Document:

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                        FIRST NORTHERN COMMUNITY BANCORP
                             2000 STOCK OPTION PLAN

                        INCENTIVE STOCK OPTION AGREEMENT
                         Annual Vesting Over Four Years

     First Northern Community Bancorp, a California corporation (the "Company"),
hereby grants an Option to purchase Shares of its common stock to the Optionee
named below. The terms and conditions of the Option are set forth in this cover
sheet, in the attachment and in the Company's 2000 Stock Option Plan (the
"Plan").

Date of Option Grant: _________________________

Name of Optionee:
                 ---------------------------------------------------------

Optionee's Social Security Number:  _____-____-_____

Number of Shares of Common Stock Covered by Option:

Price per Share:  $
                   -------------------------------------------------------

Vesting Start Date:  _________________________________

     By signing this cover sheet, you agree to all of the terms and conditions
     described in the attached Agreement and in the Plan, a copy of which is
     also enclosed.

Optionee:
          ----------------------------------------------------------------
                                 (Signature)

Company:
         -----------------------------------------------------------------
                                 (Signature)

               Title:

Attachment
----------

                                      -62-
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                        FIRST NORTHERN COMMUNITY BANCORP
                             2000 STOCK OPTION PLAN

                        INCENTIVE STOCK OPTION AGREEMENT
                         Annual Vesting Over Four Years

Incentive Stock     This Option is intended to be an incentive stock Option
Option              under section 422 of the Code and will be interpreted
                    accordingly.

Vesting and         This Option may be exercised to the extent that Shares have
Exercise            been vested. Beginning on the Vesting Start Date, you will
                    be twenty percent (20%) vested in the Shares granted under
                    this Option. Thereafter, the Shares under this Option will
                    vest annually at a rate of 20 percent (20%) per year. All
                    of the Shares shall be fully vested on the fourth
                    anniversary of the Vesting Start Date as shown on the cover
                    sheet. No additional Shares will vest after your Service has
                    terminated for any reason. "Service" means your service as
                    employee, consultant or advisor of the Company or an
                    affiliated company.

                    Notwithstanding of the vesting schedule set forth above,
                    in the event of a Change in Control of the Company during
                    the period you remain in Service, all of the Shares which
                    are unvested as of the effective date of such Change in
                    Control shall immediately become vested. For the purposes
                    hereof, a "Change in Control" shall have the meaning set
                    forth in Section 2(b) of the Plan.

Term                This Option will expire in any event at the close of
                    business at Company headquarters on the tenth anniversary
                    of the Date of Grant, as shown on the cover sheet. (It will
                    expire earlier if your Service terminates, as described
                    below.)

Regular             If your Service terminates for any reason except death,
Termination         Total and Permanent Disability, or for cause then this
                    Option will expire at the close of business at Company
                    headquarters on the 90th day after your termination
                    date. During that 90-day period you may exercise the vested
                    portion of this Option.

Termination for     If your Service terminates for cause, as determined by the
Cause               Committee, then this Option will expire upon your
                    termination of Service.

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Death               In the event of your death while in Service, then this
                    Option will expire at the close of business at Company
                    headquarters on the date which is one year after the date
                    of death. During that one-year period, your estate or heirs
                    may exercise the vested portion of this Option.

Total and           If your Service terminates because of your Total
Permanent           and Permanent Disability, then this Option will expire
Disability          at the close of business at Company headquarters on the
                    date which is one year after your termination date. During
                    that one-year period you may exercise the vested portion of
                    this Option.

                    "Total and Permanent Disability" means that you are unable
                    to work as determined in accordance with the Company's Long
                    Term Disability Plan.

Leaves of Absence   For purposes of this Option, your Service does not terminate
                    when you go on a bona fide leave of absence that was
                    approved by the Company in writing, if the terms of the
                    leave provide for continued service crediting, or when
                    continued service crediting is required by applicable law.
                    However, for purposes of determining whether this Option is
                    entitled to ISO status, your Service will be treated as
                    terminating 90 days after you went on leave, unless your
                    right to return to active work is guaranteed by law or by a
                    contract. Your Service terminates in any event when the
                    approved leave ends unless you immediately return to active
                    work.

                    The Company determines which leaves count for this purpose,
                    and when your Service terminates for all purposes under the
                    Plan.

Restrictions on     The Company will not permit you to exercise this Option
Exercise            if the issuance of Shares at that time would violate any
                    law or regulation.

Notice of Exercise  When you wish to exercise this Option, you must notify the
                    Company by filing the proper "Notice of Exercise" form
                    attached hereto. Your notice must specify how many Shares
                    you wish to purchase. Your notice must also specify how
                    your Shares should be registered (in your name only or in
                    your and your spouse's names as community property or as
                    joint tenants with right of survivorship). The notice will
                    be effective when it is received by the Company.

                    If someone else wants to exercise this Option after your
                    death, that person must prove to the Company's satisfaction
                    that he or she is entitled to do so.

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Periods of          Any other provision of this Agreement notwithstanding,
Nonexercisability   the Company shall have the right to designate one or more
                    periods of time, each of which shall not exceed 180 days in
                    length, during which this Option shall not be exercisable
                    if the Company determines (in its sole discretion) that
                    such limitation on exercise could in any way facilitate any
                    issuance of securities by the Company, facilitate the
                    registration or qualification of any securities by the
                    Company under applicable law, or facilitate the perfection
                    of any exemption from the registration or qualification
                    requirements under any applicable law for the issuance or
                    transfer of any securities. Such limitation on exercise
                    shall not alter the vesting schedule set forth in this
                    Agreement other than to limit the periods during which this
                    Option shall be exercisable.

Form of Payment     When you submit your notice of exercise, you must include
                    payment of the Option price for the Shares you are
                    purchasing. Payment may be made in one (or a combination)
                    of the following forms:

                    o Your personal check, a cashier's check or a money order.

                    o Shares which have already been owned by you for any time
                      period specified by the Committee and which are
                      surrendered to the Company. The value of the Shares,
                      determined as of the effective date of the Option
                      exercise, will be applied to the Option price.

Withholding Taxes   To the extent that any withholding or other taxes may be due
                    as a result of the Option exercise or the sale of shares
                    acquired upon exercise of this Option and the sale of the
                    shares, you will not be allowed to exercise this Option
                    unless you make acceptable arrangements to pay such
                    withholding or other taxes.

Restrictions on     By signing this Agreement, you agree not to sell any
Resale              Option Shares at a time when applicable laws, regulations
                    or Company or underwriter trading policies prohibit a sale.
                    In connection with any underwritten public offering by the
                    Company of its equity securities, you agree not to sell,
                    make any short sale of, loan, hypothecate, pledge, grant
                    any Option for the purchase of, or otherwise dispose or
                    transfer for value or agree to engage in any of the
                    foregoing transactions with respect to any shares without
                    the prior written consent of the Company or its
                    underwriters, for such period of time after the effective
                    date of such registration statement as may be requested
                    by the Company or such underwriters.

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                    In order to enforce the provisions of this paragraph, the
                    Company may impose stop-transfer instructions with respect
                    to the shares until the end of the applicable stand-off
                    period.

Transfer of Option  Prior to your death, only you may exercise this Option. You
                    cannot transfer or assign this Option. For instance, you
                    may not sell this Option or use it as security for a loan.
                    If you attempt to do any of these things, this Option will
                    immediately become invalid. You may, however, dispose of
                    this Option in your will.

                    Regardless of any marital property settlement agreement,
                    the Company is not obligated to honor a notice of exercise
                    from your spouse or former spouse, nor is the Company
                    obligated to recognize such individual's interest in this
                    Option in any other way.

Retention Rights    Neither this Option nor this Agreement give you the right
                    to be retained by the Company (or any subsidiaries) in any
                    capacity. The Company (and any subsidiaries) reserve the
                    right to terminate your Service at any time and for any
                    reason.

Shareholder Rights  You, or your estate or heirs, have no rights as a
                    shareholder of the Company until a certificate for the
                    Option Shares has been issued. No adjustments are made for
                    dividends or other rights if the applicable record date
                    occurs before your stock certificate is issued, except as
                    described in the Plan.

Adjustments         In the event of a stock split, a stock dividend or a
                    similar change in the Company stock, the number of Shares
                    covered by this Option and the exercise price per share may
                    be adjusted pursuant to the Plan. This Option shall be
                    subject to the terms of the agreement of merger,
                    liquidation or reorganization in the event the Company is
                    subject to such corporate activity.

Applicable Law      This Agreement will be interpreted and enforced under the
                    laws of the State of California.

The Plan and Other  The text of the Plan is incorporated in this Agreement
Agreements          by reference. Certain capitalized terms used in this
                    Agreement are defined in the Plan.

                    This Agreement and the Plan constitute the entire
                    understanding between you and the Company regarding this
                    Option. Any prior agreements, commitments or negotiations
                    concerning this Option are superseded.

                                      -5-

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     By signing the cover sheet of this Agreement, you agree to all of the
     terms and conditions described above and in the Plan.

                                      -6-

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                       NOTICE OF EXERCISE OF STOCK OPTION

First Northern Community Bancorp
195 N. First Street
Dixon, CA 95620
Attn:  Corporate Secretary

     Re: Exercise of Stock Option to Purchase Shares of Company Stock
         ------------------------------------------------------------

Dear Sir or Madam:

     Pursuant to the Stock Option Agreement dated ________ ___, ____ (the "Stock
Option Agreement"), between First Northern Community Bancorp, a California
corporation (the "Company"), and the undersigned, I hereby elect to purchase
_____________ shares of the common stock of the Company (the "Shares"), at the
price of $__________ per Share. My check in the amount of $______________ is
enclosed. The Shares are to be issued in _____ certificate(s) and registered in
the name(s) of:

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

     The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. To the extent that an amount is
required to be withheld for any taxes that may be due as a result of this
exercise, I will comply with the Company's requirements with respect to the
payment of such withholding. The undersigned represents that he has consulted
with any tax consultants he deems advisable in connection with the purchase or
disposition of the Shares and the Undersigned is not relying on the Company for
any tax advice.

     The undersigned acknowledges that he has received, read and understood the
Stock Option Agreement and agrees to abide by and be bound by their terms and
conditions.

Dated:  ________________, 20___

                                    ------------------------------------------
                                                    (Signature)

                                    ------------------------------------------
                                                (Please Print Name)

                                    Social Security No.
                                                       -----------------------

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

                                    ------------------------------------------
                                                  (Full Address)

                                      -68--69-
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===============================================================================

               FIRST NORTHERN COMMUNITY BANCORP OUTSIDE DIRECTORS

                       2000 NONSTATUTORY STOCK OPTION PLAN

===============================================================================

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                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

SECTION 1.        ESTABLISHMENT AND PURPOSE....................................1

SECTION 2.        DEFINITIONS..................................................1
         (a)      "Board of Directors..........................................1
         (b)      "Change in Control...........................................1
         (c)      "Code........................................................2
         (d)      "Committee...................................................2
         (e)      "Company.....................................................2
         (f)      "Exchange Act................................................2
         (g)      "Exercise Price..............................................2
         (h)      "Fair Market Value...........................................2
         (i)      "Nonstatutory Option.........................................2
         (j)      "Option......................................................2
         (k)      "Optionee....................................................2
         (l)      "Outside Director............................................3
         (m)      "Plan........................................................3
         (n)      "Service.....................................................3
         (o)      "Share.......................................................3
         (p)      "Stock.......................................................3
         (q)      "Stock Option Agreement......................................3
         (r)      "Subsidiary..................................................3
         (s)      "Total and Permanent Disability..............................3

SECTION 3.        ADMINISTRATION...............................................3
         (a)      Committee Procedures.........................................3
         (b)      Committee Responsibilities...................................3

SECTION 4.        ELIGIBILITY..................................................4
         (a)      General Rule.................................................4
         (b)      Automatic Grant of Options...................................4

SECTION 5.        STOCK SUBJECT TO PLAN........................................5
         (a)      Basic Limitation.............................................5
         (b)      Additional Shares............................................5

SECTION 6.        TERMS AND CONDITIONS OF OPTIONS..............................6
         (a)      Stock Option Agreement.......................................6
         (b)      Number of Shares.............................................6
         (c)      Exercise Price...............................................6
         (d)      Withholding Taxes............................................6
         (e)      Nontransferability...........................................6
         (f)      Exercise of Options Upon Termination of Service..............6
         (g)      No Rights as a Stockholder...................................6
         (h)      Restrictions on Transfer of Shares...........................7

SECTION 7.        PAYMENT FOR SHARES...........................................7

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SECTION 8.        ADJUSTMENT OF SHARES.........................................7
         (a)      General......................................................7
         (b)      Reorganizations..............................................7
         (c)      Reservation of Rights........................................7

SECTION 9.        LEGAL AND REGULATORY REQUIREMENTS............................7

SECTION 10.       DURATION AND AMENDMENTS......................................8
         (a)      Term of the Plan.............................................8
         (b)      Right to Amend or Terminate the Plan.........................8
         (c)      Effect of Amendment or Termination...........................8

SECTION 11.       EXECUTION....................................................8

                                      -ii-

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               FIRST NORTHERN COMMUNITY BANCORP OUTSIDE DIRECTORS
                       2000 NONSTATUTORY STOCK OPTION PLAN

     SECTION 1. ESTABLISHMENT AND PURPOSE.
     ---------- --------------------------

     This Plan was established by First Northern Bank of Dixon (the "Bank").
Pursuant to an Agreement and Plan of Reorganization, as of May 19, 2000, the
Bank became a wholly owned subsidiary of First Northern Community Bancorp (the
"Company") and the Company assumed sponsorship of the Plan. The Company hereby
amends and restates the Plan to become the sponsor of the Plan and to offer
Outside Directors an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, by purchasing Shares of
the Company's Common Stock. The Plan provides for the grant of Nonstatutory
Options to purchase Shares.

     SECTION 2. DEFINITIONS.
     ---------- ------------

     (a) "Board of Directors" shall mean the Board of Directors of the Company,
          ------------------
as constituted from time to time.

     (b) "Change in Control" shall mean the occurrence of any of the following
          -----------------
events:

          (i)  Approval by the shareholders of the Company of a merger or
     consolidation of the Company with or into another entity or any other
     corporate reorganization, if either:

               (A) The Company is not the continuing or surviving entity; or

               (B) More than 50% of the combined voting power of the Company's
          securities outstanding immediately after such merger, consolidation
          or other reorganization is owned by persons who were not shareholders
          of the Company immediately prior to such merger, consolidation or
          other reorganization;

          (ii) A change in the composition of the Board of Directors, as a
     result of which fewer than one-half of the incumbent directors are
     directors who either:

               (A) Had been directors of the Company 24 months prior to such
           change; or

               (B) Were elected, or nominated for election, to the Board of
          Directors with the affirmative votes of at least a majority of the
          directors who had been directors of the Company 24 months prior to
          such change and who were still in office at the time of the election
          or nomination; or

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          (iii) Any "person" (as such term is used in Sections 13(d) and 14(d)
      of the Exchange Act) by the acquisition or aggregation of securities is
      or becomes the beneficial owner, directly or indirectly, of securities of
      the Company representing 25% or more of the combined voting power of the
     Company's then outstanding securities ordinarily (and apart from rights
     accruing under special circumstances) having the right to vote at
     elections of directors (the "Base Capital Stock"); except that any change
     in the relative beneficial ownership of the Company's securities by any
     person resulting solely from a reduction in the aggregate number of
     outstanding shares of Base Capital Stock, and any decrease thereafter in
     such person's ownership of securities, shall be disregarded until
     such person increases in any manner, directly or indirectly, such person's
     beneficial ownership of any securities of the Company.

     (c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
          ----

     (d) "Committee" shall mean the committee designated by the Board of
          ---------
Directors, which is authorized to administer the Plan under Section 3 hereof.
The Committee shall have membership composition, which enables the Plan to
qualify under Rule 16b-3 with regard to the grant of Options or other rights
under the Plan to persons who are subject to Section 16 of the Exchange Act.

     (e) "Company" shall mean First Northern Community Bancorp, a California
          -------

corporation.

     (f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
          ------------
amended.

     (g) "Exercise Price" shall mean the amount for which one Share may be
          --------------
purchased upon exercise of an Option, as specified in the applicable Stock
Option Agreement in accordance with the terms of this Plan.

     (h) "Fair Market Value" shall mean (i) the closing price of a Share on the
          ------------------
principal exchange on which the Shares are trading, on the first trading day
immediately preceding the date on which the Fair Market Value is determined, or
(ii) if the Shares are not traded on an exchange but are quoted on the Nasdaq
National Market or a successor quotation system, the closing price on the first
trading day immediately preceding the date on which the Fair Market Value is
determined, or (iii) if the Shares are not traded on an exchange or quoted on
the Nasdaq National Market or a successor quotation system, the fair market
value of a Share, as determined by the Committee in good faith. Such
determination shall be conclusive and binding on all persons.

     (i) "Nonstatutory Option" shall mean a stock option that is not described
          -------------------
in Section 422 of the Code.

     (j) "Option" shall mean a Nonstatutory Option granted under the Plan and
          ------
entitling the holder to purchase Shares.

     (k) "Optionee" shall mean an individual who holds an Option.
          --------

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     (l) "Outside Director" shall mean a member of the Board of Directors of the
          ----------------
Company or of a Subsidiary who is not a common-law employee of the Company or of
a Subsidiary.

     (m) "Plan" shall mean this First Northern Community Bancorp Outside
          ----
Directors 2000 Nonstatutory Stock Option Plan, as amended from time to time.

     (n) "Service" shall mean service on the Board of Directors whether or not
          --------
as an Outside Director.

     (o) "Share" shall mean one share of Stock, as adjusted in accordance with
          -----
Section 8 (if applicable).

     (p) "Stock" shall mean the Common Stock of the Company.
          -----

     (q) "Stock Option Agreement" shall mean the agreement between the Company
          ----------------------
and an Optionee which contains the terms, conditions and restrictions pertaining
to the Optionee's Option.

     (r) "Subsidiary" shall mean any corporation, if the Company and/or one or
          ----------
more other Subsidiaries own not less than fifty percent (50%) of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.

     (s) "Total and Permanent Disability" shall mean that the Optionee is unable
          ------------------------------
to serve on the Board of Directors due to the Optionee's disability. Total and
Permanent Disability shall be determined by the Company in accordance with its
Long Term Disability Plan.

     SECTION 3. ADMINISTRATION.
     ---------  ---------------

     (a) Committee Procedures. The Board of Directors shall designate one of the
         --------------------
members of the Committee as chairman. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.

     (b) Committee Responsibilities. Subject to the provisions of the Plan, the
         --------------------------
Committee shall have full authority and discretion to take the following
actions:

          (i) To interpret the Plan and to apply its provisions;

          (ii) To adopt, amend or rescind rules, procedures and forms relating
     to the Plan;

          (iii) To authorize any person to execute, on behalf of the Company,
     any instrument required to carry out the purposes of the Plan;

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          (iv) To determine the eligibility of Optionees;

          (v) Subject to Section 4(b), to prescribe the terms and conditions
     of each Option and to specify the provisions of the Stock Option Agreement
     relating to such Option;

          (vi) Subject to Section 4(b), to amend any outstanding Stock Option
     Agreement, subject to applicable legal restrictions and to the consent of
     the Optionee who entered into such agreement;

          (vii) To determine the disposition of each Option under the Plan in
     accordance with any domestic relations order in the event of an Optionee's
     divorce or dissolution of marriage;

          (viii) To correct any defect, supply any omission, or reconcile any
     inconsistency in the Plan or any Stock Option Agreement; and

          (ix) Subject to Section 4(b), to take any other actions deemed
     necessary or advisable for the administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate.
All decisions, interpretations and other actions of the Committee shall be final
and binding on all Optionees and all persons deriving their rights from an
Optionee. No member of the Committee shall be liable for any action that he has
taken or has failed to take in good faith with respect to the Plan or any Option
to acquire Shares under the Plan.

     SECTION 4. ELIGIBILITY.
     ---------  ------------

     (a) General Rule. Only Outside Directors shall be eligible to receive a
         ------------
grant of an Option under this Plan. Options may only be granted pursuant to the
provisions of Section 4(b) of this Plan. Only Nonstatutory Options will be
granted pursuant to this Plan.

     (b) Automatic Grant of Options. Each Outside Director shall receive a
         --------------------------
one-time grant of Options as described in this Section 4(b).

          (i) Each Outside Director who is appointed or initially elected, or
     reelected at the Company's annual shareholders meeting shall automatically
     be granted an Option to purchase 7,011 Shares (subject to adjustment
     under Section 8).

          (ii) All Options may be exercised to the extent that Shares have been
     vested. All Shares shall vest as follows: Twenty percent (20%) shall be
     vested on the date of grant. Thereafter, the Shares will vest annually at
     a rate of 20 percent (20%) per year. All of the Shares shall be fully
     vested on the fourth anniversary of the date of grant. No additional
     Shares will vest after the Optionee's Service has terminated for any
     reason.

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          (iii) Notwithstanding anything to the contrary in Section 4(b)(ii),
     all Options granted to an Outside Director under Section 4(b)(i) shall
     become fully vested and exercisable upon a Change in Control.

          (iv) The Exercise Price under all Options granted to an Outside
     Director under this Section 4(b) shall be equal to one hundred percent
     (100%) of the Fair Market Value of a Share on the date of grant.

          (v) All Options granted to an Outside Director under this Section 4(b)
     shall terminate on the earlier of:

               (A)  The fifth anniversary of the date of grant;

               (B) The date which is one-year after the termination of the
          Optionee's Service by reason of Total and Permanent Disability or
          death, provided that during the one-year period following termination
          of Service the Option shall be exercisable as to the vested portion
          thereof;

               (C) Immediately upon the termination of the Optionee's Service
          in the event of the conviction of the Optionee of a felony, or a
          finding by a court that the Optionee engaged in a fraudulent or
          dishonest act or a gross abuse of authority regarding the Company; or

               (D) The date ninety (90) days after the termination of the
          Optionee's service as an Outside Director for any other reason,
          provided that during the 90-day period following termination of
          Service the Option shall be exercisable as to the vested portion
          thereof.

     SECTION 5. STOCK SUBJECT TO PLAN.
     ---------- ----------------------

     (a) Basic Limitation. Shares offered under the Plan shall be authorized but
         ----------------
unissued Shares. The aggregate number of Shares which may be issued under the
Plan upon exercise of Options shall not exceed 172,493 Shares, subject to
adjustment pursuant to Section 8. The number of Shares available for the grant
of Options to Outside Directors pursuant to Section 4(b) hereof shall equal the
number of Shares to be issued upon the exercise of Options granted thereunder.
The number of Shares which are subject to Options outstanding at any time under
the Plan shall not exceed the number of Shares which then remain available for
issuance under the Plan. The Company, during the term of the Plan, shall at all
times reserve and keep available sufficient Shares to satisfy the requirements
of the Plan.

     (b) Additional Shares. In the event that any outstanding Option for any
         -----------------
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.

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     SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
     ---------  --------------------------------

     (a) Stock Option Agreement. Each grant of an Option under the Plan shall be
         ----------------------
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. Subject to Section 4(b), the provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.

     (b) Number of Shares. Each Stock Option Agreement shall specify the number
         ----------------
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8.

     (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
         --------------
Price as determined in accordance with Section 4(b)(iv). The Exercise Price
shall be payable in the form described in Section 7.

     (d) Withholding Taxes. As a condition to the exercise of an Option, the
         -----------------
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option. An Optionee may satisfy
all or part of the Optionee's withholding or income tax obligations by having
the Company withhold all or a portion of any Shares that otherwise would be
issued to the Optionee or by surrendering all or a portion of any Shares that
the Optionee previously acquired. Such Shares shall be valued at their Fair
Market Value on the date when taxes otherwise would be withheld in cash. Any
payment of taxes by assigning Shares to the Company may be subject to
restrictions imposed by the Committee.

     (e) Nontransferability. During an Optionee's lifetime, the Optionee's
         ------------------
Option(s) shall be exercisable only by the Optionee and shall not be
transferable. In the event of an Optionee's death, the Optionee's Option(s)
shall not be transferable other than by will, beneficiary designation or by the
laws of descent and distribution.

     (f) Exercise of Options Upon Termination of Service. Each Stock Option
         -----------------------------------------------
Agreement shall set forth the extent to which the Optionee shall have the right
to exercise the Option following termination of the Optionee's Service with the
Company and its Subsidiaries as set forth in Section 4(b)(iii), and may
specifythe right to exercise the Option of any executors or administrators of
the Optionee's estate or any person who has acquired such Option(s) directly
from the Optionee by beneficiary designation, bequest or inheritance.

     (g) No Rights as a Stockholder. An Optionee, or a transferee of an
         --------------------------
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by the Optionee's Option until the date of the issuance of a stock
certificate for such Shares. No adjustments shall be made, except as provided in
Section 8.

                                      -6-

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<PAGE>

     (h) Restrictions on Transfer of Shares. Any Shares issued upon exercise of
         ----------------------------------
an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.

     SECTION 7. PAYMENT FOR SHARES.
     ---------- -------------------

     The entire Exercise Price shall be payable in lawful money of the United
States of America at the time when Options are exercised.

     SECTION 8. ADJUSTMENT OF SHARES.
     ---------- ---------------------

     (a) General. In the event of a subdivision of the outstanding Stock, a
         -------
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization or a similar occurrence, the Committee shall make appropriate
adjustments in one or more of (i) the number of Shares available for future
grants under Section 5, (ii) the number of Shares covered by each outstanding
Option or (iii) the Exercise Price under each outstanding Option.

     (b) Reorganizations. In the event that the Company is a party to a merger
         ---------------
or other reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization. Such agreement may provide for the assumption of
outstanding Options by the surviving corporation or its parent or for their
continuation by the Company (if the Company is a surviving corporation);
provided, however, that if assumption or continuation of the outstanding Options
is not provided by such agreement then the Committee shall have the option of
offering the payment of a cash settlement equal to the difference between the
amount to be paid for one Share under such agreement and the Exercise Price, in
all cases without the Optionees' consent.

     (c) Reservation of Rights. Except as provided in this Section 8, an
         ---------------------
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to
an Option. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

     SECTION 9. LEGAL AND REGULATORY REQUIREMENTS.
     ---------- ----------------------------------

     Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations and the regulations of any stock exchange on

                                      -7-

                                      -79-
<PAGE>

which the Company's securities may then be listed, and the Company has obtained
the approval or favorable ruling from any governmental agency which the Company
determines is necessary or advisable.

     SECTION 10. DURATION AND AMENDMENTS.
     ----------- ------------------------

     (a) Term of the Plan. The Plan, as set forth herein, shall become effective
         ----------------
as of the date set forth below, subject to the approval of the Company's
stockholders. In the event that the stockholders fail to approve the Plan within
twelve (12) months of its adoption by the Board of Directors, any Option grants
already made shall be null and void, and no additional Option grants shall be
made after such date. The Plan shall terminate automatically on February 27,
2007 and may be terminated on any earlier date pursuant to Section 10(b) below.

     (b) Right to Amend or Terminate the Plan. The Board of Directors may amend
         ------------------------------------
the Plan at any time and from time to time; provided, however, that any
amendment to Sections 4 or 5 of the Plan shall be subject to the approval of the
Company's shareholders. Rights and obligations under any Option granted before
amendment of the Plan shall not be materially altered, or impaired adversely, by
such amendment, except with consent of the person to whom the Option was
granted. Except as otherwise provided in this Section 10(b), an amendment of the
Plan shall be subject to the approval of the Company's stockholders only to the
extent required by applicable laws, regulations or rules.

     (c) Effect of Amendment or Termination. No Shares shall be issued or sold
         ----------------------------------
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.

     SECTION 11. EXECUTION.
     ----------  ----------

     To record the adoption of the Plan by the Board of Directors, the Company
has caused its authorized officer to execute the same as of May 18, 2000.

                                   FIRST NORTHERN COMMUNITY BANCORP

                                   By:  /s/ Owen J. Onsum
                                       -----------------------------------

                                   Its: President
                                       -----------------------------------

                                      -8-

                                      -80-

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