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                              AMENDED AND RESTATED

                         FRONTIER FINANCIAL CORPORATION

                           INCENTIVE STOCK OPTION PLAN

1. PURPOSE

         This Incentive Stock Option Plan (the "Plan") is intended to promote
the best interests of FRONTIER FINANCIAL CORPORATION and its subsidiaries
("Frontier" or the "Corporation") and its stockholders by providing an incentive
and reward for those key top-management officers and employees who contribute to
the operating progress and success of Frontier.

         1.1 FAVORABLE TAX TREATMENT

         Implementation of this Plan is designed to take advantage of the
favorable income tax treatment afforded to the recipient of incentive stock
options pursuant to Internal Revenue Code Sections 421 to 425 and its associated
regulations.

         1.2 ADVANTAGES TO KEY EMPLOYEES

         This Plan provides a means whereby certain key employees of Frontier
are afforded the opportunity of investing in the common stock of Frontier under
beneficial income tax consequences. Upon the exercise of the incentive stock
options granted pursuant to this plan, employees will not recognize either
ordinary or capital gain income, but may trigger the application of the
alternative minimum tax. Income realization is deferred until such time as the
employee sells the stock obtained pursuant to the exercise of the incentive
stock option and the income may be characterized as capital gain, instead of
ordinary, income upon such subsequent sale.

         1.3 ADVANTAGES TO FRONTIER

         The Plan advances the interest of Frontier by enhancing the ability of
Frontier to attract and retain the services of highly qualified and highly
motivated employees and provides such key employees with additional incentive to
exert their best efforts on behalf of Frontier to maximize the appreciation of
the value of Frontier stock.

2. STOCK AVAILABLE PURSUANT TO PLAN

         Shares of stock that may be issued under the Plan shall be authorized
and unissued shares of common stock of Frontier. The maximum number of shares
that may be issued pursuant to this Plan shall be 750,000 shares of common
stock.
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         2.1 ADJUSTMENTS

         The quantity of common stock available under this Plan shall be
proportionally adjusted to reflect any future common stock dividends, common
stock splits, recapitalization, and reorganization of Frontier as is further
described in paragraphs 4.7 and 4.8. Subject to the obtainment of shareholder
approval pursuant to the provisions of paragraph 7, the Board of Directors may
increase the amount of authorized but unissued common stock available under this
Plan.

         2.2 UNEXERCISED OPTIONS

         Shares of common stock reserved for stock option grants pursuant to
this Plan that are not exercised shall again become available for new option
grant upon the expiration or termination of the unexercised option.

3. ELIGIBILITY

         The following rules are applicable concerning the determination of
eligibility of any employees of Frontier.

         3.1 BOARD OF DIRECTORS

         The Board of Directors shall have the authority and responsibility of
determining which employees of Frontier shall be eligible to receive incentive
stock options pursuant to this Plan. The Board of Directors may establish a
committee consisting of three (3) or more directors who are not employees of
Frontier, who may make recommendations to the Board of Directors as to which key
employees should receive incentive stock options, the number of options to be
offered to each key employee, and the fair market value of such stock at the
time an incentive stock option is granted.

         3.2 KEY EMPLOYEES

         The Board of Directors may grant incentive stock options pursuant to
this Plan only to persons deemed "key employees". Key employees are defined as
those employees of Frontier who, in the absolute sole discretion and judgment of
the Board of Directors or a committee thereof, have substantial responsibility
in the direction, management, and profitability of Frontier or any branch or
division of Frontier.

         3.3 EMPLOYMENT STATUS

         Except as otherwise permitted by this Plan, for the entire time
commencing on the date that an incentive stock option is granted pursuant to
this Plan until three (3) months before its exercise, the option holder must
continually be an employee of Frontier. Such three-month period shall be
extended to one year in the case of permanent and total disability, but not
death, of the employee.

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         3.4 STOCK OWNERSHIP

         At the time an incentive stock option is granted, a key employee may
not own Frontier stock possessing more than ten per cent (10%) of the total
combined voting power of all classes of the stock of Frontier. An exception to
this ownership limitation shall be if exercise price of the stock granted
pursuant to the option shall equal or exceed 110% of the fair market value of
the stock on the date the option is granted and the option must be exercised
within five (5) years from the date of the grant.

4. INCENTIVE STOCK OPTION AGREEMENT REQUIREMENTS

         In granting incentive stock options to key employees pursuant to this
Plan, Frontier shall enter into written agreements with its key employees,
"Frontier Financial Corporation Incentive Stock Option Agreement." Said written
agreements must, among other things, provide that the substance of the following
terms and conditions be included therein, subject, however, to amendment as may
be necessary to comply with the Internal Revenue Code and regulations thereto,
Securities and Exchange Commission requirements, and amendments made pursuant to
paragraph 7 below.

         4.1 OPTION PRICE

         The option price shall not be less than the fair market value of the
stock at the time such option is granted. However, in the event the option is
granted to a key employee who at the time of the grant owns ten per cent or more
of the combined voting power of all classes of Frontier stock, then the option
price shall equal or exceed 110% of the fair market value of the stock at the
time such option is granted. The Board of Directors of Frontier shall make a
good faith attempt to value the Frontier stock accurately. The Incentive Stock
Option Agreement shall specifically set forth the option price in terms of
American Dollars.

         4.2 TERM OF OPTION

         No Incentive Stock Option may be exercisable after the expiration of
ten (10) years from the date such option is granted and, to the extent required
pursuant to the rules and regulations promulgated by the Securities and Exchange
Commission, no Incentive Stock Option shall be exercisable until six months has
expired from the date of the grant of the option. However, the ten year period
shall be limited to five (5) years for any option granted to a key employee who
at the time of the grant owns ten per cent or more of the combined voting power
of all classes of Frontier stock. The Incentive Stock Option Agreement shall
provide that in the event a key employee terminates employment with Frontier
prior to the expiration of an option, that option shall be deemed to expire upon
the termination of employment; provided, however, that if such termination is
the result of the key employee retiring in good standing, the Board of Directors
may extend the right to exercise such option for a period of six (6) months
immediately following the date of full retirement.

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         4.3 EXERCISE OF OPTION

         An option shall be deemed exercised when written notice of such
exercise has been given to the Corporation at its principal business office by
the person entitled to exercise the Option and full payment in cash or cash
equivalents (or with shares of Common Stock as hereafter provided) for the
shares with respect to which the Option is exercised has been received by the
Corporation. As soon as practicable after any proper exercise of an Option in
accordance with the provisions of this Plan, the Corporation shall deliver to
the Optionee at the main office of the Corporation, or such other place as shall
be mutually acceptable, a certificate or certificates representing the shares of
Common Stock as to which the Option has been exercised.

         The Board of Directors may provide that, upon exercise of the Option,
the Optionee may elect to pay for all or some of the shares of Common Stock
underlying the Option with shares of Common Stock of the Corporation previously
acquired and owned at the time of exercise by the Optionee, subject to all
restrictions and limitations of applicable laws, rules, and regulations,
including Section 424(c)(3) of the Internal Revenue Code, and provided that the
Optionee makes representations and warranties satisfactory to the Corporation
regarding his or her title to the shares used to effect the purchase, including
without limitation representations and warranties that the Optionee has good and
marketable title to such shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions and has full power to deliver such shares without obtaining the
consent or approval of any person or governmental authority other than those
which have already given consent or approval in a form satisfactory to the
Corporation. The equivalent dollar value of the shares used to effect the
purchase shall be the fair market value of the shares on the date of the
purchase as determined by the Board of Directors or the President and Secretary
of the Corporation in its/their sole discretion, exercised in good faith.

         4.4 TIME LIMIT FOR GRANTING OPTIONS

         Any Incentive Stock Option issued pursuant to this Plan must be granted
within ten (10) years from the earlier of date on which this Plan is adopted by
the Board of Directors of Frontier or the date such plan is approved by the
stockholders of Frontier. However, this Plan shall be void unless the
shareholders of Frontier approve of its adoption either 12 months before or
after it is adopted by the Board of Directors.

         4.5 TRANSFERABILITY OF OPTION RIGHTS

         No option granted pursuant to this Plan may be assigned or transferred;
provided, however, that upon the death of a key employee, who at death was
actively employed by Frontier, the spouse and/or children of the key employee or
personal representative of his estate shall have the right to exercise an
unexpired option for a period of six (6) months immediately following the death
of the key employee. During the life of the key employee, the option may be
exercised only by the key employee; provided, however, that in the case of

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permanent and total disability, the option may be exercised by a court-appointed
legal representative of the key employee at any time within one year of the
termination of employment.

         4.6 TERMINATION OF EMPLOYMENT

         Any option granted pursuant to this Plan shall terminate and expire
upon the termination of employment of the key employee by Frontier for any
reason other than death; provided, however, that if the key employee has retired
or been otherwise terminated with the approval of the Board of Directors, the
Board may grant to the key employee a period of six (6) months following such
retirement in which to exercise all or any portion of the stock option.

         4.7 RECAPITALIZATION

         In the event there is any increase or decrease in the number of issued
shares of common stock of Frontier resulting from a subdivision or consolidation
of shares, a capital adjustment, the issuance of a stock dividend, the
declaration of a stock split, or other increase or decrease in such shares,
there shall be a proportional adjustment effected without receipt of
consideration by Frontier as follows: (a) in the aggregate number of shares of
common stock on which options may be granted to all key employees under this
Plan; (b) in the aggregate number of shares of common stock on which options
have been granted to any one key employee; (c) in the number of shares covered
by each outstanding option; and (d) in the price per share of stock, subject to
the provisions of Section 4.1 above in each such option.

         4.8 MERGER OR CONSOLIDATION

         Subject to any required action by the stockholders of Frontier, if
Frontier shall be the surviving or resulting corporation in any merger or
consolidation, any option granted hereunder shall pertain to and apply to the
securities to which a holder of the number of shares of common stock subject to
the option would have been entitled; that a dissolution or liquidation of
Frontier or a merger or consolidation in which Frontier is not the surviving or
resulting corporation shall cause every option outstanding hereunder to
terminate, except that the surviving or resulting corporation may, in its
absolute and uncontrolled discretion, tender options to purchase its shares on
its own terms and conditions, both as to the number of shares and otherwise. In
any event, however, a key employee with an unexercised option granted pursuant
to this plan shall have the right to immediately prior to such dissolution,
liquidation, merger or consolidation to exercise the option granted hereby to
the full extent therefore not exercised. Any options exercised pursuant to this
paragraph can be exercised by providing written notice and the exercise price
shall be due and payable concurrent with the closing of the dissolution,
liquidation, consolidation or merger of Frontier.

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         4.9 LIMITATIONS ON DISPOSITION

         In order to preserve the favorable income tax treatment afforded to
incentive stock options, disposition of stock acquired by the exercise of an
incentive stock option cannot occur within two (2) years from the date the
option was granted nor within one (1) year after the transfer of such shares to
the key employee by the exercising of such option. Nothing in this Plan shall
prevent an employee from making a disqualifying disposition. However, if the key
employee transfers, except by bequest or inheritance, such stock within the
above two and/or one year periods, the key employee shall be obligated to use
Frontier as the transfer agent and inform Frontier in writing the number of
shares transferred, the consideration received in such transfer and the original
exercise price of the stock transferred. If any key employee disposes of stock
obtained pursuant to this Plan and such disposition generates a payroll tax
withholding obligation, it is agreed that the key employee shall make
appropriate arrangements with Frontier to fund his/her requisite share of such
payroll tax obligation.

         4.10 INVESTMENT PURPOSE

         The key employee at the time of the exercise of an Incentive Stock
Option shall state in writing that said employee is purchasing Frontier stock
for investment purposes and that said key employee has no present intention of
selling the Frontier stock.

         4.11 NONALIENABILITY

         The key employee must agree that he or she will not in any way assign,
pledge, encumber, or otherwise transfer any right, title and interest in his or
her right to purchase Frontier stock, or any other right under this Plan.

         4.12 RIGHTS BEFORE EXERCISE

         Except as provided in paragraphs 4.7 and 4.8, a key employee with an
unexercised stock option shall have no rights as a shareholder with respect to
any shares of common stock of Frontier subject to option until said key employee
has delivered payment for such stock to the duly authorized officer of Frontier.
The employee shall have no right to any cash dividends for which the record date
precedes the date of Frontier's receipt of the payment for such stock.

         4.13 SEQUENTIAL EXERCISE OF OPTIONS ISSUED BEFORE JANUARY 1, 1987

         Frontier previously adopted an Incentive Stock Option Plan, which
terminates according to the ten year provisions on March 10, 1992. Accordingly,
after the effective date of this Plan, there will be outstanding unexpired
options from the prior plan. Any option granted before January 1, 1987 pursuant
to the prior plan must be exercised sequentially on a first issued, first
exercised basis. Any option granted after January 1, 1987 under the prior plan
does not have to be exercised in a sequential manner. Any option granted
pursuant to this Plan does not have to be exercised in a sequential manner.

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         4.14 AGGREGATE FAIR MARKET VALUE LIMITATION

         In order to preserve the preferential income tax treatment afforded to
Incentive Stock Options, this Plan places a limit on the options to be granted
to a key employee. The limitation is determined by placing a limit of $100,000
on the aggregate value of option stock that can be exercised for the first time
in a calendar year. Aggregate value is determined on the date the option is
granted. Internal Revenue Code Section 422(d). This does not place a $100,000
limit on the exercise stock options in any one year. Rather, the limit is
imposed on the first calendar year which an option can be exercised. In the
event said IRC Section 422(d) is subsequently amended by Congress, this dollar
limitation shall be deemed amended commensurately.

         4.15 IDENTIFICATION NUMBERS

         Each Incentive Stock Option Agreement between Frontier and a key
employee shall include an identification number. Agreements shall be numbered
consecutively, commencing with the first agreement authorized by the Board of
Directors. For example, the first Incentive Stock Option Agreement may have the
identification number "ISOK-001". Subsequent Incentive Option Agreements would
then be numbered ISOK-002, ISOK-003, ISOK-004, etc.

         4.16 NON REGISTERED STOCK

         Unless Frontier, in its sole discretion, determines to register the
common stock that may be issued pursuant to this Plan any stock of Frontier
obtained by a key employee pursuant to this plan is not registered stock and
accordingly, is a restricted security. Therefore, any disposition of such stock
by a key employee shall be made in accordance with the applicable rules and
regulations of the Securities and Exchange Commission.

5. ADMINISTRATION

          This Plan shall be administered by the Board of Directors of Frontier.
However, the Board of Directors may establish a special committee, including the
Personnel Committee of Frontier, to administer this Plan and appoint members of
the Board of Directors to such committee. No director who is an active officer
or employee of Frontier may serve as a member of the committee administering
this Plan. No member of such committee shall be eligible to participate in this
Plan. However, such committee may solicit input and recommendations from any
officer or employee of Frontier who shall not, by virtue of offering such
information or recommendations, be considered ineligible for Incentive Stock
Options. The committee shall make recommendations periodically to the Board of
Directors including recommendations as to the key employees who should be
granted stock options and the quantity and fair market value of such stock
options. The final decisions as to Incentive Stock Options, however, shall be
made by the Board of Directors and such decisions shall be set forth in the
Minutes of the meeting of the Board of Directors at which the action was taken.

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         5.1 INTERPRETATION AND CONSTRUCTION

         The committee appointed by the Board of Directors, if any, shall have
the responsibility and authority for interpreting and constructing any
provisions of the plan, any option granted pursuant to the plan, or any other
agreement pertaining to the plan. The decision of the Board shall be final and
conclusive and binding upon all key employees.

         5.2 PERSONAL LIABILITY

         No member of the Board of Directors or committee of the Board shall be
liable for any action or determination made hereunder.

6. EFFECTIVE DATE

         This Plan shall become effective upon its approval by both of the
following: The Board of Directors of Frontier and the holders of a majority of
the outstanding shares of common stock of Frontier at a duly called meeting of
said shareholders. Said shareholder approval must occur within either 12 months
before or after the plan is adopted by the Board of Directors. No option may be
granted by the Board of Directors under this Plan after the expiration of ten
(10) years following said effective date.

7. AMENDMENTS

         The Board of Directors may from time to time alter, amend, suspend or
discontinue this Plan or alter or amend any and all option agreements granted
pursuant to this Plan.

         7.1 ADDITIONAL APPROVAL REQUIRED

         The approval of the shareholders of Frontier by a vote of the
shareholders representing a majority of the outstanding capital stock of
Frontier shall be required for amendments or alterations to the Plan that will:
(a) Increase the maximum number of shares as to which options may be granted
under this Plan; (b) decrease the minimum option price; (c) decrease, directly
or indirectly by cancellation and substitution of options or otherwise, the
option price applicable to any option granted under this Plan; (d) be treated
as the adoption of a new plan pursuant the Internal Revenue Code and its
applicable regulations; and (e) result in a material modification of the plan
eligibility requirements.

         7.2 EXCEPTIONS

         Provided, however, that the provisions of this clause shall not (a)
prevent the granting to any key employee holding an unexpired option under this
plan, of an additional option(s) under this plan; (b) withdraw the
administration of this Plan from the committee; (c) permit any member of the
committee to be eligible to receive or hold an option under the Plan; and (d)
alter any outstanding option agreement to the detriment of the key employee
holding the option without the consent of such employee.

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8. USE OF PROCEEDS

         The proceeds received by Frontier from the sale of its common stock
pursuant to the exercise of options by key employees shall be used for general
corporate purposes.

9. REDEMPTION OF STOCK UPON TERMINATION

         Frontier, solely at Frontier's option, shall have the right to redeem
any stock owned by a key employee resulting from the exercising of a stock
option pursuant to this Plan upon the key employee's termination of employment.
The term of Frontier's option to redeem such stock shall be three months,
commencing on the employment termination date. The redemption price shall be the
fair market value of the stock on the date of redemption and the redemption
price shall be paid in cash by Frontier upon the redemption.

10. FINANCING THE EXERCISE OF THE OPTIONS

         Frontier may initiate a financing program that would allow a key
employee to finance up to 75% of the exercise price of any option granted
pursuant to this Plan. If such financing is offered, it shall be in Frontier's
sole discretion to determine the terms and conditions of such financing.
Frontier shall be allowed to make an independent assessment of whether financing
should be provided to any individual based on that individual's credit history.
Thus, if a financing plan is adopted, the decision whether a key employee is
entitled to utilize such financing is solely a credit decision to be made by
Frontier.

11. ADOPTION AND/OR GRANT OF OPTIONS OUTSIDE THIS PLAN

         Nothing in this Plan shall be construed as limiting Frontier from
establishing another stock option plan (statutory or nonstatutory) that would
operate concurrently with this Plan; provided, however, that the approval of
the shareholders of Frontier by vote of the shareholders representing a
majority of the outstanding capital stock of Frontier shall be required to
adopt any additional plan. Moreover, if any additional plan is adopted, no
option granted under this plan shall be contingent upon the exercise or
nonexercise of any option granted under the additional plan.

12. PARAGRAPH HEADINGS

         The paragraph headings used in this Plan are for the reference
convenience of the reader. In the event of a conflict between the language of a
particular paragraph and a paragraph heading, the language of the paragraph
shall prevail.

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