated the
Executive for Eligibility in such Plan,

Whereas, the Executive wishes to accept Participation in the Plan and freely
acknowledges that such acceptance irrevocably replaces the Executive’s Salary
Continuation Agreement dated January 1, 2002, and executed January 2nd, 2002,
and any amendments thereto, between the Executive and the Company,

Whereas, the Company wishes, for the benefit of the Executive, to amend certain
provisions of the Plan as they apply to the Executive through the execution of
this Participation Agreement and acknowledges that this Participation Agreement
shall be terminated or amended only by a written agreement signed by the Company
and the Executive except as specified in 3.1 below,

Now Therefore, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Executive is a Participant in
the Plan and further agree as follows:

SECTION 1
DEFINITIONS

Terms used in this Participation Agreement are used as defined in the Plan. In
addition, the following terms shall have the meanings given in this
Participation Agreement.

1.1 Change-in-Control. “Change-in-Control” means the first to occur of any of
the following events:
 

 
(a)
Merger - First Northern Community Bancorp merges into or consolidates with
another corporation, or merges another corporation into First Northern Community
Bancorp, and as a result less than 50% of the combined voting power of the
resulting corporation immediately after the merger or consolidation is held by
persons who were stockholders of First Northern Community Bancorp immediately
before the merger or consolidation,

 
(b)
Acquisition of Significant Share Ownership - A report on Schedule 13D or another
form or schedule (other than Schedule 13G) is filed or is required to be filed
under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the
schedule discloses that the filing person or persons acting in concert has or
have become the beneficial owner of 20% or more of a class of First Northern
Community Bancorp’s voting securities, but this clause (b) shall not apply to
beneficial ownership of First Northern Community Bancorp voting shares held in a
fiduciary capacity by an entity of which First Northern Community Bancorp
directly or indirectly beneficially owns 50% or more of its outstanding voting
securities or voting shares held by an employee benefit plan maintained for the
benefit of First Northern Bank of Dixon’s employees, or

9

--------------------------------------------------------------------------------

 
(c)
Change in Board Composition - During any period of two consecutive years,
individuals who constitute First Northern Community Bancorp’s Board of Directors
at the beginning of the two-year period cease for any reason to constitute at
least a majority of First Northern Community Bancorp’s Board of Directors;
provided, however, that - for purposes of this clause (c) - each director who is
first elected by the board (or first nominated by the board for election by
stockholders) by a vote of at least two-thirds of the directors who were
directors at the beginning of the period shall be deemed to have been a director
at the beginning of the two-year period.

1.2 Good Reason. “Good Reason” shall be defined as any of the following:
 

 
(a)
A material reduction in the Executive’s title or responsibilities; or

 
(b)
A reduction in base salary as in effect on the date of Change in Control; or

 
(c)
The relocation of the Executive’s principal executive office so that Executive’s
one-way commute distance from Executive’s residence is increased by more than
forty (40) miles; or

 
(d)
The adverse and substantial alternation in the nature and quality of the office
space within which the Executive performs duties on behalf of the Company,
including the size and location thereof, as well as the secretarial and
administrative support provided to the Executive; or

 
(e)
The failure by the Company to continue to provide the Executive with
compensation and benefits substantially similar to those provided under any of
the employee benefit plans in which the Executive becomes a participant, or the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed at the time of Change in Control; or

 
(f)
The failure of the Company to obtain a satisfactory agreement from any successor
or assign of the Company to assume and agree to perform this Agreement.

SECTION 2
AMENDMENTS

This section, solely for the purpose of benefits earned by this Executive,
amends certain sections of the First Northern Bank Supplemental Executive
Retirement Plan.

2.1 Amendments Following a Change in Control - If the Executive’s employment
with the Bank terminates within 24 months after any Change in Control or in the
event the Executive terminates employment voluntarily for Good Reason within 24
months after any Change-in-Control, the following benefit shall be payable to
the Executive in lieu of any other benefits payable under the Plan:
 
Change in Control Benefit - the benefit payable to the Executive shall be the
greater of the payments described in (1), (2), and (3) below:

 
1.
A lump sum payment of $768,372 adjusted at the rate equal to 4.37% per year for
the period of time between January 1, 2007, and the payment date.

 
2.
A lump sum payment Actuarially Equivalent to the benefit determined under
Section 4.1 of the Plan with the following changes: (a) the Target Retirement
Percentage used shall be the Target Retirement Percentage assuming Service to
age 65, and (b) the Profit Sharing Benefit and Social Security Benefit shall be
determined as of the 1st of the year of termination. The lump sum payment shall
be determined using the Treasury Rate in effect on the date of termination and
shall be discounted for the period of time the lump sum payment precedes the
date the Participant attains age 65.

 
3.
A lump sum payment Actuarially Equivalent to the benefit the Participant would
receive from the Plan without regard to this Section 2.1. The lump sum payment
shall be determined using the Treasury Rate in effect on the date of
termination.

 
The Company shall pay this Change in Control Benefit to the Executive within
three days after the Executive’s Separation from Service. If when the
Participant’s Separation from Service occurs the Participant is a specified
employee within the meaning of Code section 409A, the lump-sum benefit shall be
delayed and shall instead be paid on the first day of the seventh month after
the month in which Separation from Service occurs, with interest to the payment
date using the Treasury Rate.

10

--------------------------------------------------------------------------------

2.2 Vested Benefit - Any increase in the value of benefits payable to the
Executive under any section of the Plan or this Participation Agreement over the
value that would have been provided under the Salary Continuation Agreement
which this Participation Agreement replaces shall be vested as follows: 25% on
December 31, 2006, 50% on December 31, 2007, 75% on December 31, 2008, and 100%
on December 31, 2009. In determining the increase in value, the assumptions
currently in use to account from this plan under GAAP shall be used.

2.3 One Benefit Only. Despite anything to the contrary in the Plan or in this
Participation Agreement, the Executive and Beneficiary are entitled to one
benefit only, which shall be determined by the first event to occur that is
dealt with by the Plan and this Participation Agreement. Subsequent occurrence
of events dealt with by the Plan and this Participation Agreement shall not
entitle the Executive or Beneficiary to other or additional benefits under the
Plan or this Participation Agreement.

2.4 Amendment of Death Benefit - If the Executive dies while actively employed
and before the attainment of Normal Retirement Age, the benefit payable to the
Executive’s beneficiary shall be $1,666,667. This benefit shall be paid in a
lump sum as soon as administratively feasible.

If the Executive dies while actively employed and on or after attainment of
Normal Retirement Age, the benefit payable to the Executive’s beneficiary shall
be the same benefit the beneficiary would have received had the Executive
retired on the date of death, commenced Normal Retirement Benefits and died
before receiving the first payment.

If the Executive dies after termination of employment, then the Executive shall
receive the benefit described in Section 4.4 of the Plan.

The benefit payable under this section 2.4 shall be paid in lieu of any other
benefit payable under the Plan or this Participation Agreement. The Executive
acknowledges that this amendment replaces all endorsed death benefit agreements
dated prior to this Participation Agreement and that the effect of this
amendment is that the Executive and the Executive’s beneficiaries no longer have
any interest in any life insurance contract owned by First Northern Bank.

SECTION 3
MISCELLANEOUS

3.1 Amendments and Termination. This Participation Agreement may be amended or
terminated only by a written agreement signed by the Bank and the Executive. For
the purpose of determining benefits for the Executive, any amendment or
termination of the Plan shall be effective for the Executive only by a written
agreement signed by the Company and the Executive. However, the Executive and
Company agree that the Company, in its sole discretion, may amend the Plan and
this Participation Agreement to reduce the impact on the Company’s earnings of
any changes made by the Financial Accounting Standards Board to pension
accounting standards. The Company may change the manner of benefit accrual for
the Executive if, in the opinion of the Company, the changes to the Plan and
this Participation Agreement produce an expense recognition pattern closer to
the pattern of expense recognition expected prior to the change in accounting
standards. In no event will the benefit provided to the Executive at Normal
Retirement Age be reduced.

3.2 Binding Effect. This Participation Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, successors,
administrators and trustees.

3.3 Agreement To Insure. The Company may, in its sole discretion, decide to
purchase a life insurance policy or policies on the life of the Executive in
order to informally fund or otherwise offset the costs incurred by the Plan. The
Executive agrees to complete all forms and undergo any insurance underwriting
that the Company may request from time to time during the Executive’s active
employment. In addition, the Executive hereby acknowledges that the Executive,
Beneficiaries, or the Executive’s estate hold no claim to any part of the value
of or rights provided by such policies.

11

--------------------------------------------------------------------------------

In Witness Whereof, the Executive and a duly authorized Company officer have
signed this Participation Agreement as of the day and year shown below.

The Executive:
 
The Company:
   
First Northern Bank Of Dixon
       
Owen J. Onsum
         
By:
             
Its:
 

12

--------------------------------------------------------------------------------

 
PARTICIPATION AGREEMENT
FOR
LOUISE WALKER

--------------------------------------------------------------------------------

 
This Participation Agreement is entered into as of this 31st day of December,
2006, by and between First Northern Bank of Dixon, a California-chartered,
FDIC-insured bank with it main office in Dixon, California (“Company”) and
Louise Walker (the “Executive”).

Whereas, the Executive has contributed substantially to the success of the
Company and its parent corporation, First Northern Community Bancorp, and the
Company desires that the Executive continue its employ,

Whereas, the Board has in accordance with Section 3.1 of the First Northern Bank
of Dixon Supplemental Executive Retirement Plan (the “Plan”) nominated the
Executive for Eligibility in such Plan,

Whereas, the Executive wishes to accept Participation in the Plan and freely
acknowledges that such acceptance irrevocably replaces the Executive’s Salary
Continuation Agreement dated January 1, 2002, and executed January 2nd, 2002,
and any amendments thereto, between the Executive and the Company,

Whereas, the Company wishes, for the benefit of the Executive, to amend certain
provisions of the Plan as they apply to the Executive through the execution of
this Participation Agreement and acknowledges that this Participation Agreement
shall be terminated or amended only by a written agreement signed by the Company
and the Executive except as specified in 3.1 below,

Now Therefore, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Executive is a Participant in
the Plan and further agree as follows:

SECTION 1
DEFINITIONS

Terms used in this Participation Agreement are used as defined in the Plan. In
addition, the following terms shall have the meanings given in this
Participation Agreement.

1.1 Change-in-Control. “Change-in-Control” means the first to occur of any of
the following events:
 

 
(d)
Merger - First Northern Community Bancorp merges into or consolidates with
another corporation, or merges another corporation into First Northern Community
Bancorp, and as a result less than 50% of the combined voting power of the
resulting corporation immediately after the merger or consolidation is held by
persons who were stockholders of First Northern Community Bancorp immediately
before the merger or consolidation,

 
(e)
Acquisition of Significant Share Ownership - A report on Schedule 13D or another
form or schedule (other than Schedule 13G) is filed or is required to be filed
under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the
schedule discloses that the filing person or persons acting in concert has or
have become the beneficial owner of 20% or more of a class of First Northern
Community Bancorp’s voting securities, but this clause (b) shall not apply to
beneficial ownership of First Northern Community Bancorp voting shares held in a
fiduciary capacity by an entity of which First Northern Community Bancorp
directly or indirectly beneficially owns 50% or more of its outstanding voting
securities or voting shares held by an employee benefit plan maintained for the
benefit of First Northern Bank of Dixon’s employees, or

 
(f)
Change in Board Composition - During any period of two consecutive years,
individuals who constitute First Northern Community Bancorp’s Board of Directors
at the beginning of the two-year period cease for any reason to constitute at
least a majority of First Northern Community Bancorp’s Board of Directors;
provided, however, that - for purposes of this clause (c) - each director who is
first elected by the board (or first nominated by the board for election by
stockholders) by a vote of at least two-thirds of the directors who were
directors at the beginning of the period shall be deemed to have been a director
at the beginning of the two-year period.

13

--------------------------------------------------------------------------------

1.2 Good Reason. “Good Reason” shall be defined as any of the following:
 

 
(g)
A material reduction in the Executive’s title or responsibilities; or

 
(h)
A reduction in base salary as in effect on the date of Change in Control; or

 
(i)
The relocation of the Executive’s principal executive office so that Executive’s
one-way commute distance from Executive’s residence is increased by more than
forty (40) miles; or

 
(j)
The adverse and substantial alternation in the nature and quality of the office
space within which the Executive performs duties on behalf of the Company,
including the size and location thereof, as well as the secretarial and
administrative support provided to the Executive; or

 
(k)
The failure by the Company to continue to provide the Executive with
compensation and benefits substantially similar to those provided under any of
the employee benefit plans in which the Executive becomes a participant, or the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed at the time of Change in Control; or

 
(l)
The failure of the Company to obtain a satisfactory agreement from any successor
or assign of the Company to assume and agree to perform this Agreement.

SECTION 2
AMENDMENTS

This section, solely for the purpose of benefits earned by this Executive,
amends certain sections of the First Northern Bank Supplemental Executive
Retirement Plan.

2.1 Amendments Following a Change in Control - If the Executive’s employment
with the Bank terminates within 24 months after any Change in Control or in the
event the Executive terminates employment voluntarily for Good Reason within 24
months after any Change-in-Control, the following benefit shall be payable to
the Executive in lieu of any other benefits payable under the Plan:

Change in Control Benefit - the benefit payable to the Executive shall be the
greater of the payments described in (1), (2), and (3) below:

 
4.
A lump sum payment of $313,397 adjusted at the rate equal to 4.37% per year for
the period of time between January 1, 2007, and the payment date.

 
5.
A lump sum payment Actuarially Equivalent to the benefit determined under
Section 4.1 of the Plan with the following changes: (a) the Target Retirement
Percentage used shall be the Target Retirement Percentage assuming Service to
age 65, and (b) the Profit Sharing Benefit and Social Security Benefit shall be
determined as of the 1st of the year of termination. The lump sum payment shall
be determined using the Treasury Rate in effect on the date of termination and
shall be discounted for the period of time the lump sum payment precedes the
date the Participant attains age 65.

 
6.
A lump sum payment Actuarially Equivalent to the benefit the Participant would
receive from the Plan without regard to this Section 2.1. The lump sum payment
shall be determined using the Treasury Rate in effect on the date of
termination.

 
The Company shall pay this Change in Control Benefit to the Executive within
three days after the Executive’s Separation from Service. If when the
Participant’s Separation from Service occurs the Participant is a specified
employee within the meaning of Code section 409A, the lump-sum benefit shall be
delayed and shall instead be paid on the first day of the seventh month after
the month in which Separation from Service occurs, with interest to the payment
date using the Treasury Rate.

2.2 Vested Benefit - Any increase in the value of benefits payable to the
Executive under any section of the Plan or this Participation Agreement over the
value that would have been provided under the Salary Continuation Agreement
which this Participation Agreement replaces shall be vested as follows: 25% on
December 31, 2006, 50% on December 31, 2007, 75% on December 31, 2008, and 100%
on December 31, 2009. In determining the increase in value, the assumptions
currently in use to account from this plan under GAAP shall be used.

14

--------------------------------------------------------------------------------

2.3 One Benefit Only. Despite anything to the contrary in the Plan or in this
Participation Agreement, the Executive and Beneficiary are entitled to one
benefit only, which shall be determined by the first event to occur that is
dealt with by the Plan and this Participation Agreement. Subsequent occurrence
of events dealt with by the Plan and this Participation Agreement shall not
entitle the Executive or Beneficiary to other or additional benefits under the
Plan or this Participation Agreement.

2.4 Amendment of Death Benefit - If the Executive dies while actively employed
and before the attainment of Normal Retirement Age, the benefit payable to the
Executive’s beneficiary shall be $1,333,333. This benefit shall be paid in a
lump sum as soon as administratively feasible.

If the Executive dies while actively employed and on or after attainment of
Normal Retirement Age, the benefit payable to the Executive’s beneficiary shall
be the same benefit the beneficiary would have received had the Executive
retired on the date of death, commenced Normal Retirement Benefits and died
before receiving the first payment.

If the Executive dies after termination of employment, then the Executive shall
receive the benefit described in Section 4.4 of the Plan.

The benefit payable under this section 2.4 shall be paid in lieu of any other
benefit payable under the Plan or this Participation Agreement. The Executive
acknowledges that this amendment replaces all endorsed death benefit agreements
dated prior to this Participation Agreement and that the effect of this
amendment is that the Executive and the Executive’s beneficiaries no longer have
any interest in any life insurance contract owned by First Northern Bank.

4.4 Benefits Payable Upon Death. If a Participant dies while actively employed,
the benefit payable to the Participant’s Beneficiary shall be the same benefit
and paid for the same duration as the benefit the Participant would have
received had the Participant become eligible for benefits under section 4.3
above on the date of the Participant’s death and then died before receiving the
first payment. The benefit shall be paid to the Beneficiary at the same time the
benefit would have been paid to the Participant under section 4.3, disregarding
the potential six-month delay required under Code section 409A for
separation-from-service benefits paid to a specified employee.

If a Participant dies after termination of employment, the Participant’s
Beneficiary shall be entitled to receive benefits in the same amount and for the
same duration that the Participant would have received had the Participant
survived to receive all payments due. The benefit shall be paid to the
Beneficiary at the same time the benefit would have been paid to the
Participant, disregarding the potential six-month delay required under Code
section 409A for separation-from-service benefits paid to a specified employee.

SECTION 3
MISCELLANEOUS

3.1 Amendments and Termination. This Participation Agreement may be amended or
terminated only by a written agreement signed by the Bank and the Executive. For
the purpose of determining benefits for the Executive, any amendment or
termination of the Plan shall be effective for the Executive only by a written
agreement signed by the Company and the Executive. However, the Executive and
Company agree that the Company, in its sole discretion, may amend the Plan and
this Participation Agreement to reduce the impact on the Company’s earnings of
any changes made by the Financial Accounting Standards Board to pension
accounting standards. The Company may change the manner of benefit accrual for
the Executive if, in the opinion of the Company, the changes to the Plan and
this Participation Agreement produce an expense recognition pattern closer to
the pattern of expense recognition expected prior to the change in accounting
standards. In no event will the benefit provided to the Executive at Normal
Retirement Age be reduced.

3.2 Binding Effect. This Participation Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, successors,
administrators and trustees.

3.3 Agreement To Insure. The Company may, in its sole discretion, decide to
purchase a life insurance policy or policies on the life of the Executive in
order to informally fund or otherwise offset the costs incurred by the Plan. The
Executive agrees to complete all forms and undergo any insurance underwriting
that the Company may request from time to time during the Executive’s active
employment. In addition, the Executive hereby acknowledges that the Executive,
Beneficiaries, or the Executive’s estate hold no claim to any part of the value
of or rights provided by such policies.

15

--------------------------------------------------------------------------------

In Witness Whereof, the Executive and a duly authorized Company officer have
signed this Participation Agreement as of the day and year shown below.

The Executive:
 
The Company:
   
First Northern Bank of Dixon
       
Louise Walker
         
By:
             
Its:
 

 
 
16

--------------------------------------------------------------------------------