FIRST NORTHERN BANK OF DIXON SALARY CONTINUATION AGREEMENT
Exhibit
10.15
FIRST
NORTHERN BANK OF ▇▇▇▇▇
THIS
SALARY CONTINUATION AGREEMENT
is
entered into as of this 1st day of June, 2006, (“Effective Date”) by and between
First Northern Bank of Dixon, a California-chartered, FDIC-insured bank with
its
main office in Dixon, California (the “Bank”), and ▇▇▇▇▇▇▇ ▇▇▇, Senior Vice
President (the “Executive”).
WHEREAS,
the
Bank desires that the Executive continue in its employ,
WHEREAS,
to
encourage the Executive to remain an employee of the Bank, the Bank is willing
to provide salary continuation benefits to the Executive, payable out of
the
Bank’s general assets,
WHEREAS,
none of
the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in §18(k)(4)(A)(ii) of the Federal Deposit
Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance
Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the
best
knowledge of the Bank, is contemplated insofar as the Bank is concerned.
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 as follows:
ARTICLE
1
DEFINITIONS
Whenever
used in this Agreement, the following terms shall have the meanings specified:
1.1
“Cause” shall have the meaning set forth in Section 5.1
1.2
“Change in Control” means any of the following events occurs:
(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
(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.
1.3
“Disability” means the Executive suffers a sickness, accident or injury which
has been determined by the carrier of any individual or group disability
insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Bank of the
carrier’s or Social Security Administration’s determination upon the request of
the Bank.
1.4
“Good
Reason” for purposes of this Agreement shall be defined as:
(a)
a
material reduction in Executive’s title or responsibilities;
(b)
a
reduction in base salary as in effect on the date of a Change in Control
of the
Bank;
(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;
(d)
the
adverse and substantial alteration in the nature and quality of the office
space
within which the Executive performs his duties, including the size and location
thereof, as well as the secretarial and administrative support provided to
the
Executive;
(e)
the
failure by the Bank to continue to provide the Executive with compensation
and
benefits substantially similar to those provided to him under any of the
employee benefit plans in which the Executive becomes a participant, or the
taking of any action by the Bank which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material fringe
benefit enjoyed by him at the time of the Change in Control; or
(f)
the
failure of the Bank to obtain a satisfactory agreement from any successor
or
assign of the Bank to assume and agree to perform this Agreement, as
contemplated in Section 7.5 hereof.
1.5
“Normal Retirement Age” means age 65.
1.6
“Normal Retirement Date” means the later of the date the executive attains
Normal Retirement Age or the Executive’s Termination of Employment with the
Bank.
1.7
“Person” means an individual, corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship, unincorporated organization
or other entity.
1.8
“Plan
Year” means the calendar year ending on December 31.
1.9
“Termination of Employment” means the Executive shall have ceased to be employed
by the Bank for any reason whatsoever, excepting a leave of absence approved
by
the Bank. For purposes of this Agreement, if there is a dispute over the
employment status of the Executive or the date of termination of the Executive’s
employment, the Bank shall have the sole and absolute right to decide the
dispute, unless a Change in Control shall have occurred within 24 months
before
termination of employment.
ARTICLE
2
LIFETIME
BENEFITS
2.1
Normal
Retirement Benefit.
Upon
the Executive’s Termination of Employment at on a Normal Retirement Date, for
reasons other than death, the Bank shall pay to the Executive the benefit
described in this Section 2.1 instead of any other benefit under this Agreement.
2.1.1
Amount of Benefit. The annual benefit under this Section 2.1 is $50,000.
2.1.2
Payment of Benefit. Beginning with the month after the Executive’s Normal
Retirement Date, the Bank shall pay the annual benefit to the Executive in
12
equal monthly installments on the first day of each month. The annual benefit
shall be paid to the Executive for 10 years.
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2.2
Early
Termination Benefit.
Upon
the Executive’s voluntary Termination of Employment prior to a Normal
Retirement, the Bank shall not pay any benefits under this agreement to the
Executive or the Executive’s Beneficiaries.
2.3
Disability
Benefit.
If the
Executive terminates employment because of Disability before a Normal Retirement
Date, the Bank shall pay to the Executive the benefit described in this Section
2.3 instead of any other benefit under this Agreement.
2.3.1
Amount of Benefit. The benefit under this Section 2.3 is $50,000 multiplied
by
(1) a fraction the numerator of which is the number of full calendar years
and
months between the executive’s date of hire and the Executive’s Termination of
Employment and the denominator of which is the number of full calendar years
and
months between the Executive’s date of hire and the earliest possible Normal
Retirement Date, and (2) an interest discount factor determined using an
8.3%
interest rate reflecting the number of full calendar years and months that
benefit payments commence prior to age 65.
2.3.2
Payment of Benefit. Beginning with the month after Termination of Employment
due
to Disability, the Bank shall pay the Disability Annual Benefit amount to
the
Executive in 12 equal monthly installments on the first day of each month.
The
annual benefit shall be paid to the Executive for 10 years.
2.4
Change-in-Control
Benefit.
If the
Executive’s employment with the Bank terminates involuntarily within 24 months
after the first occurrence of a Change in Control or in the event the Executive
terminates employment voluntarily for Good Reason within 24 months of such
Change in Control, the Bank shall pay to the Executive the benefit described
in
this Section 2.4 instead of any other benefit under this Agreement. However,
no
benefits shall be payable under this Agreement if the Executive’s employment is
terminated under Article 5 of this Agreement.
2.4.1
Amount of Benefit: The Change-in-Control Benefit under this Section 2.4 is
$345,712 multiplied by an interest discount factor calculated using an interest
rate equal to the 10-year US Treasury ▇▇▇▇ rate at the Plan Year ending
immediately before the date on which the Termination of Employment occurs
and
reflecting the number of full calendar years and months that the benefit
payment
occurs prior to age 65.
2.4.2
Payment of Benefit: The Bank shall pay the Change-in-Control benefit under
Section 2.4 of this Agreement to the Executive in one lump sum within three
days
after the Executive’s Termination of Employment.
ARTICLE
3
DEATH
BENEFITS
If
the
Executive dies prior to Termination of Employment and before the Executive’s
Normal Retirement Age, the Bank shall pay to the Executive’s beneficiary(ies) a
lump sum payment equal to $750,000 in lieu of any other benefit payable
hereunder.
If
the
Executive dies prior to Termination of Employment and on or after the
Executive’s Normal Retirement Age, the Bank shall pay to the Executive’s
beneficiary(ies) the benefit described in Section 2.1 assuming the Executive
had
retired on the Executive’s date of death, commenced payments and lived to
receive all such payments.
If
the
Executive dies following Termination of Employment, the Bank shall pay to
the
Executive’s beneficiary(ies) the remaining benefit payments that the Executive
would have received had the Executive lived to receive all benefits payable
under this agreement.
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ARTICLE
4
BENEFICIARIES
4.1
Beneficiary
Designations.
The
Executive shall designate a beneficiary or beneficiaries by filing a written
designation with the Bank. The Executive may revoke or modify the designation
at
any time by filing a new designation. However, designations will be effective
only if signed by the Executive and accepted by the Bank during the Executive’s
lifetime. The Executive’s beneficiary designation shall be deemed automatically
revoked if the beneficiary predeceases the Executive, or if the Executive
names
a spouse as beneficiary and the marriage is subsequently dissolved. If the
Executive dies without a valid beneficiary designation, all payments shall
be
made to the Executive’s estate.
4.2
Facility of Payment. If a benefit is payable to a minor, to a person declared
incapacitated, or to a person incapable of handling the disposition of his
or
her property, the Bank may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Bank may require such proof of incapacity,
minority or guardianship as the Bank deems appropriate before distribution
of
the benefit. Distribution shall completely discharge the Bank from all liability
for such benefit.
ARTICLE
5
GENERAL
LIMITATIONS
5.1
Termination for Cause. Notwithstanding any provision of this Agreement to
the
contrary, the Bank shall not pay any benefit under this Agreement if the
Bank
terminates the Executive’s employment for:
(a)
Gross
negligence or gross neglect of duties,
(b)
Commission of a felony or commission of a misdemeanor involving moral turpitude,
or
(c)
Fraud, disloyalty, dishonesty, or willful violation of any law or significant
Bank policy committed in connection with the Executive’s employment and, in the
Bank’s sole judgment, resulting in an adverse effect on the Bank.
5.2
Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement
if the Executive commits suicide within two years after the date of this
Agreement and while employed at the Bank, or if the Executive has made or
makes
any material misstatement of fact on any application for life insurance
purchased by the Bank.
5.3
Removal. If the Executive is removed from office or permanently prohibited
from
participating in the conduct of the Bank’s affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
§1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order.
5.4
Insolvency. If the Commissioner of the California Department of Financial
Institutions appoints the Federal Deposit Insurance Corporation as receiver
for
the Bank under California Financial Code §3220-3225, all obligations under this
Agreement shall terminate as of the date of the Bank’s declared insolvency.
ARTICLE
6
CLAIMS
AND REVIEW PROCEDURES
6.1
Claims Procedure. A person or beneficiary (“claimant”) who has not received
benefits under the Agreement that he or she believes should be paid shall
make a
claim for such benefits as follows:
6.1.1
Initiation - Written Claim. The claimant initiates a claim by submitting
to the
Bank a written claim for the benefits.
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6.1.2
Timing of Bank Response. The Bank shall respond to such claimant within 90
days
after receiving the claim. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can extend the
response period by an additional 90 days by notifying the claimant in writing,
prior to the end of the initial 90-day period, that an additional period
is
required. The notice of extension must set forth the special circumstances
and
the date by which the Bank expects to render its decision.
6.1.3
Notice of Decision. If the Bank denies part or all of the claim, the Bank
shall
notify the claimant in writing of such denial. The Bank shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:
6.1.3.1
The specific reasons for the denial,
6.1.3.2
A
reference to the specific provisions of the Agreement on which the denial
is
based,
6.1.3.3
A
description of any additional information or material necessary for the claimant
to perfect the claim and an explanation of why it is needed,
6.1.3.4
An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and
6.1.3.5
A
statement of the claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.
6.2
Review Procedure. If the Bank denies part or all of the claim, the claimant
shall have the opportunity for a full and fair review by the Bank of the
denial,
as follows:
6.2.1
Initiation - Written Request. To initiate the review, the claimant, within
60
days after receiving the Bank’s notice of denial, must file with the Bank a
written request for review.
6.2.2
Additional Submissions - Information Access. The claimant shall then have
the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Bank shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations)
to
the claimant’s claim for benefits.
6.2.3
Considerations on Review. In considering the review, the Bank shall take
into
account all materials and information the claimant submits relating to the
claim, without regard to whether such information was submitted or considered
in
the initial benefit determination.
6.2.4
Timing of Bank Response. The Bank shall respond in writing to such claimant
within 60 days after receiving the request for review. If the Bank determines
that special circumstances require additional time for processing the claim,
the
Bank can extend the response period by an additional 60 days by notifying
the
claimant in writing, prior to the end of the initial 60-day period, that
an
additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Bank expects to render its
decision.
6.2.5
Notice of Decision. The Bank shall notify the claimant in writing of its
decision on review. The Bank shall write the notification in a manner calculated
to be understood by the claimant. The notification shall set forth:
6.2.5.1
The specific reason for the denial,
6.2.5.2
A
reference to the specific provisions of the Agreement on which the denial
is
based,
6.2.5.3
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 (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and
6.2.5.4
A
statement of the claimant’s right to bring a civil action under ERISA Section
502(a)
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ARTICLE
7
MISCELLANEOUS
7.1
Binding Effect. This Agreement shall bind the Executive and the Bank, and
their
beneficiaries, survivors, executors, successors, administrators and transferees.
7.2
Amendments and Termination. This Agreement may be amended or terminated only
by
a written agreement signed by the Bank and the Executive.
7.3
No
Guarantee of Employment. This Agreement is not an employment policy or contract.
It does not give the Executive the right to remain an employee of the Bank,
nor
does it interfere with the Bank’s right to discharge the Executive. It also does
not require the Executive to remain an employee nor interfere with the
Executive’s right to terminate employment at any time.
7.4
Non-Transferability. Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached, or encumbered in any manner.
7.5
Successors; Binding Agreement. By an assumption agreement in form and substance
satisfactory to the Executive, the Bank will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or
substantially all of the business or assets of the Bank to expressly assume
and
agree to perform this Agreement in the same manner and to the same extent
that
the Bank would be required to perform this Agreement if no such succession
had
occurred. The Bank’s failure to obtain such an assumption agreement before the
succession becomes effective shall be considered a breach of this Agreement
and
shall entitle the Executive to the Change-in-Control benefit provided in
Section
2.4.
7.6
Tax
Withholding. The Bank shall withhold any taxes that are required to be withheld
from the benefits provided under this Agreement.
7.7
Applicable Law. Except to the extent preempted by the laws of the United
States
of America, the validity, interpretation, construction, and performance of
this
Agreement shall be governed by and construed in accordance with the laws
of the
State of California, without giving effect to the principles of conflict
of laws
of such state.
7.8
Unfunded Arrangement. The Executive and his beneficiary(ies) are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment,
or
garnishment by creditors. Any insurance on the Executive’s life is a general
asset of the Bank to which the Executive and beneficiary have no preferred
or
secured claim.
7.9
Entire Agreement. This Agreement constitutes the entire agreement between
the
Bank and the Executive as to the subject matter hereof. No rights are granted
to
the Executive by virtue of this Agreement other than those specifically set
forth herein.
7.10
Administration. The Bank shall have the powers that are necessary to administer
this Agreement, including but not limited to the power to:
(a)
interpret the provisions of the Agreement,
(b)
establish and revise the method of accounting for the Agreement,
(c)
maintain a record of benefit payments, and
(d)
establish rules and prescribe forms necessary or desirable to administer
the
Agreement.
7.11
Named Fiduciary. The Bank shall be the named fiduciary and plan administrator
under this Agreement. The named fiduciary may delegate to others certain
aspects
of the management and operational responsibilities of the plan, including
the
employment of advisors and the delegation of ministerial duties to qualified
individuals.
6
7.12
Severability. If for any reason any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not
held
so invalid, and each such other provision shall, to the full extent consistent
with the law, continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way
affect
the remainder of such provision, not held so invalid, and the remainder of
such
provision, together with all other provisions of this Agreement shall, to
the
full extent consistent with the law, continue in full force and effect.
7.13
Headings. The headings of Sections herein are included solely for convenience
of
reference and shall not affect the meaning or interpretation of any provision
of
this Agreement.
7.14
Notices. All notices, requests, demands and other communications hereunder
shall
be in writing and shall be deemed to have been duly given if delivered by
hand
or mailed, certified or registered mail, return receipt requested, with postage
prepaid, to the following addresses or to such other address as either party
may
designate by like notice.
(a)
If to
the Bank, to: Board of Directors First Northern Bank of Dixon ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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(b)
If to the Executive, to:
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and
to
such other or additional person or persons as either party shall have designated
to the other party in writing by like notice.
7.15
Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change
in
Control, then current management of the Bank could cause or attempt to cause
the
Bank to refuse to comply with its obligations under this Agreement, or could
institute or cause or attempt to cause the Bank to institute litigation seeking
to have this Agreement declared unenforceable, or could take or attempt to
take
other action to deny Executive the benefits intended under this Agreement.
In
these circumstances, the purpose of this Agreement would be frustrated. It
is
the intention of the Bank that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this Agreement,
whether by litigation or other legal action, because the cost and expense
thereof would substantially detract from the benefits intended to be granted
to
the Executive hereunder, and it is the intention of the Bank that the Executive
not be forced to negotiate settlement of his rights under this Agreement
under
threat of incurring such expenses. Accordingly, if after a Change in Control
occurs it should appear to the Executive that (a) the Bank has failed to
comply
with any of its obligations under this Agreement, or (b) the Bank or any
other
person has taken any action to declare this Agreement void or unenforceable,
or
instituted any litigation or other legal action designed to deny, diminish
or to
recover from the Executive the benefits intended to be provided to the Executive
hereunder, the Bank irrevocably authorizes the Executive from time to time
to
retain counsel of his choice at the expense of the Bank as provided in this
Section 7.15, to represent the Executive in connection with the initiation
or
defense of any litigation or other legal action, whether by or against the
Bank
or any director, officer, stockholder or other person affiliated with the
Bank,
in any jurisdiction. The fees and expenses of counsel selected from time
to time
by the Executive as provided in this section shall be paid or reimbursed
to the
Executive by the Bank on a regular, periodic basis upon presentation by the
Executive of a statement or statements prepared by such counsel in accordance
with such counsel’s customary practices, up to a maximum aggregate amount of
$250,000. The Bank’s obligation to pay the Executive’s legal fees provided by
this Section 7.15 operates separately from, and in addition to, any legal
fee
reimbursement obligation the Bank or the Bank’s parent First Northern Community
Bancorp may have with the Executive by virtue of any separate employment,
severance, or other agreement between the Executive and the Bank or First
Northern Community Bancorp.
7
7.16
Internal Revenue Code Section 280G Gross Up.
(a)
If as
a result of a Change in Control the Executive becomes entitled to acceleration
of benefits under this Salary Continuation Agreement or under any other plan
or
agreement of or with the Bank or First Northern Community Bancorp (together,
the
“Total Benefits”), and if any of the Total Benefits will be subject to the
Excise Tax as set forth in Sections 280G and 4999 of the Internal Revenue
Code
of 1986 (the “Excise Tax”), the Bank shall pay to the Executive the following
additional amounts, consisting of (1) a payment equal to the Excise Tax payable
by the Executive on the Total Benefits under Section 4999 of the Internal
Revenue Code (the “Excise Tax Payment”), and (2) a payment equal to the amount
necessary to provide the Excise Tax Payment net of all income, payroll and
excise taxes. Together, the additional amounts described in clauses (1) and
(2)
are referred to in this Agreement as the “Gross-Up Payment Amount.” Payment of
the Gross-Up Payment Amount shall be made in addition to the amount set forth
in
Section 2.4 hereof.
(b)
For
purposes of determining whether any of the Total Benefits will be subject
to the
Excise Tax and the amount of such Excise Tax,
(1)
any
other payments or benefits received or to be received by the Executive (whether
under the terms of this Agreement or any other agreement, or other plan or
arrangement with the Bank or First Northern Community Bancorp, any person
whose
actions result in a Change in Control or any person affiliated with First
Northern Community Bancorp or such person) in connection with a Change in
Control or the Executive’s termination of employment shall be treated as
“parachute payments” within the meaning of Section 280G(b)(2) of the Internal
Revenue Code, and all “excess parachute payments,” within the meaning of Section
280G(b)(1), shall be treated as subject to the Excise Tax, unless in the
opinion
of the certified public accounting firm that is retained by the First Northern
Community Bancorp as of the date immediately before the Change in Control
(the
“Accounting Firm”), such other payments or benefits (in whole or in part)
represent reasonable compensation for services actually rendered, within
the
meaning of Section 280G(b)(4) of the Internal Revenue Code, or are otherwise
not
subject to the Excise Tax,
(2)
the
amount of the Total Benefits which shall be treated as subject to the Excise
Tax
shall be equal to the lesser of (A) the total amount of the Total Benefits
reduced by the amount of such Total Benefits that in the opinion of the
Accounting Firm are not parachute payments, or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) (after applying
clause (1) above), and
(3)
the
value of any noncash benefits or any deferred payment or benefit shall be
determined by First Northern Community Bancorp’s Accounting Firm in accordance
with the principles of Sections 280G(d)(3) and (4) of the Internal Revenue
Code.
(c)
For
purposes of determining the Gross-Up Payment Amount, the Executive shall
be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment Amount
is to
be made, and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive’s residence on the date of
termination of employment, net of the reduction in federal income taxes that
could be obtained from deduction of state and local taxes (calculated by
assuming that any reduction under Section 68 of the Internal Revenue Code
in the
amount of itemized deductions allowable to the Executive applies first to
reduce
the amount of state and local income taxes that would otherwise be deductible
by
the Executive, and applicable federal FICA and Medicare withholding
taxes).
8
(d)
If
the Excise Tax is later determined to be less than the amount taken into
account
hereunder at the time of termination of the Executive’s employment, the
Executive shall, when the amount of such reduction in Excise Tax is finally
determined, repay to the Bank the portion of the Gross-Up Payment Amount
attributable to the reduction (plus that portion of the Gross-Up Payment
Amount
attributable to the Excise Tax, federal, state and local income taxes and
FICA
and Medicare withholding taxes imposed on the Gross-Up Payment Amount being
repaid by the Executive to the extent that such repayment results in a reduction
in Excise Tax, FICA and Medicare withholding taxes and/or a federal, state
or
local income tax deduction). If the Excise Tax is later determined to be
more
than the amount taken in account hereunder at the time of termination of
the
Executive’s employment (including any payment the existence or amount of which
cannot be determined at the time the Gross-Up Payment Amount is paid), the
Bank
shall make an additional Gross-Up Payment Amount to the Executive of the
excess
(plus any interest, penalties or additions payable by the Executive on the
excess) when the amount of the excess is finally determined.
7.17
Accounting Firm Gross-Up Determination.
(a)
Subject to the provisions of Section 7.16, all determinations required to
be
made under this Section 7.17, including whether and when a Gross-Up Payment
Amount is required, the Gross-Up Payment Amount and the assumptions used
to
arrive at such determination shall be made by the Accounting Firm, which
shall
provide detailed supporting calculations both to the Bank and the Executive
within 15 business days after receipt of notice from the Bank or the Executive
that there has been a Gross-Up Payment Amount, or such earlier time as is
requested by the Bank (the “Determination”).
(b)
If
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Executive may appoint
another nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder).
(c)
All
fees and expenses of the Accounting Firm shall be borne solely by First Northern
Community Bancorp or the Bank and First Northern Community Bancorp or the
Bank
shall enter into any agreement requested by the Accounting Firm in connection
with the performance of its services hereunder.
(d)
If
the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive with a written opinion to such effect, and
to the
effect that failure to report Excise Tax, if any, on the Executive’s applicable
federal income tax return will not result in the imposition of a negligence
or
similar penalty.
(e)
Determinations by the Accounting Firm shall be binding upon the Bank and
the
Executive.
(f)
As a
result of the uncertainty in determining whether any of the Total Benefits
will
be subject to the Excise Tax at the time of the Determination, it is possible
that a Gross-Up Payment Amount will not have been made by the Bank that should
have been made (an “Underpayment”), or that a Gross-Up Payment Amount will have
been made that should not have been made (an “Overpayment”). If the Executive is
required to make payment of any additional Excise Tax, the Accounting Firm
shall
determine the amount of the Underpayment that has occurred, and the Underpayment
(together with interest at the rate provided in Section 1274(d)(2)(B) of
the
Internal Revenue Code) shall be promptly paid by the Bank to or for the benefit
of the Executive. If the Gross-Up Payment Amount exceeds the amount necessary
to
reimburse the Executive for his Excise Tax, the Accounting Firm shall determine
the amount of the Overpayment that has been made, and the Overpayment (together
with interest at the rate provided in Section 1274(d)(2)(B) of the Internal
Revenue Code) shall be promptly paid by the Executive to or for the benefit
of
the Bank. If his expenses are reimbursed by the Bank, the Executive shall
cooperate with any reasonable requests by the Bank in any contests or disputes
with the Internal Revenue Service concerning the Excise Tax.
7.18
Termination or Modification of Agreement by Reason of Changes in the Law,
Rules
or Regulations. The Bank is entering into this agreement upon the assumption
that certain existing tax laws, rules and regulations will continue in effect
in
their current form. If said assumptions should materially change and said
change
has a material detrimental effect on this Agreement, then the Bank reserves
the
right to terminate or modify this Agreement accordingly, subject to obtaining
the written consent of the Executive, which shall not be unreasonably
withheld.
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7.19
Advice of Counsel. Before signing this Agreement, Executive either (i) consulted
with and obtained advice from Executive’s independent legal counsel in respect
to the legal nature and operations of this Agreement, including its impact
on
Executive’s rights, privileges and obligations, or (ii) freely and voluntarily
decided not to have the benefit of such consultation and advice with legal
counsel.
IN
WITNESS WHEREOF,
the
Executive and a duly authorized Bank officer have signed this Agreement as
of
the day and year first written above.
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THE
EXECUTIVE:
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THE
BANK:
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FIRST
NORTHERN BANK OF ▇▇▇▇▇
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By:
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▇▇▇▇▇▇▇
▇▇▇
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Its:
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10
BENEFICIARY
DESIGNATION
FIRST
NORTHERN BANK OF ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇
I
designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement:
Primary:
_________________________
Contingent:
_______________________
Note:
To name a trust as beneficiary, please provide the name of the trustee(s)
and
the exact
name and date of the trust agreement.
I
understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or if I
have
named my spouse as beneficiary and our marriage is subsequently dissolved.
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Signature:
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▇▇▇▇▇▇▇
▇▇▇
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Date:
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Accepted
by the Bank this _________ day of ______________, 200__.
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By:
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Title:
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11