NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO SHARES OF AMERICAN
RIVER HOLDINGS' COMMON STOCK SHALL BE ISSUED PURSUANT HERETO UNLESS THE AMERICAN
RIVER HOLDINGS 1995 STOCK OPTION PLAN SHALL HAVE FIRST BEEN APPROVED BY THE
SHAREHOLDERS OF AMERICAN RIVER HOLDINGS.

                             AMERICAN RIVER HOLDINGS

                        INCENTIVE STOCK OPTION AGREEMENT

        This Incentive Stock Option Agreement (the "Agreement") is made and
entered into as of the ______ day of __________, _____, by and between American
River Holdings, a California corporation (the "Corporation"), and
___________________________ ("Optionee");

        WHEREAS, pursuant to the American River Holdings 1995 Stock Option Plan
(the "Plan"), a copy of which is attached hereto, the Board of Directors of the
Corporation (or the Stock Option Committee, if authorized by the Board of
Directors) has authorized granting to Optionee an incentive stock option to
purchase all or any part of ______________ (_____) authorized but unissued
shares of the Corporation's common stock for cash at the price of ___________
Dollars and _______ Cents ($__.__) per share, such option to be for the term and
upon the terms and conditions hereinafter stated;

        NOW, THEREFORE, it is hereby agreed:

        1. GRANT OF OPTION. Pursuant to said action of the Board of Directors,
or the Stock Option Committee, if applicable, and pursuant to authorizations
granted by all appropriate regulatory and governmental agencies, the Corporation
hereby grants to Optionee the option to purchase, upon and subject to the terms
and conditions of the Plan, as amended, which is incorporated in full herein by
this reference, all or any part of ______________ (_____) shares of the
<PAGE>

Corporation's common stock (hereinafter called "stock") at the price of
_______________ Dollars and _______ Cents ($__.__) per share, which price is not
less than one hundred percent (100%) of the fair market value of the stock (or
not less than 110% of the fair market value of the stock for
Optionee-shareholders who own securities possessing more than ten percent (10%)
of the total combined voting power of all classes of securities of the
Corporation) as of the date of action of the Board of Directors, or the Stock
Option Committee, if applicable, granting this option.

        2. EXERCISABILITY. This option shall be exercisable as to

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This option shall remain exercisable as to all of such shares until
_______________ __, _____ (but not later than ten (10) years from the date this
option is granted) unless this option has expired or terminated earlier in
accordance with the provisions hereof. Shares as to which this option becomes
exercisable pursuant to the foregoing provision may be purchased at any time
prior to expiration of this option.

        3. EXERCISE OF OPTION. This option may be exercised by written notice
delivered to the Corporation stating the number of shares with respect to which
this option is being exercised, together with cash or shares of the
Corporation's stock, as applicable, in the amount of the purchase price of such

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<PAGE>

shares. Not less than ten (10) shares may be purchased at any one time unless
the number purchased is the total number which may be purchased under this
option and in no event may the option be exercised with respect to fractional
shares. Upon exercise, Optionee shall make appropriate arrangements and shall be
responsible for the withholding of any federal and state taxes then due.

        4. CESSATION OF EMPLOYMENT. Except as provided in Paragraphs 2 and 5
hereof, if Optionee shall cease to be an employee of the Corporation or a
subsidiary corporation for any reason other than Optionee's death or disability
[as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
from time to time (the "Code")], this option shall expire three (3) months
thereafter. During the three (3) month period this option shall be exercisable
only as to those installments, if any, which had accrued as of the date when
Optionee ceased to be an employee of the Corporation or a subsidiary
corporation.

        5. TERMINATION OF EMPLOYMENT FOR CAUSE. If Optionee's employment with
the Corporation or a subsidiary corporation is terminated for cause, this option
shall expire thirty (30) days from the date of such termination. Termination for
cause shall include, but not be limited to, termination for malfeasance or gross
misfeasance in the performance of duties or conviction of a crime involving
moral turpitude, and, in any event, the determination of the Board of Directors
with respect thereto shall be final and conclusive.

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<PAGE>

        6. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. This option
shall not be transferable except by will or the applicable laws of descent and
distribution and shall be exercisable during Optionee's lifetime only by
Optionee. If Optionee dies while serving as an employee of the Corporation or a
subsidiary corporation, or during the three (3) month period referred to in
Paragraph 4 hereof, this option shall expire one (1) year after the date of
Optionee's death or on the day specified in Paragraph 2 hereof, whichever is
earlier. After Optionee's death but before such expiration, the persons to whom
Optionee's rights under this option shall have passed by will or the applicable
laws of descent and distribution or the executor or administrator of Optionee's
estate shall have the right to exercise this option as to those shares for which
installments had accrued under Paragraph 2 hereof as of the date on which
Optionee ceased to be an employee of the Corporation or a subsidiary
corporation.

        If Optionee terminates his or her employment because of disability, (as
defined in Section 22(e)(3) of the Code), Optionee may exercise this option to
the extent he or she is entitled to do so at the date of termination, at any
time within one (1) year of the date of termination, or before the expiration
date specified in Paragraph 2 hereof, whichever is earlier.

        7. EMPLOYMENT. This Agreement shall not obligate the Corporation or a
subsidiary corporation to employ Optionee for any period, nor shall it interfere
in any way with the right of the Corporation or a subsidiary corporation to

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<PAGE>

reduce Optionee's compensation.

        8. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a
shareholder with respect to the Corporation's stock subject to this option until
the date of issuance of stock certificates to Optionee. Except as provided in
the Plan, no adjustment will be made for dividends or other rights for which the
record date is prior to the date such stock certificates are issued.

        9. MODIFICATION AND TERMINATION. The rights of Optionee are subject to
modification and termination upon the occurrence of certain events as provided
in Sections 13 and 14 of the Plan.

        10. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any person
acquiring shares upon exercise of this option, will notify the Corporation not
more than five (5) days after any sale or other disposition of such shares.

        11. REPRESENTATIONS OF OPTIONEE. No shares issuable upon the exercise of
this option shall be issued and delivered unless and until the Corporation has
complied with all applicable requirements of California and federal law and of
the Securities and Exchange Commission and the California Department of
Corporations pertaining to the issuance and sale of such shares, and all
applicable listing requirements of the securities exchanges, if any, on which
shares of the Corporation of the same class are then listed. Optionee agrees to
ascertain that such requirements shall have been complied with at the time of

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<PAGE>

any exercise of this option. In addition, if the Optionee is an "affiliate" for
purposes of the Securities Act of 1933, there may be additional restrictions on
the resale of stock, and Optionee therefore agrees to ascertain what those
restrictions are and to abide by the restrictions and other applicable federal
and state securities laws.

        Furthermore, the Corporation may, if it deems appropriate, issue stop
transfer instructions against any shares of stock purchased upon the exercise of
this option and affix to any certificate representing such shares the legends
which the Corporation deems appropriate.

        Optionee represents that the Corporation, its directors, officers,
employees and agents have not and will not provide tax advice with respect to
the option, and Optionee agrees to consult with his or her own tax advisor as to
the specific tax consequences of the option, including the application and
effect of federal, state, local and other tax laws.

        12. NOTICES. Any notice to the Corporation provided for in this
Agreement shall be addressed to it in care of its President or Chief Financial
Officer at its main office and any notice to Optionee shall be addressed to
Optionee's address on file with the Corporation or a subsidiary corporation, or
to such other address as either may designate to the other in writing. Any
notice shall be deemed to be duly given if and when enclosed in a properly
sealed envelope and addressed as stated above and deposited, postage prepaid,

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<PAGE>

with the United States Postal Service. In lieu of giving notice by mail as
aforesaid, any written notice under this Agreement may be given to Optionee in
person, and to the Corporation by personal delivery to its President or Chief
Financial Officer.

        13. INCENTIVE STOCK OPTION. This Agreement is intended to be an
incentive stock option agreement as defined in Section 422 of the Code.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

OPTIONEE                                AMERICAN RIVER HOLDINGS

By_______________________               By_________________________


                                        By_________________________


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