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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST NORTHERN CAPITAL CORP.
(Name of Registrant as Specified In Its Charter)
Filed by Registrant
(Name of Person(s) Filing Proxy Statement,
if Other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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FIRST NORTHERN CAPITAL CORP.
201 NORTH MONROE AVENUE
P.O. BOX 23100
GREEN BAY, WISCONSIN 54305-3100
(920) 437-7101
March 18, 1999
Dear Stockholder:
You are cordially invited to attend First Northern Capital Corp.'s 1999
Annual Meeting of Stockholders, which will be held at the Holiday Inn City
Centre, 200 Main Street, Green Bay, Wisconsin at 10:00 a.m. on Wednesday, April
28, 1999.
First Northern's Notice of Annual Meeting of Stockholders and Proxy
Statement describes the business to be conducted at the Annual Meeting. If you
plan to attend the Annual Meeting, please return the enclosed reply form.
A copy of First Northern's Summary Annual Report is enclosed and a copy
of the Annual Report on Form 10-K for the year ended December 31, 1998 is
attached to the Proxy Statement.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the meeting
we urge you to MARK, SIGN, DATE AND RETURN YOUR PROXY FORM IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. This will not prevent you from voting
in person at the meeting, but will ensure that your shares will be represented
if you are unable to attend.
Sincerely,
FIRST NORTHERN CAPITAL CORP.
/s/ Michael D. Meeuwsen
Michael D. Meeuwsen
President and Chief Executive Officer
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FIRST NORTHERN CAPITAL CORP.
201 NORTH MONROE AVENUE
P.O. BOX 23100
GREEN BAY, WISCONSIN 54305-3100
(920) 437-7101
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
-----------------------------
To the Stockholders of First Northern Capital Corp.:
The 1999 Annual Meeting of Stockholders of First Northern Capital Corp.
("First Northern") will be held on Wednesday, April 28, 1999, at 10:00 a.m.,
Central Time, at the Holiday Inn City Centre, 200 Main Street, Green Bay,
Wisconsin (the "Annual Meeting") for the following purposes:
(1) To elect a class of two directors to serve for terms expiring in 2002;
(2) To consider and vote upon the First Northern Capital Corp. 1999
Stock Plan as set forth in Appendix A to the Proxy Statement; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 26, 1999
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof. Only stockholders
of record at the close of business on that date will be entitled to vote at the
Annual Meeting.
Your attention is called to the Proxy Statement accompanying this Notice
for a more complete statement regarding the matters to be acted upon at the
Annual Meeting.
By Order of the Board of Directors
/s/ Marla J. Carr
Marla J. Carr
Vice President and Secretary
Green Bay, Wisconsin
March 18, 1999
YOUR VOTE IS IMPORTANT
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE INDICATE YOUR VOTING
DIRECTIONS, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY, WHICH IS
SOLICITED BY THE FIRST NORTHERN BOARD OF DIRECTORS, USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO
AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING.
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PROXY STATEMENT
FIRST NORTHERN CAPITAL CORP.
201 NORTH MONROE AVENUE
P.O. BOX 23100
GREEN BAY, WISCONSIN 54305-3100
(920) 437-7101
----------------------
SOLICITATION AND VOTING
This Proxy Statement and accompanying proxy are furnished to the
stockholders of First Northern Capital Corp. ("First Northern" or the
"Corporation") in connection with the solicitation of proxies by the Board of
Directors of First Northern for use at the annual meeting of First Northern
stockholders on Wednesday, April 28, 1999 (the "Annual Meeting"), and at any
adjournment thereof. The 1998 Annual Report on Form 10-K (the "10-K"), which
accompanies this Proxy Statement, contains financial statements and certain
other information concerning First Northern. The 10-K and such financial
statements are neither a part of this Proxy Statement nor are incorporated
herein by reference. The proxy material and 10-K are being mailed to
stockholders commencing on or about March 18, 1999.
On December 20, 1995, First Northern Savings Bank, S.A. (the "Savings
Bank") reorganized into a unitary savings and loan holding company structure
(the "Reorganization"), becoming a wholly owned subsidiary of First Northern. In
the Reorganization, the holders of all the outstanding stock of the Savings Bank
acquired the same proportionate ownership interest in First Northern as they had
held in the Savings Bank. The consolidated capital, assets, liabilities, income
and other financial data of First Northern immediately following the
Reorganization were substantially the same as those of the Savings Bank
immediately prior to consummation of the Reorganization. All references herein
to First Northern for any date or period prior to consummation of the
Reorganization refer to the Savings Bank.
The Board of Directors has fixed the close of business on February 26, 1999
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. Only holders of record of Common Stock, $1.00 par value per share (the
"Common Stock"), the only class of voting stock of First Northern outstanding,
on the Record Date will be entitled to notice of and to vote at the Annual
Meeting. Each share of Common Stock is entitled to one vote. At the Record Date,
there were 8,807,659 shares of Common Stock outstanding. All share and per share
data in this Proxy Statement prior to August 18, 1997 have been adjusted to
reflect the two-for-one stock split effected August 18, 1997.
Any stockholder entitled to vote at the Annual Meeting may vote either in
person or by a properly executed proxy. Shares represented by properly executed
proxies received by First Northern will be voted at the Annual Meeting, or any
adjournment thereof, in accordance with the terms of such proxies, unless
revoked. If no voting instructions are given on a properly executed proxy, the
shares will be voted FOR the election of management's director nominees and the
First Northern Capital Corp. 1999 Stock Plan (the "1999 Stock Plan").
If a stockholder is a participant in First Northern's Dividend Reinvestment
Plan (the "DRIP") or owns shares through investments in the First Northern
Common Stock Fund (the "Stock Fund") of the Savings Bank's 401(k) Savings Plan
(the "Savings Plan"), the proxy will serve as voting instructions for the
participant's shares held in those plans. Shares of plan participants will be
voted by the administrator of the DRIP and the trustees of the Savings Plan in
accordance with such respective participants' voting instructions. If a
participant in the DRIP does not return a proxy, the administrator of the DRIP
will not vote such participant's shares held in the DRIP. If a participant in
the Stock Fund of the Savings Plan does not return a proxy, the trustees of the
Savings Plan will vote such participant's shares held in the Stock Fund in the
same proportion that all shares in the Stock Fund are voted.
A proxy may be revoked by a stockholder at any time prior to the voting
thereof by filing a written notice of revocation with the Secretary of First
Northern, by delivering a properly executed proxy bearing a later date or by
voting in person at the Annual Meeting. Attendance at the Annual Meeting will
not in itself constitute revocation of a proxy.
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A majority of the votes entitled to be cast by the shares entitled to vote,
represented in person or by proxy, will constitute a quorum of stockholders at
the Annual Meeting. Shares for which authority is withheld to vote for director
nominees and broker non-votes (i.e., proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owners or
other persons entitled to vote shares as to a matter with respect to which the
brokers or nominees do not have discretionary power to vote) will be considered
present for purposes of establishing a quorum. A plurality of the votes cast at
the Annual Meeting by the holders of shares of Common Stock entitled to vote is
required for the election of directors (i.e., the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be chosen at the Annual Meeting). If a quorum exists, the
affirmative vote of a majority of the votes cast on the proposal is required for
approval of the 1999 Stock Plan. With respect to the election of directors, any
shares not voted, whether by withheld authority, broker non-vote or otherwise,
will have no effect on the election of directors except to the extent that the
failure to vote for an individual results in another individual receiving a
larger number of votes. With respect to the proposal to approve the 1999 Stock
Plan, because abstentions and broker non-votes are not considered votes cast,
neither will have an effect on the vote. The Inspectors of Election appointed by
the Board of Directors will count the votes and ballots at the Annual Meeting.
Expenses in connection with the solicitation of proxies will be paid by
First Northern. Proxies will be solicited principally by mail, but may also be
solicited by the directors, officers and other employees of First Northern in
person or by telephone, facsimile or other means of communication. Such
directors, officers and employees will receive no compensation therefor in
addition to their regular compensation, but may be reimbursed for out-of-pocket
expenses in connection with such solicitation. Brokers, dealers, banks, or their
nominees, who hold Common Stock on behalf of another will be asked to send proxy
material and related documents to the beneficial owners of such stock, and First
Northern will reimburse such persons for their reasonable expenses.
The Board of Directors of First Northern knows of no matters to be acted
upon at the Annual Meeting other than as set forth in the Notice of such Annual
Meeting as attached to this Proxy Statement. The Bylaws set forth certain
requirements that must be followed should a stockholder wish to propose any
floor nominations for director or floor proposals at annual or special meetings
of stockholders. In the case of annual meetings, the Bylaws state that a notice
containing certain specified information must be delivered to the Secretary of
First Northern not less than 70 days or more than 100 days prior to the
scheduled date of such meeting. No such notices have been received by First
Northern. If any other matters properly come before the Annual Meeting, or any
adjournment thereof, it is the intention of the persons named in the proxy to
vote such proxies in accordance with their best judgment on such matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth information as of the Record Date regarding
beneficial ownership of First Northern Common Stock by each director and nominee
for director, by each executive officer named in the Summary Compensation Table
below and by all directors and executive officers of First Northern as a group.
No person is known by First Northern to be the beneficial owner of more than 5%
of its outstanding shares of Common Stock.
NUMBER OF SHARES AND
NAME OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1)(2) OF CLASS
Richard E. Aicher..................................95,749 (3) 1.08%
Rick B. Colberg...................................116,928 (4) 1.32
Howard M. Frankenthal.............................283,181 (5) 3.20
Thomas J. Lopina, Sr...............................58,140 (6) 0.66
Michael D. Meeuwsen ..............................227,077 (7) 2.54
Robert B. Olson....................................78,810 (8) 0.89
Richard C. Smits..................................121,548 (9) 1.38
J. Gus Swoboda ................................... 45,484(10) 0.51
Steven L. Wilmet..................................108,358(11) 1.23
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NUMBER OF SHARES AND
NAME OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1)(2) OF CLASS
All directors and executive officers
as a group (12 persons)......................1,636,289(12) 17.68
- - -----------------
[FN]
(1) Unless otherwise noted, the specified persons have sole voting and
dispositive power as to the shares indicated.
(2) Includes unissued shares deemed to be beneficially owned by the named
persons pursuant to unexercised stock options which may be exercised within
60 days of the Record Date. Each person holds the following number of
option shares which are deemed to be beneficially owned: Mr.
Aicher--47,467; Mr. Colberg--54,467; Mr. Frankenthal--28,800; Mr.
Lopina--21,600; Mr. Meeuwsen--118,000; Mr. Olson--3,600; Mr. Smits--1,200;
Mr. Swoboda--25,200; and Mr. Wilmet--27,217. All directors and executive
officers as a group hold options for 448,352 shares deemed to be
beneficially owned.
(3) Includes 37,564 shares as to which voting and investment power is shared.
(4) Includes 48,684 shares as to which voting and investment power is shared.
(5) Includes 56,600 shares held by Frankenthal International, Ltd. Pension and
Profit Sharing Trust, under which Mr. Frankenthal serves is the sole
beneficiary. Includes 6,000 shares held by Mr. Frankenthal's wife, as to
which he disclaims beneficial ownership.
(6) Includes 5,200 shares held by Mr. Lopina's wife as custodian for a son and
6,400 shares held by Mr. Lopina's wife directly, all as to which voting and
investment power is shared.
(7) Includes 70,058 shares as to which voting and investment power is shared.
(8) Includes 75,210 shares as to which voting and investment power is shared.
(9) Includes 92,446 shares as to which voting and investment power is shared.
(10) Includes 19,584 shares held by Mr. Swoboda's wife, as to which voting and
investment power is shared, and 700 additional shares as to which Mr.
Swoboda shares voting and investment power.
(11) Includes 53,130 shares as to which voting and investment power is shared.
(12) Includes 428,028 shares as to which voting and investment power is shared
and 304,488 shares held by the Savings Plan wherein the voting of such
shares and their disposition in a tender offer is directed by the
participants but the trustees (who are Messrs. Meeuwsen and Colberg and one
other executive officer of First Northern) have the power of disposition in
all other circumstances.
</FN>
The above beneficial ownership information is based on data furnished by
the specified persons and is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"), as required for purposes
of this Proxy Statement. It is not necessarily to be construed as an admission
of beneficial ownership for other purposes.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws provide that the number of directors of First Northern shall be
determined by the Board of Directors and that the directors shall be divided
into three classes as nearly equal in number as possible. Currently, the number
of directors is fixed at six, divided into three classes of two directors. At
each annual meeting the term of office of one class of directors expires and a
class of directors is elected to serve for a term of three years or until their
successors are elected and qualify.
Messrs. Howard M. Frankenthal and Richard C. Smits, the directors whose
present terms expire at the Annual Meeting, are being nominated for re-election
as directors for terms expiring in 2002. Shares represented by proxies received
from stockholders will be voted for the election of Messrs. Frankenthal and
Smits unless otherwise specified by such stockholders.
Information regarding the nominees and the directors whose terms continue
is set forth in the following table. If any of the nominees should decline or be
unable to act as a director, an eventuality which is not foreseen, proxies may
be voted with discretionary authority for a substitute nominee or nominees
designated by the Board of Directors.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF THE DIRECTOR NOMINEES LISTED BELOW.
PRINCIPAL OCCUPATION
AND BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE (1) SINCE (2)
------------ --------------- ---------
Nominees for Terms Expiring in 2002
Howard M. Frankenthal President and Director, Frankenthal 1988
45 (3)(4) International, Ltd., Mequon, Wisconsin--a
meat wholesaler.
Richard C. Smits Retired; formerly Executive Vice President 1994
60 (4)(5) and Chief Operating Officer of First Northern
and the Savings Bank from 1994 to 1997.
From 1992 to 1994, President and Chief
Executive Officer of Prime Federal Bank,
FSB ("Prime Federal"), which was merged
into the Savings Bank in 1994.
Continuing Directors--Terms Expiring in 2001
Michael D. Meeuwsen President and Chief Executive Officer 1988
45 of First Northern and the Savings Bank.
J. Gus Swoboda Retired; prior to July, 1997, Senior Vice 1987
63 (4)(6)(7) President, Human and Corporate Development,
Wisconsin Public Service Corporation, Green
Bay, Wisconsin--an electric and gas utility
company.
Continuing Directors--Terms Expiring in 2000
Thomas J. Lopina, Sr. Associate, Spectrum Solutions, Inc., Oshkosh, 1979
61 (6) Wisconsin--a small business consulting firm.
Prior to October, 1997, President, Chief
Executive Officer and Director of
Ingersoll Equipment Co., Inc.,
Winneconne, Wisconsin--a manufacturer of
outdoor power equipment.
Robert B. Olson Vice President of Manufacturing Operations, 1997
61 (3)(6) Little Rapids Corporation, Green Bay,
Wisconsin -- a specialty paper producer.
Director of Prime Federal, from 1982 to
1994.
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[FN]
(1) Unless otherwise noted, all directors have been employed in their
respective principal occupations listed for at least the past five years.
Mr. Meeuwsen was elected an executive officer of First Northern upon its
formation in August 1995.
(2) Indicates date when director was first elected to the Board of the Savings
Bank. The directors of First Northern also comprise the Board of Directors
of the Savings Bank.
(3) Member of the Audit Committee, of which Mr. Robert J. Mettner was Chairman.
Mr. Mettner retired from the Board of Directors of the Savings Bank and
First Northern on December 31, 1998. The Audit Committee
</FN>
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held one meeting in 1998. The Audit Committee's functions include meeting
with First Northern's independent auditors and making recommendations to
the Board of Directors regarding the engagement or retention of independent
public accountants, adequacy of internal controls, adoption of accounting
methods and procedures, public disclosures required for compliance with
securities laws and other matters relating to First Northern's financial
accounting and reporting. Both the internal auditor and independent
auditors meet periodically with the Audit Committee and have access to the
Audit Committee.
(4) Member of the Executive Committee, of which Mr. Swoboda, who is Chairman of
the Board of First Northern, is Chairman. The Executive Committee held six
meetings in 1998. The Executive Committee is authorized to exercise the
power of the Board of Directors in the management of the business and
affairs of First Northern when the Board is not in session, except for
those powers which are non-delegable by law or have been delegated to other
committees. In addition, any Board member can be an alternate member of the
Executive Committee to establish a quorum.
(5) Prior to joining First Northern's Board, Mr. Smits had been a director of
Prime Federal since 1986.
(6) Member of the Compensation Committee, of which Mr. Lopina is Chairman. The
Compensation Committee held two meetings in 1998. The Compensation
Committee establishes and reviews: compensation policy; salaries, bonuses
and benefits for all employees, including determinations with respect to
stock options; and personnel policies and procedures.
(7) Mr. Swoboda is a director of American Medical Security Group, Inc., a
health and life insurance company.
The Nominating Committee is comprised of the entire Board of Directors. The
Nominating Committee held one meeting in 1998. The Nominating Committee's sole
function is to propose nominees for the position of director. In carrying out
its responsibilities, the Nominating Committee will consider candidates
suggested by other directors, employees and stockholders. Suggestions for
candidates, accompanied by biographical material, may be sent to the Secretary
of First Northern at its corporate offices.
The Board of Directors held thirteen meetings in 1998. During the period in
the last fiscal year in which they served, all members of the Board of Directors
attended at least 75% of the aggregate of the total number of meetings of the
Board and the total number of meetings held by all committees of the Board on
which they served.
DIRECTOR COMPENSATION
MEETING FEES
In 1998, the directors received $1,200 for each regular or special meeting
of First Northern or the Savings Bank attended. Directors who are not officers
of First Northern or the Savings Bank were also paid $125 per hour for each
committee meeting attended. Only one fee is paid to each director for meetings
held by both the First Northern and Savings Bank Boards or committees on the
same day.
DIRECTOR STOCK OPTIONS
The First Northern 1994 Directors' Stock Option Plan (the "1994 Directors'
Plan") was adopted by stockholders on April 27, 1994 to strengthen First
Northern's ability to attract and retain directors and encourage directors to
maintain a personal interest in First Northern's continued success and progress.
The 1994 Directors' Plan had 140,000 shares of Common Stock reserved for
issuance. All directors of First Northern participated in the 1994 Directors'
Plan, except those eligible to participate in the stock option plans applicable
to executive officers. The 1994 Directors' Plan had a term of five years and one
month and expired, by its terms, on February 19, 1999.
The 1994 Directors' Plan provided for the granting of non-qualified stock
options. The 1994 Directors' Plan was administered by the Board of Directors.
The Board had no discretion as to the amount and timing of options to be granted
because the amount and timing of the options was fixed by the terms of the 1994
Directors' Plan. On the first business day of each February during the term of
the 1994 Directors' Plan, each eligible director received an option to purchase
3,600 shares of Common Stock. The exercise price is equal to 100% of the fair
market value of the shares on
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the date of grant. Options granted on February 1, 1995 and 1996, February 3,
1997, February 2, 1998 and February 1, 1999 were at exercise prices of $6.38,
$7.88, $8.25, $12.75 and $11.875 per share, respectively.
The 1994 Directors' Plan provided that options granted thereunder will
become exercisable in one-third increments in each year, beginning one year
after the date of grant. In the event of the death, disability or retirement of
the grantee or a change in control of First Northern, all options then
outstanding under the 1994 Directors' Plan will be immediately exercisable in
full. All options expire ten years after the date of grant.
At the Record Date, options for a total of 25,200 shares had been exercised
and options for 72,000 shares were outstanding under the Plan. Since the 1994
Directors' Plan has expired, except as to options outstanding thereunder, no
shares are available for future grants. Instead of adopting a new separate plan
to replace the 1994 Directors' Plan, directors will be eligible to participate
in the 1999 Stock Plan being submitted for stockholder approval at the Annual
Meeting.
DEFERRED RETIREMENT PLAN FOR DIRECTORS
In 1991, the Savings Bank adopted a Non-Qualified Deferred Retirement Plan
for Directors (the "Directors' Deferred Retirement Plan"). In 1998, the Savings
Bank modified the Directors' Deferred Retirement Plan's age plus full years of
service requirement from a total of 75 to 70. Eligible directors under the
Directors' Deferred Retirement Plan include persons serving as members of the
Savings Bank Board and any director of an advisory board established by the
Savings Bank if such person was a director of a predecessor institution and is
designated by the Savings Bank as an eligible participant. Eligible directors
who either terminate Board service for any reason after both attaining 62 years
of age and completing at least nine full years of service on the Savings Bank
Board or any such predecessor Board, or who terminate service before attaining
age 62, but whose age plus full years of service equals or exceeds 70, will be
entitled to a monthly retirement benefit of $1,000. The benefit will commence on
the first day of the month following the later of (i) the date the eligible
director attains age 62, (ii) the date such director terminates service on the
Savings Bank Board, or (iii) the date the director terminates employment with
the Savings Bank and its affiliates, and shall continue for 180 months or until
the director's death, if earlier. If the eligible director dies after benefits
have commenced, but prior to the receipt of 36 monthly payments, the benefit
will continue to the director's beneficiary for the duration of the 36 month
period.
Under the Directors' Deferred Retirement Plan, any eligible director
terminated for cause forfeits the right to receive any retirement benefit.
Furthermore, directors who accept employment with another financial institution
or holding company thereof will not be entitled to any retirement benefits
otherwise payable under the Directors' Deferred Retirement Plan. The directors
of the Savings Bank may amend or terminate the Directors' Deferred Retirement
Plan at any time, provided that no amendment or termination may impair the
rights of any individuals receiving benefits under the Directors' Deferred
Retirement Plan on the date of such amendment or termination.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Philosophy and Objectives. First Northern's strategic compensation policies
are determined by the Compensation Committee of the Board of Directors and are
structured to attract, motivate and retain high caliber executives to ensure the
future growth and profitability of First Northern. The Compensation Committee
was comprised of three outside directors during 1998. No member of the
Compensation Committee is a current or former officer or employee of First
Northern or any of its subsidiaries. The Compensation Committee determines the
components of total compensation for all personnel, establishes specific
compensation levels for the executive officers and administers First Northern's
bonus and executive stock plans.
The Compensation Committee's executive compensation objectives and
practices generally reflect First Northern's efforts to retain and motivate
executive officers by providing a total compensation package which is
competitive in the
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financial services industry and is based on corporate and individual
performance. The Compensation Committee believes that compensation for First
Northern's executive officers should exhibit a pay-for-performance orientation.
Compensation for First Northern's executive officers currently consists of three
components--base salary, bonus and stock options. The existing compensation
structure has been designed to emphasize variable compensation through the use
of incentive plans in order to encourage long-term growth in stockholder value
and discourage unreasonable risk-taking to achieve short-term profits.
It is part of First Northern's corporate mission to attract and retain a
management and employee team with abilities recognized in the industry for a
high degree of professionalism while providing a fair return to stockholders by
maximizing profitability. Individual executive compensation is reviewed on an
annual basis with emphasis placed on recognizing and rewarding executives based
on performance, as measured by corporate and individual attainment of pre-set
goals. Historically, the success of First Northern's compensation practices has
been evidenced by lower-than-industry-average turnover, better-than-industry
average net income and return on assets, and a net worth position far exceeding
all regulatory requirements.
Base Salary. First Northern's policy is to establish a base salary range
for each executive officer position. Base salary range midpoints are established
consistent with median base salaries paid to individuals who hold comparable
positions at other financial and non-financial institutions as well as through
an internal evaluation of the responsibilities of each position. Base salary may
be adjusted from the median based on the degree of accomplishment of certain
predetermined projects related to each executive's area of responsibility. The
Compensation Committee utilizes comparative salary survey data from various
local, state and national consulting firms, as well as from independent
compensation consultants and other industry sources. In comparing other
financial institutions, consideration is given to institution size, geographic
location, organizational structure and financial performance. In addition, First
Northern considers economic conditions and business climate in its primary
market area so that it may successfully compete for a competent work force.
Although a great deal of qualitative and quantitative performance criteria is
reviewed, the Compensation Committee does exercise a certain amount of
subjective evaluation in making executive compensation decisions.
Annual Incentive Compensation. In addition to base salary, First Northern
provides an incentive bonus program through the Savings Bank's Management
Incentive Plan ("MIP"). The MIP is designed to reward the efforts of senior and
middle-level management if certain levels of corporate and individual
performance are attained. Compensation under the MIP is based on actual fiscal
year operating results measured against predetermined financial performance
goals established for First Northern and individual performance goals
established for each participant. Generally, executive officer bonuses under the
MIP are weighted 75% corporate performance and 25% individual performance. In
recognition of his having primary responsibility for the financial success of
First Northern, the Chief Executive Officer's bonus is based solely on corporate
performance. Awards for corporate performance are made only if First Northern
attains a specified profit threshold. The extent of any bonus award is based
upon salary level and by the degree to which corporate and individual
performance goals are attained. Participants in the MIP, the formula for payment
of bonuses thereunder, and the corporate financial performance goals are
designated annually by the Compensation Committee. For 1998, First Northern's
targeted financial performance goal was based on its return on average assets
ratio. Individual awards for each covered employee could range from 3.5% to 50%
of base salary. Since First Northern's return on average assets ratio for 1998
exceeded the financial performance target, the actual range of bonuses paid for
1998 was 6.3% to 29.5% of covered employees' salaries.
Long-Term Incentive Compensation. Based primarily on the executive's
ability to influence First Northern's long-term growth and profitability, stock
options are granted annually to executive officers as a long-term incentive
benefit. In granting stock options, the Compensation Committee is guided by a
formula that estimates the five year compounded increase in the market price of
First Northern Common Stock. The dollar value the executive would receive under
his or her assigned tier in the MIP (assuming attainment of 100% of the target)
is divided by the five year compounded increase in the market price of First
Northern Common Stock to arrive at an approximate number of shares to be
granted. The actual number of shares granted is adjusted based on a number of
internal and external factors relating to corporate performance. All options are
granted at the closing market price on the day of grant and vest over a three
year period. Since the value of an option bears a direct relationship to First
Northern's performance as measured by stock price, the Compensation Committee
believes that stock options are an effective incentive for executive officers to
create value
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for stockholders. The Compensation Committee views stock options as an important
component of its long-term performance based compensation strategy.
Chief Executive Officer Compensation. The factors that are used to
determine the Chief Executive Officer's annual base salary and incentive
compensation are the same as those described above for all executive officers.
In 1998, Mr. Meeuwsen had a base salary of $166,000, which the Compensation
Committee determined to be appropriate based upon industry pay practices for
chief executive officers. The bonus earned by Mr. Meeuwsen in 1998 under the MIP
was 29.5% of his base salary, determined in the manner described above. Mr.
Meeuwsen was also granted a stock option during the last fiscal year for 20,000
shares, in accordance with the formula described above.
Thomas J. Lopina, Sr. Robert B. Olson J. Gus Swoboda
Chairperson
Compensation Committee
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation of the Chief Executive Officer and the other three most highly
compensated executive officers for services in all capacities to First Northern
and its subsidiaries for the last three fiscal years. All such compensation was
paid by the Savings Bank.
LONG-TERM
COMPENSATION
AWARDS
SECURITIES ALL
UNDERLYING OTHER
ANNUAL COMPENSATION (1) OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(2) BONUS($)(3) (#)(4) ($)(5)
---------------------------- ---- ------------------------- ------------- -------------
Michael D. Meeuwsen 1998 $ 181,600 $49,000 20,000 $17,804
President and CEO of First 1997 $ 172,400 $45,000 20,000 $15,944
Northern and Savings Bank 1996 $ 166,400 $40,000 15,000 $14,784
Steven L. Wilmet 1998 $ 84,050 $19,500 9,000 $ 8,503
Senior Vice President - Operations 1997 $ 80,975 $22,000 10,000 $ 8,008
and Branch Development of Savings 1996 $ 77,700 $16,000 6,000 $ 7,120
Bank
Richard E. Aicher 1998 $ 82,900 $19,500 9,000 $ 8,251
Senior Vice President - Lending of 1997 $ 79,600 $21,800 10,000 $ 7,768
Savings Bank 1996 $ 76,000 $16,000 6,000 $ 6,880
Rick B. Colberg 1998 $ 82,250 $19,000 9,000 $ 8,335
Senior Vice President, CFO and 1997 $ 79,175 $21,800 10,000 $ 7,864
Treasurer of Savings Bank; Vice 1996 $ 75,700 $16,000 6,000 $ 7,000
President, CFO and Treasurer of
First Northern
[FN]
(1) While each of the named individuals received perquisites or other personal
benefits in the years shown, the value of these benefits is not indicated,
in accordance with Securities and Exchange Commission ("SEC") regulations,
since they did not exceed, in the aggregate, the lesser of $50,000 or 10%
of the individual's salary and bonus in any year.
(2) Includes any First Northern and/or subsidiaries Board of Directors' fees
paid to the individual while serving as an executive officer.
</FN>
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[FN]
(3) Annual bonus amounts are earned and accrued during the years indicated and
paid at the beginning of the next calendar year.
(4) Consists of stock option grants. No stock appreciation rights ("SARs") were
awarded during any of the years indicated.
(5) The dollar amounts reflect First Northern's contributions to the Savings
Plan.
</FN>
EMPLOYMENT AND RETIREMENT ARRANGEMENTS
Employment Agreements. The Savings Bank has employment agreements with the
executive officers named in the Summary Compensation Table. Messrs. Meeuwsen's,
Aicher's and Colberg's agreements were entered into in 1990; Mr. Wilmet's
agreement was entered into in 1994. The initial terms of the employment
agreements are five years for Mr. Meeuwsen and three years for the other
executives. Messrs. Meeuwsen's, Aicher's and Colberg's employment agreements are
automatically extended for an additional year on the annual anniversary date
unless contrary written notice is given by either the Savings Bank or the
executive. Mr. Wilmet's employment agreement can be extended for an additional
year on each annual anniversary date upon agreement of the executive and
affirmative action taken by the Savings Bank's Board of Directors. Each
agreement has been renewed on every anniversary date.
Under the employment agreements, each executive officer is entitled to a
base salary which is reviewed annually based upon individual performance and the
financial results of the Savings Bank. The employment agreements also provide
that the executive officers shall be eligible for incentive compensation
pursuant to the MIP and be entitled to reimbursement of business expenses and
other benefits and perquisites, in accordance with the Savings Bank's policies.
The employment agreements can be terminated at the election of the
executive officer or the Savings Bank at the expiration of the term, at any time
for cause, upon the occurrence of certain events specified by federal statute or
regulation, or as a result of the executive officer's retirement, disability or
death. Each employment agreement can also be voluntarily terminated without
cause by the executive officer or the Savings Bank during the term of the
agreement. Each executive officer may also terminate his employment agreement
under certain circumstances following a change in control.
Upon termination of the executives' employment at their election at the
expiration of the terms of the employment agreements, such executive officers
are entitled to receive unpaid base salary and incentive compensation for the
period of employment and compensation for accrued but unused vacation time. Upon
termination of employment at the election of the Savings Bank at the expiration
of the terms of their respective agreements, the executives are entitled to
receive the same compensation as if they had voluntarily terminated at the end
of the term as well as an amount equal to 100% of their annual base salary at
the date of termination and certain benefits for a period of twelve months
thereafter.
Upon each executive officer's death or retirement, he or his personal
representative, as the case may be, shall receive his earned but unpaid base
salary and incentive compensation prorated to the end of the calendar month in
which such termination occurs and compensation for accrued but unused vacation
time. Each executive's employment agreement defines retirement to mean
retirement in accordance with and pursuant to any retirement plan of the Savings
Bank generally applicable to its executive officers or in accordance with any
arrangements established with the executive's consent.
If the executive officer terminates employment voluntarily during a term or
he is terminated by the Savings Bank for cause, as defined in the employment
agreements, the executive officer shall not be entitled to any compensation or
benefits for any period after the date of termination. If during the term of any
employment agreement, the Savings Bank terminates the executive officer without
cause or the employment agreement is terminated by the executive officer for
cause, the executive would be entitled to receive 100% of base salary at the
time of termination until a date twelve months after the expiration of the then
current term of employment, provided that such compensation may not exceed an
amount equal to 60 months for Mr. Meeuwsen and 36 months for the other
executives of base salary, respectively, along with unpaid base salary and
incentive compensation and accrued but unused vacation time. Each executive
officer would also continue to receive certain insurance and other benefits
until twelve months after the end of the term of
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employment. The Savings Bank must also pay to each executive officer an
additional lump sum cash payment if it terminates the executive officer without
cause in an amount equal to the product of the Savings Bank's annual aggregate
contributions for the benefit of the executive officer to all qualified
retirement plans in the year preceding termination and the number of years in
the initial term of their respective employment agreements.
Under each employment agreement, the executive officer may also terminate
employment following a change in control of the Savings Bank or First Northern
under certain circumstances, including a reduction in compensation and benefits
or responsibilities and duties. A change in control is defined to include, among
other things, a change in the majority of directors of the Savings Bank or First
Northern or an acquisition of a certain percentage of stock of the Savings Bank
or First Northern or a successor in interest to the Savings Bank or First
Northern. Upon any such termination as a result of a change in control, each
executive officer has a right under their respective employment agreements to
receive payments and benefits as if a termination by the Savings Bank without
cause had occurred.
The employment agreements provide that under no circumstances may the
aggregate amount of all severance payments and termination benefits, computed on
a present value basis, exceed an amount which would cause the payments to be
characterized as parachute payments within the meaning of Section 280G(b)(2) of
the Internal Revenue Code. That section generally defines parachute payments to
include any severance payments and termination benefits which, on a present
value basis, equal or exceed three times the executive officer's average annual
total compensation over a five year period immediately preceding the change in
control transaction.
Supplemental Retirement Agreements. In 1994, the Savings Bank entered into
supplemental retirement agreements with Mr. Meeuwsen and certain of its other
executive officers, including all of the executive officers named in the Summary
Compensation Table, except Mr. Wilmet. In 1998, the supplemental retirement
agreements were modified to reduce the vesting period. Previously, the sum of
the executive officer's age and years of service was required to total 80, but
now the sum of the executive officer's age and years of service must equal 70.
Under these agreements, a supplemental retirement benefit will vest if the
executive continues to be employed by the Savings Bank until the earlier of (i)
such time as the sum of the executive officer's age and years of service total
70; (ii) a change in control of the Savings Bank or First Northern (as defined
in the employment agreements); (iii) the executive officer's death; or (iv) the
executive officer's total and permanent disability. No benefit is payable under
the supplemental retirement agreements if such executive officers were to
terminate their employment with the Savings Bank prior to the occurrence of any
of the foregoing. When Messrs. Meeuwsen's, Aicher's and Colberg's supplemental
retirement benefits vest, they or their beneficiary will receive a total of 180
monthly payments of $7,472, $3,965 and $2,646 per month, respectively,
commencing on the first day of the month following the earlier of their
respective attainment of age 65 or their death. If the supplemental retirement
benefits commence prior to the executive's attainment of age 65 because of his
death, or if the executive officer requests acceleration of his benefit payments
(and the Compensation Committee consents to such acceleration), the amount of
the monthly payment will be reduced to reflect a 6% discount rate compounded
monthly. These supplemental retirement agreements are subject to the same
parachute payment limitations that govern the employment agreements.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below sets forth information regarding stock option grants during
the last fiscal year to the executive officers named in the Summary Compensation
Table.
INDIVIDUAL GRANTS (1)(2)
---------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
----- ------------ ------------- -------- ---------- ----- ------
Michael D. Meeuwsen 20,000 27.0% $13.25 1/15/2008 $166,685 $422,410
Steven L. Wilmet 9,000 12.2% $13.25 1/15/2008 $75,008 $190,085
Richard E. Aicher 9,000 12.2% $13.25 1/15/2008 $75,008 $190,085
Rick B. Colberg 9,000 12.2% $13.25 1/15/2008 $75,008 $190,085
(1) No SARs were granted during 1998.
(2) The stock option/SAR plans are administered by the Compensation Committee
of the Board of Directors which designates the persons to be granted
options/SARs, the type of option and the date of grant. The Compensation
Committee also determines the number of shares subject to such options, the
option price and the time or times at which each option will first become
exercisable in whole or in part. The table reflects grants of stock options
on January 15, 1998 pursuant to the 1994 Executive Stock Plan. The options
are intended to qualify as incentive stock options under the Internal
Revenue Code of 1986, as amended (the "Code"), to the extent permitted by
the Code; any options not meeting such requirements will be treated as
non-qualified stock options. The per share option exercise prices are 100%
of the fair market value of First Northern Common Stock on the date of
grant and the term of each option is ten years. Options granted become
exercisable in one-third increments in each year, beginning one year after
the date of grant. Subject to the limitations of the 1994 Executive Stock
Plan, the Compensation Committee, in its discretion, may modify, extend or
renew any option/SAR granted. Upon the death, disability or retirement of
the grantee or a change in control of First Northern, these options will
become immediately exercisable.
(3) The dollar amounts in these columns are the result of calculations at the
5% and 10% stock appreciation rates set by the SEC and, therefore, do not
forecast possible future appreciation, if any, of First Northern's Common
Stock price.
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OPTION EXERCISES AND YEAR-END VALUES
The table below sets forth information concerning stock option
exercises during the last year and the number and value of options outstanding
at the end of the last fiscal year for the executive officers named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
- - ----------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#) FISCAL YEAR-END ($)(2)
SHARES -------------------- -----------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ------------ ------------------- ----------------------
Michael D. Meeuwsen 5,000 $ 48,250 109,427/38,333 $677,830/$29,491
Steven L. Wilmet 4,600 $ 52,808 23,483/17,667 $152,684/$14,499
Richard E. Aicher 4,512 $ 42,593 40,645/17,667 $236,803/$14,499
Rick B. Colberg 6,244 $ 60,479 49,151/17,667 $305,447/$14,499
[FN]
(1) No SARs are outstanding.
(2) Based on the $11.625 market price of First Northern Common Stock on The
Nasdaq Stock Market, Inc.'s ("NASDAQ") National Market at the end of the
fiscal year.
</FN>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
stockholder return on First Northern Common Stock, based on the market price of
the Common Stock and assuming reinvestment of cash dividends, with the
cumulative total return of U.S. companies on the NASDAQ Stock Market Index and
the NASDAQ Bank Stocks Index. The graph assumes $100 was invested on December
31, 1993 in First Northern Common Stock, the NASDAQ Stock Market (U.S.) Index
and the NASDAQ Bank Stocks Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[INSERT PERFORMANCE GRAPH HERE]
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STOCK/INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- - ----------- -------- -------- -------- -------- -------- --------
First Northern Common Stock $100.00 78.70 115.00 117.40 208.40 177.80
NASDAQ Stock Market $100.00 97.80 138.30 170.00 208.60 293.20
NASDAQ Bank Stocks $100.00 99.60 148.40 195.90 328.00 324.90
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Thomas J. Lopina, Sr., Robert B. Olson and J. Gus Swoboda, members
of the Compensation Committee, have outstanding loans from the Savings Bank in
an aggregate amount exceeding $60,000. As of January 1, 1997, Mr. Lopina's
outstanding loans were converted to the Savings Bank's pre-FIRREA policy. (See
"Certain Transactions with First Northern.") Mr. Lopina had a mortgage loan
originated June 23, 1993 in the amount of $110,000, with a balance of $98,137 at
December 31, 1998, a current interest rate of 4.75% (5.00% during 1998) and a
note rate of 6.25%. Mr. Olson"s loans included: a mortgage loan originated
February 28, 1990 in the amount of $100,000, with a balance of $0 at December
31, 1998, which had an actual interest rate of 7.25% and a note rate of 9.75%; a
mortgage loan originated July 31, 1997, in the amount of $160,000, with a
balance of $155,316 at December 31, 1998 with a current interest rate of 4.75%
(5.00% during 1998) and note rate of 7.375%; and a mortgage loan originated
September 29, 1998, in the amount of $100,000 with a balance of $100,000 at
December 31, 1998 with a current interest rate and note rate of 6.875%. Mr.
Swoboda"s loans included: a mortgage loan originated April 13, 1998 in the
amount of $170,000, with a balance of $157,275 at December 31, 1998, with a
current interest rate of 4.75% (5.00% during 1998) and a note rate of 6.875%; a
mortgage loan originated May 13, 1993 in the amount of $72,800, with a balance
of $0 at December 31, 1998, which had an actual rate of 5.0% and a note rate of
6.25%; and a second mortgage originated April 7, 1998 in the amount of $115,000,
with a balance of $0 at December 31, 1998, which had an actual and note interest
rate of 9.0%. Such loans were made in the ordinary course of business and do not
involve more than the normal risk of collectability or present other unfavorable
features. For a description of First Northern's policies with respect to loans
to officers, directors and employees, see "Certain Transactions with First
Northern."
CERTAIN TRANSACTIONS WITH FIRST NORTHERN
Through the Savings Bank, First Northern makes home mortgage and consumer
loans to its and its subsidiaries' officers, directors and employees in the
ordinary course of its business. Prior to the August 9, 1989 passage of the
Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"),
adjustable interest rate mortgage loans were originated at current market rates
but modified to a rate rounded up to the nearest 0.25% above the Savings Bank's
cost of money and the borrowers were not charged loan origination fees (other
than reimbursement of out-of-pocket costs). Under such loans, if the employment
of the borrower terminates, and the then-current employee interest rate is below
the note rate, the interest rate reverts to the rate provided for in the
mortgage note. Upon the passage of FIRREA, any executive officer or director
obtaining a loan from the Savings Bank was required to pay the current market
rate and associated originating fees. Other officers and employees were not
subject to FIRREA's restrictions. Effective November 8, 1996, regulations
affecting loans to directors and executive officers were changed to allow such
loans on the same terms and conditions offered to other employees as part of a
benefits and compensation package. Accordingly, on January 1, 1997, the Savings
Bank reinstated its pre-FIRREA policy for all employees and directors. Under its
present policy, all directors, officers and employees receive the
above-described modified loan rates and are not charged loan origination fees
(other than reimbursement of out-of-pocket costs). Management believes that the
loans made to directors, officers and employees do not involve more than the
normal risk of collectability or present other unfavorable features.
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The following table sets forth certain data relating to existing loans to
directors and executive officers of First Northern where the aggregate amount of
such loans exceeded $60,000 at any time since January 1, 1998 and the interest
rate was below that offered to all other customers for comparable transactions.
(See "Compensation Committee Interlocks and Insider Participation" with respect
to loans to Messrs. Lopina, Olson and Swoboda).
INTEREST
RATE
DURING
ORIGINAL BALANCE LAST
NAME AND DATE OF AMOUNT OF AS OF FISCAL NOTE
POSITION TYPE LOAN LOAN (1) 12/31/98 YEAR RATE
--------- --------- --------- ----------- ---------- ---------- --------
Richard E. Aicher Mortgage 03/31/88 $115,000 $ 81,775 5.00%(2) 8.75%
Senior Vice President- Second
Lending, Savings Bank Mortgage 01/06/98 45,000 41,172 5.75(3) 6.00
Marla J. Carr Mortgage 03/20/89 131,800 76,180 5.00(2) 9.75
Senior Vice President-
Human Resources and
Secretary of Savings Bank;
Vice President and Secretary
of First Northern
Rick B. Colberg Mortgage 08/15/80 72,000 -0- 5.00(2) 11.25
Senior Vice President, CFO Second
and Treasurer of Savings Mortgage 11/06/96 87,400 -0- 9.21 8.50
Bank; Vice President, CFO Mortgage 07/20/98 110,000 106,743 6.25 6.875
and Treasurer of First
Northern
Michael D. Meeuwsen Mortgage 02/24/97 156,000 132,187 5.00(2) 7.25
President and CEO of Second
First Northern and Mortgage 07/11/91 100,000 32,169 7.75(3) (4)
Savings Bank
John E. Steinbrecker Mortgage 03/27/86 90,400 59,487 5.00(2) 10.00
Senior Vice President-
Retail Deposits and
Brokerage Services,
Savings Bank
Steven L. Wilmet Mortgage 06/17/97 130,000 127,162 5.00(2) 7.25
Senior Vice President- Second
Operations and Branch Mortgage 06/17/97 18,000 17,114 7.75(3) (4)
Development of Savings Bank
Howard M. Frankenthal Mortgage 03/18/88 300,000 200,751 5.00(2) 7.75
Director
Richard C. Smits Mortgage 09/16/77 40,000 19,858 4.78 8.25
Director Second
Mortgage 10/19/98 100,000 100,000 6.95(5) (4)
- - ----------------
[FN]
(1) The largest unpaid balance during 1998 was less than the original amount of
the respective loan.
(2) On January 1, 1999, in accordance with First Northern's mortgage loan
policy for directors, officers and employees, the interest rate on mortgage
loans for officers and directors is 4.75%.
(3) First Northern has a consumer loan policy for directors, officers and
employees in which interest rates (varies with the type of loan) are
indexed to First Northern's cost of funds or prime interest rate.
(4) The note interest rate is prime rate plus 2.00%.
(5) Interest rate is subject to First Northern's consumer loan policy; however,
an introductory offering interest rate of 6.95% is extended to all
customers for six months after the date of the loan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, First Northern's directors, its
executive officers and any person holding more than 10% of the Common Stock are
required to report their initial ownership of the Common Stock and any
subsequent
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change in that ownership to the SEC. Specific due dates for these reports have
been established and First Northern is required to disclose in this Proxy
Statement any failure to file such reports by these dates during the last year.
All of these filing requirements were satisfied during the year ended December
31, 1998, except that Thomas J. Lopina, Sr., a director of First Northern, did
not file on a timely basis one report relating to one transaction. In making
these disclosures, First Northern has relied solely on written representations
of its directors and executive officers and copies of the reports that they have
filed with the Commission. There are no known 10% beneficial owners.
PROPOSAL 2
FIRST NORTHERN 1999 STOCK PLAN
The information contained in this Proxy Statement with respect to the First
Northern Capital Corp. 1999 Stock Plan is qualified in its entirety by reference
to the text of the Plan, which is attached hereto as Appendix A.
GENERAL
At the Annual Meeting, stockholders of First Northern are being asked to
approve the First Northern Capital Corp. 1999 Stock Plan (the "1999 Stock
Plan"). The 1999 Stock Plan was adopted by the First Northern Board on January
21, 1999, subject to the approval of the First Northern stockholders at the
Annual Meeting. The 1999 Stock Plan is intended to replace the First Northern
1994 Executive Stock Plan (the "1994 Executive Plan") and the 1994 Directors'
Plan (together, the "1994 Plans"), which expired by their terms on February 19,
1999. No further grants of options may be made under the 1994 Plans. 434,600
shares of First Northern Common Stock are subject to outstanding options granted
under the 1994 Plans. No options have yet been granted under the 1999 Stock
Plan, and it is anticipated that no such options will be granted prior to
stockholder approval.
The purpose of the 1999 Stock Plan is to promote the growth and development
of First Northern by providing increased incentives for key salaried employees
and directors of First Northern. The First Northern Board believes that adoption
of the 1999 Stock Plan is desirable since it will serve to promote the interests
of First Northern and its stockholders by strengthening First Northern's ability
to attract and retain key salaried employees and directors and by encouraging
them to maintain their personal interest in First Northern's continued success
and progress.
THE FIRST NORTHERN BOARD HAS ADOPTED THE 1999 STOCK PLAN AS ADVISABLE AND
IN THE BEST INTERESTS OF FIRST NORTHERN AND THE FIRST NORTHERN STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF FIRST NORTHERN VOTE FOR APPROVAL OF
THE 1999 STOCK PLAN.
1999 STOCK PLAN
The 1999 Stock Plan provides for the grant of: (i) incentive stock options
("ISOs"), intended to qualify as such within the meaning of Section 422 of the
Code; (ii) non-qualified stock options ("NSOs"); (iii) Stock Appreciation Rights
("SARs"); and (iv) restricted stock (collectively, the "Awards"). Under the 1999
Stock Plan, the maximum number of shares of First Northern Common Stock that may
be issued is 900,000 (subject to adjustment for certain events as described
below). The total number of shares that may be issued under the 1999 Stock Plan
represents approximately 10% of the number of shares of Common Stock
outstanding, the same percentage that was used to determine the total number of
shares issuable under the 1994 Plans. The 1999 Stock Plan has a term of ten
years.
The 1999 Stock Plan will be administered by a committee designated by the
First Northern Board (the "Committee"), which initially is the Compensation
Committee. The Committee, in its discretion, will designate the persons to whom
Awards shall be granted, grant the Awards in such form and amount as it shall
determine, and impose such limitations, restrictions and conditions upon any
such Award as it shall deem appropriate. Subject to the limitations of the 1999
Stock Plan, the Committee, in its discretion, may modify, extend or renew any
Award granted. Key salaried employees and directors of First Northern or any
subsidiary shall be eligible to receive Awards, provided that no eligible person
shall be eligible to receive an Award or Awards covering more than 100,000
shares in any calendar year. First Northern estimates that the number of key
salaried employees and directors currently eligible to participate in the 1999
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19
Stock Plan is approximately fourteen. First Northern cannot determine at this
time the number of options to be granted in the future to persons named in the
Summary Compensation Table contained in this Proxy Statement, to all current
executive officers as a group, to all employees as a group or to all directors.
The exercise price of ISOs granted under the 1999 Stock Plan will not be
less than 100% of the fair market value (as defined in the 1999 Stock Plan) of
the shares on the date of grant of the option. For NSOs, the exercise price
shall not be less than 90% of the fair market value of the shares on the grant
date. Unless otherwise determined by the Committee, 33 1/3% of the shares
covered by options granted under the 1999 Stock Plan will become exercisable
after one year and an additional 33 1/3% in each of the next two years. Unless
otherwise determined by the Committee, all rights to exercise ISOs and NSOs
under the 1999 Stock Plan will expire ten years from the date of grant.
No person may receive an ISO if, at the time of grant, such person owns,
directly or indirectly, more than 10% of the total combined voting power of
First Northern, unless the exercise price is at least 110% of the fair market
value of the shares and the exercise period of such ISO is limited to five
years. The maximum fair market value (determined at time of grant) of shares
covered by ISOs that first become exercisable by any employee in any one
calendar year is limited to $100,000. Non-employee directors are not eligible to
receive ISOs, since ISOs are limited, by the terms of the Code, to employees. On
March 5, 1999, the fair market value of First Northern Common Stock (as
defined in the 1999 Stock Plan) was $11.6875 the closing price on the NASDAQ
National Market).
In conjunction with the grant of NSOs, the Committee may grant up to 0.5
SARs to key salaried employees or directors for each share subject to an NSO and
pay cash to such persons in an amount equivalent to the difference between the
fair market value of the stock subject to the options and the option price. The
terms of the SAR will be identical to the related NSO. To the extent that an NSO
is exercised without a simultaneous exercise of the related SAR, such SAR shall
terminate.
Shares of restricted stock may be issued either alone or in addition to
other Awards granted under the 1999 Stock Plan. The Committee shall determine
the eligible persons to whom and the times at which grants of restricted stock
will be made, the number of shares to be awarded, the time or times within which
such Awards may be subject to forfeiture, and any other terms and conditions of
the Awards. Grants of restricted stock may be conditioned upon the attainment of
specified performance goals or other criteria determined by the Committee, and
the provisions of restricted stock Awards need not be the same with respect to
each recipient.
Each individual receiving a restricted stock Award will be issued a share
certificate registered in the recipient's name and bearing an appropriate legend
referring to the restrictions applicable to the shares represented thereby.
Until the applicable restrictions lapse, a grantee will not be permitted to
transfer or encumber the shares of restricted stock, but will have all of the
rights of a stockholder, including the right to vote the shares and the right to
receive dividends with respect thereto. All shares still subject to restriction
shall be forfeited upon termination of a grantee's service unless the Committee
determines to waive such restrictions in the event of hardship or other special
circumstances of a grantee whose employment is involuntarily terminated (other
than for cause).
In the event of any recapitalization, stock split or reverse split, stock
dividend, merger in which First Northern is the surviving entity, combination or
exchange of shares, or other capital change affecting First Northern Common
Stock, equitable and appropriate changes in the aggregate number and kind of
shares available for grant under the 1999 Stock Plan and in the number, price
and kind of shares covered by outstanding grants shall be made.
Accelerated vesting and exercise provisions apply in the event of an
optionee's death, disability or retirement. Accelerated exercise provisions
apply if the service of an optionee is terminated for any other reason, other
than for cause. If an optionee is terminated for cause, all options held by such
optionee shall be deemed terminated and not exercisable. In the event of a
corporate sale or change (as defined in the 1999 Stock Plan), all options then
outstanding shall be immediately exercisable in full and the Committee shall
take action regarding outstanding options as provided in the 1999 Stock Plan to
preserve the benefits of the options or to require the options to be exercised
within a specific number of days or be terminated.
Payment for shares acquired through the exercise of options issued under
the 1999 Stock Plan may be made either in cash or in shares of First Northern
Common Stock beneficially owned by the optionee for at least six months prior
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to the time of exercise, valued at their fair market value determined as of the
date of exercise, or in a combination thereof.
Each grant under the 1999 Stock Plan will be evidenced by an agreement
containing such terms and conditions as the Committee shall establish from time
to time.
The Board of Directors may amend or discontinue the 1999 Stock Plan at any
time, but may not, without the consent of the holder to whom an Award has been
granted, make any alteration which would adversely affect any outstanding Award,
or make any amendment without stockholder approval if such approval would be
required in order to comply with applicable laws, regulations or the
requirements of the NASDAQ National Market.
TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of Awards made under the 1999 Stock Plan based upon the applicable
provisions of the Code in effect on the date hereof.
Non-Qualified Stock Options. An optionee will not recognize taxable income
at the time an NSO is granted. Upon exercise of an NSO, an optionee will
recognize taxable income in an amount equal to the difference between the
exercise price and the fair market value of the shares at the date of exercise.
The amount of such difference will be a deductible expense to First Northern for
tax purposes. On a subsequent sale or exchange of shares acquired pursuant to
the exercise of an NSO, the optionee will recognize a taxable gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The tax basis will, in general, be the amount paid
for the shares plus the amount treated as compensation income at the time the
shares were acquired pursuant to the exercise of the option.
Incentive Stock Options. A optionee will not recognize taxable income at
the time an ISO is granted. Further, an optionee will not recognize taxable
income upon exercise of an ISO if the optionee complies with two separate
holding periods: shares acquired upon exercise of an ISO must be held for at
least two years after the date of grant and for at least one year after the date
of exercise. The difference between the exercise price and the fair market value
of the stock at the date of exercise is, however, a tax preference item. When
the shares of stock received pursuant to the exercise of an ISO are sold or
otherwise disposed of in a taxable transaction, the optionee will recognize a
capital gain or loss, measured by the difference between the exercise price and
the amount realized.
Ordinarily, an employer granting ISOs will not be allowed any business
expense deduction with respect to stock issued upon exercise of an ISO. However,
if all of the requirements for an ISO are met except for the holding period
rules set forth above, the optionee will be required, at the time of the
disposition of the stock, to treat the lesser of the gain realized or the
difference between the exercise price and the fair market value of the stock at
the date of exercise as ordinary income and the excess, if any, as capital gain.
First Northern will be allowed a corresponding business expense deduction to the
extent of the amount of the optionee's ordinary income.
Stock Appreciation Rights. Upon exercise of an SAR, an optionee will
recognize ordinary income in an amount equal to the cash received. First
Northern will be entitled to a deduction for tax purposes in the same amount and
at the same time as the optionee recognizes ordinary income.
Restricted Stock. A grantee receiving a restricted stock Award will
generally recognize ordinary income in an amount equal to the fair market value
of the stock at the time the stock is no longer subject to forfeiture. While the
restrictions are in effect, the grantee will recognize compensation income equal
to the amount of any dividends received and First Northern will be allowed a
deduction for that amount. A grantee may elect, under Section 83(b) of the Code,
within 30 days of the stock grant, to recognize taxable ordinary income on the
date of grant equal to the fair market value of the shares (determined without
regard to the restrictions) on such date. First Northern will generally be
entitled to a deduction equal to the amount that is taxable as ordinary income
to the grantee in the year that such income is taxable.
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ACCOUNTING TREATMENT
Under existing accounting rules, First Northern incurs no compensation
expense upon the grant of a stock option with an exercise price at least equal
to the fair market value of First Northern Common Stock on the date of grant.
However, in the footnotes to First Northern's annual financial statements, First
Northern sets forth pro forma net income and earnings per share amounts which
are calculated as if First Northern had elected to recognize compensation
expense equal to the fair value of the option on the grant date based on the
Black-Scholes option pricing model. The Financial Accounting Standards Board has
proposed changes regarding accounting for stock-based compensation which would
affect outside director grants of stock options, among other things. If adopted,
these changes may relate back and be effective for all transactions effected
after December 15, 1998. Outstanding SARs will result in an expense for
financial statement reporting purposes to the extent that the market price of
First Northern Common Stock increases during a quarter over the exercise price
of the related option, with a corresponding credit in the case of a subsequent
decrease in market price, the credit not to exceed expenses previously
recognized.
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AUDITORS
The Board of Directors, acting on the recommendation of the Audit
Committee, has appointed the firm of Ernst & Young LLP as independent auditors
to audit the books and accounts of First Northern for 1999. Ernst & Young LLP
has audited the accounts of First Northern since 1978. Representatives of Ernst
& Young LLP are expected to be present at the Annual Meeting to respond to
appropriate questions and to make a statement if they so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by the Secretary of First Northern,
Ms. Marla J. Carr, no later than November 19, 1999 in order to be considered for
inclusion in next year's annual meeting proxy materials pursuant to SEC Rule
14a-8. Stockholders wishing to propose any floor nominations for director or
floor proposals at the 2000 annual meeting without inclusion of such proposals
in First Northern's proxy materials must provide notice thereof containing
certain specified information as required by the Bylaws to First Northern's
Secretary so as to be received at least 70 days and not more than 100 days prior
to the scheduled date of such annual meeting in order for such notice to be
considered timely under the Bylaws and the SEC's proxy rules.
By Order of the Board of Directors
/s/ Marla J. Carr
Marla J. Carr
Vice President and Secretary
Green Bay, Wisconsin
March 18, 1999
A COPY (WITHOUT EXHIBITS) OF FIRST NORTHERN'S ANNUAL REPORT ON FORM 10-K
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER
31, 1998 IS ATTACHED TO THIS PROXY STATEMENT. FIRST NORTHERN WILL PROVIDE AN
ADDITIONAL COPY OF THE 10-K WITHOUT CHARGE TO ANY RECORD OR BENEFICIAL OWNER OF
FIRST NORTHERN COMMON STOCK ON THE WRITTEN REQUEST OF SUCH PERSON DIRECTED TO:
MARLA J. CARR, VICE PRESIDENT AND SECRETARY, FIRST NORTHERN CAPITAL CORP., 201
NORTH MONROE AVENUE, P.O. BOX 23100, GREEN BAY, WISCONSIN 54305-3100.
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APPENDIX A
FIRST NORTHERN CAPITAL CORP.
1999 STOCK PLAN
I. PURPOSE
1.01 Establishment of Plan. The purpose of this Plan is to promote the
growth and development of First Northern Capital Corp. ("First Northern") by
providing increased incentives for key salaried employees and directors of First
Northern and of any present or future Subsidiaries. A "Subsidiary" as used
herein shall mean any corporation in which First Northern or another corporation
qualifying as a Subsidiary within this definition owns 50% or more of the total
combined voting power of all classes of stock. This Plan provides for the
granting of (i) incentive stock options ("ISOs") intended to qualify as such
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), (ii) non-qualified stock options
("NSOs"), (iii) stock appreciation rights ("SARs") and (iv) restricted stock.
The four types of benefits that may be granted under the Plan are collectively
referred to as "Awards."
II. SHARES SUBJECT TO OPTION
2.01 Available Shares. The shares available for Awards of whatever type
under this Plan shall be 900,000 shares of First Northern's common stock, $1.00
par value, and may be authorized but unissued stock or stock issued and
reacquired by First Northern. Shares subject to and not issued under an Award
which expires, terminates or is cancelled for any reason during the term of the
Plan shall again become available for the granting of Awards under the Plan.
2.02 Changes in the Number of Available Shares. In the event of any
recapitalization, stock split or reverse split, combination or exchange of
shares, stock dividend, merger in which First Northern is the surviving
corporation, combination or exchange of shares, or other capital change
affecting the common stock of First Northern, the Committee (defined in
paragraph 3.01 hereof) shall make, subject to the approval of the Board of
Directors of First Northern, equitable and appropriate changes in the aggregate
number and kind of shares available for which Awards may be granted under the
Plan and in the number, price and kind of shares covered by Awards granted or to
be granted under the Plan, provided that no changes shall be made in any ISO
which would cause such option to fail to continue to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
III. ADMINISTRATION
3.01 Administration by the Committee. The Plan shall be administered by
a committee designated by the Board of Directors of First Northern (the
"Committee"), and shall initially be the Compensation Committee of the Board.
The Committee shall be constituted to permit the Plan to comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
or any successor rule ("Rule 16b-3") and Section 162(m) of the Code. A majority
of the members of the Committee shall constitute a quorum. The approval of such
a quorum, expressed by a vote at a meeting, or the unanimous consent of all
members in writing without a meeting, shall constitute the action of the
Committee and shall be valid and effective for all purposes of the Plan. The
Committee is empowered to adopt such rules, regulations and procedures and take
such other action as it shall deem necessary or proper for the administration of
the Plan. Subject to paragraph 10.04 hereof, the Committee, in its discretion,
may modify, extend or renew any Award theretofore granted. The Committee shall
also have authority to interpret the Plan, and the decision of the Committee on
any questions concerning the interpretation of the Plan shall be final and
conclusive. The Committee may consult with counsel, who may be counsel for the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel. The Committee shall have the power, subject
to and within the limits of the express provisions of the Plan:
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(a) to determine from time to time which of the eligible persons shall be
granted Awards under the Plan, the type of Awards, and time or times
when, and the number of shares for which, an Award or Awards shall be
granted to such persons;
(b) to prescribe the other terms and provisions (which need not be
identical) of each Award granted under the Plan to eligible persons;
(c) to construe and interpret the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for Plan
administration. The Committee, in the exercise of this power, may
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any agreement, in the manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective. All decisions and determinations by the Committee in
exercising this power shall be final and binding upon First Northern
and the individuals; and
(d) generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of First
Northern with respect to the Plan.
IV. ELIGIBILITY FOR AWARDS
4.01 Eligibility. Key salaried employees and directors of First
Northern or any Subsidiary shall be eligible to receive Awards.
4.02 Grant of Awards. From among all eligible persons, the Committee
shall determine from time to time those persons to whom Awards shall be granted,
provided that no eligible person shall be eligible to receive an Award or Awards
covering more than 100,000 shares in any calendar year. No person shall have any
right whatsoever to receive an Award unless so determined by the Committee.
V. OPTION TERMS AND CONDITIONS
5.01 Option Contracts. Options granted hereunder shall be evidenced by
option contracts containing such terms and conditions as the Committee shall
establish from time to time consistent with the Plan. Option contracts need not
be identical but each option contract shall, as appropriate, contain language
including the substance of the following provisions:
(a) Number of Shares and Price. Each option contract shall state the
number of shares to which it pertains and the option price therefor.
Such price for each ISO shall be not less than 100% of the fair market
value of the shares on the date such option is granted. Such price for
each NSO shall be not less than 90% of the fair market value of the
shares on the date such NSO is granted. For all purposes of the Plan,
fair market value shall mean the closing price for the shares on the
valuation date, as reported in The Nasdaq Stock Market, Inc.'s
("NASDAQ") National Market. In the absence of reported sales on the
NASDAQ National Market on any trading date, fair market value shall be
the average of the reported closing bid and asked price for the stock
on the NASDAQ National Market on such date. Notwithstanding any other
provision in this Plan, for any eligible employee who, at the time an
ISO is granted, owns (directly and under the attributable rules of
Section 425(d) of the Code) stock possessing more than 10% of the
total combined voting power of First Northern (or any parent or
Subsidiary) the option price under such ISO shall be not less than
110% of the fair market value of the shares subject to such ISO and
such option, by its terms, shall not be exercisable after the
expiration of five years from the date such option is granted.
(b) Vesting of Options. Options may be exercised only in accordance with
the terms of each option contract. Unless the Committee determines
otherwise at the time of grant, no option shall be exercisable until
the optionee has completed at least the number of years of continuous
service from the date of grant of each option as follows, and then the
same shall be exercisable for any amount
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of shares covered by such option up to the maximum percentage
of shares covered thereunder as follows:
Number of Completed Years of Maximum Percentage of
Continuous Service After Shares Becoming Exercisable
the Date of Grant of Option Under the Option
---------------------------- -----------------------------
Less than 1 year Zero
At least 1 but less than 2 33 1/3%
At least 2 but less than 3 66 2/3%
At least 3 years 100%
To the extent provided in Article VI or Article VII, all options then
outstanding shall become immediately exercisable. No fractional shares
shall be issuable on exercise of any option and if the application of
the maximum percentage set forth above would result in a fractional
share, the number of shares exercisable shall be rounded up to the
next full share. Finally, the maximum fair market value of First
Northern stock (determined at the time of grant) covered by ISOs that
first become exercisable by any optionee in any calendar year is
limited to $100,000.
(c) Term of Options and Restriction on Exercise. Unless otherwise
determined by the Committee, all rights to exercise an ISO or NSO
shall expire ten years from the date of option grant. An NSO granted
in conjunction with an SAR under paragraph 8.01 shall only be
exercisable during such periods of time as may be allowed under Rule
16b-3. Although First Northern intends to exert its best efforts so
that the shares purchasable upon the exercise of an option will be
registered under, or exempt from the registration requirements of the
federal Securities Act of 1933 and any applicable state securities law
at the time the option becomes exercisable, if the exercise of an
option would otherwise result in the violation by First Northern of
any provision of such Act or of any state securities law, First
Northern may require that such exercise be deferred until First
Northern has taken appropriate action to avoid any such violation.
(d) Nontransferability. Except as provided in Section VI hereof:
(i)all options granted pursuant to the Plan shall not be transferable
except by will or the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by the optionee or by
his/her guardian or legal representative; and
(ii)no options or any privileges pertaining thereto or under the Plan
shall be transferred, assigned, pledged or hypothecated in any way,
whether by operation of law or otherwise, nor be subject to execution,
attachment or similar process.
(e) Method of Exercise and Payment of Purchase Price. Subject to (c)
above, an option may be exercised, as to all or part of the shares
covered by the option, by the optionee delivering to the Committee at
its principal business office on any business day, a written notice
specifying the number of shares the optionee desires to purchase. The
option price shall be paid in full in cash or, in the discretion of
the Committee, in shares of stock of First Northern which have been
beneficially owned by the optionee for at least six months prior to
the time of exercise, valued at their fair market value determined as
of the date of exercise, or in a combination thereof.
5.02 Rights as Shareholder. An optionee shall not be deemed the holder
of any shares covered by an option until such shares are fully paid and issued
to him/her after exercise of such option.
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VI. TERMINATION OF SERVICE
6.01 Death. In the event of the death of an optionee while in the
service of First Northern or its Subsidiaries, the options then held by such
optionee, whether or not otherwise exercisable at the time of such death, may be
exercised, by the estate of the optionee or by a person who acquired the right
to exercise such options by bequest or inheritance from such optionee, within
one year after the date of such death, but not later than the date on which the
options would otherwise expire. Any options or portions thereof not so exercised
shall terminate.
6.02 Disability. If the service of an optionee is terminated by reason
of disability (in case of an ISO, as defined in Section 105(d)(4) of the Code
and in case of an NSO, as determined by the Committee), the options then held by
such optionee may be exercised, whether or not otherwise exercisable at the time
of such termination, within one year after such termination, but not later than
the date on which the options would otherwise expire. Any options or portions
thereof not so exercised shall terminate.
6.03 Other Termination. If the service of an optionee is terminated for
any reason other than such death or disability, but is not terminated for cause,
options then held by such optionee to the extent that the same are exercisable
on the date of such termination may be exercised at any time within one year
thereafter (provided that any ISO exercised more than three months after the
optionee's termination of employment will not be eligible for tax treatment as
an ISO and instead will be treated as an NSO), but not later than the date on
which the options would otherwise expire. Notwithstanding the foregoing, if the
service of an optionee is terminated by retirement in accordance with First
Northern's normal retirement policies, as determined by the Committee, the
options then held by such optionee may be exercised, whether or not exercisable
at the time of such termination, within one year after the date of such
termination (provided that any ISO exercised more than three months after the
optionee's termination of employment will not be eligible for tax treatment as
an ISO and instead will be treated as an NSO), but not later than the date on
which the options would otherwise expire. Any options or portions thereof not so
exercised shall terminate. However, notwithstanding any other provision of the
Plan, if the service of an optionee is terminated for cause, as determined by
the Committee, all options then held by such optionee shall be deemed terminated
and not exercisable by such optionee.
6.04 Transfers and Leaves. A change in employment from First Northern
to a Subsidiary, or vice versa, shall not constitute termination of employment
for purposes of the Plan. The Committee may determine that for purposes of the
Plan, an optionee who is on leave of absence (but in the case of ISOs, only to
the extent that employment is not determined to be interrupted thereby for
purposes of Section 422 of the Code) will still be considered as in the
continuous employment of First Northern or a Subsidiary.
VII. CORPORATE SALE OR CHANGE
7.01 Sale or Change. In the event of a corporate sale or change, as
defined in paragraph 7.03, all options then outstanding shall be immediately
exercisable in full and the Committee shall, subject to the approval of the
Board of Directors of First Northern, or the board of directors of any
corporation assuming the obligations of First Northern hereunder, take action
regarding all outstanding and unexercised options pursuant to either clause (a)
or (b) below.
(a) Appropriate provisions may be made for the protection of such options
by the substitution on an equitable basis of appropriate shares of
First Northern, or of the merged, consolidated or otherwise
reorganized corporation, provided only that the excess of the
aggregate fair market value of the shares subject to such options
immediately before such substitution over the purchase price thereof
is not more than the excess of the aggregate fair market value of the
substituted shares made subject to option immediately after such
substitution over the purchase price thereof; or
(b) Upon written notice to the optionees, the Committee may require that
all options must be exercised within a specific number of days of the
date of such notice or they will be terminated on a stated date (the
"Advanced Termination Date").
7.02 Special Rule. If First Northern gives the notice provided by
clause (b) of paragraph 7.01 to any optionee who would incur liability to First
Northern for recapture of profits, under Section 16(b) of the Securities
Exchange Act
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of 1934, as amended, as a result of the purchase of shares upon the exercise of
such option and the subsequent disposition of those shares in the transaction
upon which such notice was based, then the following provisions shall apply. Any
such optionee may elect, at any time prior to the Advanced Termination Date, to
request First Northern in writing to repurchase such option. If such written
request is made, such option thereupon shall cease to be exercisable and
promptly after the Advanced Termination Date First Northern shall repurchase
such option for an amount of cash (less normal state and federal withholding
taxes) equal to two times the excess of the fair market value on the Advanced
Termination Date of the shares which were subject to the option over the option
exercise price.
7.03 Definition. The term "corporate sale or change" shall mean: (a) a
reorganization, merger or consolidation between First Northern and another
corporation in which the shareholders of First Northern immediately prior to
such combination own less than 65% of the voting securities in the combined
corporation, without regard to the entity which continues as the surviving
corporation, (b) the sale of substantially all the property of First Northern,
(c) the dissolution or liquidation of First Northern, or (d) a change in control
of First Northern. The term "control" shall refer to the acquisition of
beneficial ownership of 10% or more of the voting securities of First Northern
by any person or persons acting as a group within the meaning of Section 13(d)
of the Securities Exchange Act of 1934. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of equity not specifically listed herein; excluding, however, any employee
benefit plan (or related trust) sponsored or maintained by First Northern or any
corporation controlled by First Northern.
VIII. STOCK APPRECIATION RIGHTS
8.01 SAR Grants. Stock Appreciation Rights ("SARs") may be granted by
the Committee in conjunction with any NSO granted under this Plan, at the time
of the grant of such NSO, on the basis of up to .5 SARs for each share subject
to an NSO. All of the terms of this Plan respecting NSOs shall also apply to
SARs, subject to the further special rules of this paragraph and such other
terms and conditions not inconsistent therewith as the Committee may determine.
Accordingly, each SAR by its terms shall (l) become exercisable only when and to
the extent that the underlying NSO is eligible to be exercised, (2) become
transferable only when the underlying NSO is transferable and under the same
conditions, and (3) expire when the underlying NSO expires.
8.02 Method of Exercise. SARs may be exercised by an optionee
exercising the underlying NSO or applicable portion thereof. An optionee may not
exercise an SAR if the underlying NSO has not been exercised. As provided in
paragraph 8.01 above, SARs shall be exercisable at such time or times and only
to the extent that the underlying NSO is exercisable; further, with respect to
employees who are officers or directors of First Northern, SARs may be exercised
only during such periods of time as such may be allowed under Rule 16b-3. To the
extent that an NSO is exercised without a simultaneous exercise of the related
SARs, the related SARs shall terminate. Notwithstanding the foregoing, if an
optionee elects to have First Northern repurchase an option pursuant to
paragraph 7.02 above, the related SARs shall be deemed exercised as of the
Advanced Termination Date.
8.03 Payment. Upon such exercise of an SAR the optionee shall become
entitled to receive in cash (less normal state and federal withholding taxes)
the economic value of such SAR. Such economic value shall be equal to the excess
of the fair market value (determined on the date of exercise of such SAR) of one
share of stock over the option price per share specified in the underlying NSO,
multiplied by the number of SARs exercised.
IX. RESTRICTED STOCK
9.01 Administration. Shares of restricted stock may be issued either
alone or in addition to other Awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which grants of
restricted stock will be made, the number of shares to be awarded, the time or
times within which such Awards may be subject to forfeiture and any other terms
and conditions of the Awards. The Committee may condition the grant of
restricted stock upon the attainment of specified performance goals or such
other factors or criteria as the Committee shall determine. The provisions of
restricted stock Awards need not be the same with respect to each recipient.
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9.02 Awards and Certificates. Each individual receiving a restricted
stock Award shall be issued a certificate in respect of such shares of
restricted stock. Such certificate shall be registered in the name of such
individual and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the First Northern Capital Corp. 1999 Stock Plan and a
Restricted Stock Agreement. Copies of such Plan and Agreement are on
file at the corporate office of First Northern Capital Corp."
The Committee may require that the certificates evidencing such shares
be held in custody by First Northern until the restrictions thereon shall have
lapsed and that, as a condition of any restricted stock Award, the grantee shall
have delivered a stock power, endorsed in blank, relating to the stock covered
by such Award.
9.03 Terms and Conditions. Shares of restricted stock shall be subject
to the following terms and conditions:
(a) Until the applicable restrictions lapse, the grantee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber
shares of restricted stock.
(b) The grantee shall have, with respect to the shares of restricted
stock, all of the rights of a stockholder of First Northern, including
the right to vote the shares and the right to receive any cash
dividends. Unless otherwise determined by the Committee, cash
dividends shall be automatically paid in cash and dividends payable in
stock shall be paid in the form of additional restricted stock.
(c) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement and (d) below, all shares still subject to restriction
shall be forfeited by the grantee upon termination of a grantee's
service for any reason.
(d) In the event of hardship or other special circumstances of a grantee
whose service is involuntarily terminated (other than for cause), the
Committee may waive in whole or in part any or all remaining
restrictions with respect to such grantee's shares of restricted
stock.
(e) If and when the applicable restrictions lapse, unlegended certificates
for such shares shall be delivered to the grantee.
(f) Each Award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
X. MISCELLANEOUS
10.01 Term of Plan and Effective Date. Awards may be granted under this
Plan at any time up until the expiration of ten years following the Effective
Date of the Plan; on which date the Plan shall expire, except as to outstanding
Awards, which Awards shall remain in effect until they have been exercised or
have expired in the case of options, or have become unrestricted or forfeited in
the case of restricted stock. The Effective Date of the Plan shall be January
21, 1999, the date of its adoption by the Board of Directors of First Northern,
subject, however, to approval by the shareholders of First Northern within a
period of twelve months after such adoption. Notwithstanding any other provision
hereof, no Awards granted hereunder shall be exercisable or become unrestricted
until after such shareholder approval has been obtained.
10.02 No Employment or Retention Agreement Intended. The grant of an
Award hereunder shall not be deemed to imply the right to continued service in
any capacity by First Northern or a Subsidiary and shall not constitute an
employment agreement or retention agreement of any kind.
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10.03 Separate Plan. This Plan is separate and independent from any
other stock option plan or similar plan of First Northern.
10.04 Amendment or Discontinuance. The Board of Directors of First
Northern may amend or discontinue this Plan at any time, but may not, without
the consent of the holder to whom an Award has been granted, make any alteration
in such Award which would adversely affect the same, or make any amendment
without shareholder approval if such approval would be required in order to
comply with applicable laws, regulations or the requirements of the NASDAQ
National Market.
10.05 Liability. No member of the Board of Directors, or the Committee,
or the officers or employees of First Northern shall be personally liable for
any action, omission or determination made in good faith in connection with the
Plan.
10.06 Government and Other Regulations. The obligations of First
Northern to sell and deliver shares of stock under this Plan shall be subject to
all applicable laws, rules and regulations and the obtaining of all such
approvals by the governmental agencies as may be deemed necessary or desirable
by the Board of Directors of First Northern, including (without limitation) the
satisfaction of all applicable federal, state and local tax withholding
requirements.
10.07 Withholding Taxes. All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case of
distributions in First Northern common stock, the participant or other recipient
may, as a condition precedent to the delivery of said common stock, be required
to pay to his/her participating employer the excess if any, of the amount of
required withholding if any, from distributions in cash under the Plan. The
required withholding may be paid in full or in the discretion of the Committee,
in shares of stock of First Northern, valued at its fair market value as of the
date the withholding obligation arises, or in a combination thereof. Any such
request or election (to satisfy a withholding obligation using shares) by an
individual who is subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 shall be made in accordance with the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. No
distribution under the Plan shall be made in fractional shares of First
Northern's common stock but the proportional market value thereof shall be paid
in cash.
10.08 Governing Law. This Plan and any option contracts and Restricted
Stock Agreements extended pursuant hereto shall be interpreted and enforced in
accordance with the laws of the State of Wisconsin.
A-7
30
FIRST NORTHERN CAPITAL CORP.
PROXY/VOTING INSTRUCTIONS FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas J. Lopina, Sr. and Michael D.
Meeuwsen, and each of them, as proxies, with full power of substitution, and
hereby authorizes them to represent and to vote all shares of common stock
which the undersigned is entitled to vote, with all powers the undersigned
would possess if personally present, at the Annual Meeting of Stockholders of
First Northern Capital Corp. ("First Northern") to be held at the Holiday Inn
City Centre, 200 Main Street, Green Bay, Wisconsin, at 10:00 a.m., Central
Time, on Wednesday, April 28, 1999, or at any adjournment thereof, as follows,
hereby revoking any proxy previously given:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1 AND PROPOSAL 2.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1 AND
PROPOSAL 2.
(SEE REVERSE SIDE TO VOTE)
31
FIRST NORTHERN CAPITAL CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(SEE REVERSE SIDE)
- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
FIRST NORTHERN CAPITAL CORP. 1999 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1 - HOWARD M. FRANKENTHAL 2 - RICHARD C. SMITS / / FOR all nominees / / WITHHOLD AUTHORITY
listed to the left to vote for all
(except as specified nominees listed
below). to the left.
__________________________________
(Instructions: To withhold authority to vote for any individual nominee, write ---------> | |
the number(s) of the nominee(s) in the box provided to the right.) |_________________________________ |
2. PROPOSAL TO APPROVE THE FIRST NORTHERN 1999 STOCK PLAN
The Board of Directors unanimously recommends that the stockholders vote FOR approval
of this proposal. / / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxy holders are authorized to vote on such other matters as may properly come before the Annual
Meeting or any adjournment thereof, all as described and set forth in the Notice and Proxy Statement relating to the Annual
Meeting, receipt of which are hereby acknowledged.
If you hold shares of First Northern common stock in First Northern's Dividend Reinvestment Plan or First Northern Savings Bank,
S.A.'s 401(k) Savings Plan, this proxy constitutes voting instructions for any shares so held by the undersigned.
Check box to NO. OF SHARES
Indicate Address Change. / / Date ______________________
Indicate changes below: __________________________________
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SIGNATURE(S) IN BOX
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AN
AUTHORIZED PERSON.