**Exhibit 10.5**

 

**DON HARRIS**

 

**EMPLOYMENT AGREEMENT**

 

**AMENDMENT NUMBER 1**

 

**THIS EMPLOYMENT AGREEMENT AMENDMENT 1**(this “**Amendment**”),effective as of December 10, 2008 (the “**EffectiveDate**”), by and between **FIRST NATIONAL BANK OFOTTAWA**, a national banking association**(**the“**Bank**”), and **DON HARRIS**(the “**Executive**”).

 

**RECITALS**

** **

**WHEREAS,** the Bank and the Executive previously entered intothat certain Employment Agreement dated July 2, 2005 (the “**Agreement**”);

 

**WHEREAS,** the Bank and the Executive desire to amend certainprovisions of the Agreement in order to bring such provisions into compliancewith the applicable provisions of Section 409A of the Internal RevenueCode of 1986, as amended (and guidance issued thereunder) (collectivelyreferred to herein as “**Section 409A**”);

 

**WHEREAS,** pursuant to Section 12(d) of the Agreement,the Agreement may be amended in writing with the signature of each party; and

 

**WHEREAS,** the parties desire to amend the Agreement on theterms hereinafter set forth.

 

**NOW, THEREFORE,** for good and valuable consideration, thesufficiency of which is agreed and acknowledged by the parties hereto,effective as of the Effective Date, the Agreement is amended to read asfollows:

 

**AGREEMENTS**

** **

# **1.**                                       Section 3(b) ofthe Agreement is amended by adding the following sentence to the end thereof:

# ** **

“The employee bonuspayment and the “Impact Group” bonus payment, if any, shall be paid as soon aspracticable, but in no event later than two and one-half (21⁄2) months followingthe end of the year in which they are earned.”

 

2.                                       Section 4(a) of the Agreementis amended by deleting the apostrophe in the term “coverages”.

 

3.                                       Section 4(c) of the Agreementis amended by adding the following sentence to the end thereof:

 

“To the extent any duesor expenses payable under this Section 4(c) are to be paid

 

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in the form of areimbursement to the Executive, such reimbursement shall be made as soon aspracticable, but in no event later than two and one-half (21⁄2) months followingthe end of the year in which the corresponding dues or expenses are incurred.”

 

4.                                       The lastsentence of Section 9(b) of the Agreement is amended in its entiretyand replaced with the following sentences:

 

“In the event of termination pursuant to this Section 9(b),Executive shall be entitled to his Base Salary for what would have been theremainder of the then-current term of this Agreement (less any amount describedin the next sentence of this Section 9(b)), which amounts shall be paid inequal installments over what would have been the remainder of the term of thisAgreement pursuant to the Bank’s payroll schedule.  To the extent any portion of the paymentsprovided under this Section 9(b) exceeds the “safe harbor” amountdescribed in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), theExecutive shall receive such portion of the amount due under this Section 9(b) thatexceeds the “safe harbor” amount in a single lump sum payment payable withinfive (5) days after the Executive’s termination of employment.”

 

5.                                       Section 9(c) ofthe Agreement is amended by adding the following sentence to the end thereof:

 

“Anyamounts due under this Section 9(c) shall be paid to the Executive,or his estate in the event of his death, as soon as administrativelypracticable following the Executive’s termination of employment.”

 

6.                                       A new sentenceis added to the end of Section 9(d) of the Agreement to read asfollows:

 

“Notwithstandingthe foregoing, if such Change of Control does not meet the definition of eithera “change in the ownership,” a “change in the effective control” or a “changein the ownership of a substantial portion of the assets” of the Company under Section 409Aof the Code, or any successor thereto, payment will be made in the same formand at the same time as under Section 9(b) to the extent requiredunder Code Section 409A.”

 

6.             The fifth sentence of Section 9(e) ofthe Agreement is amended to read as follows:

 

“Inthe event that such opinions determine that there would be an excess parachutepayment, the payment hereunder or any other payment  determined by such counsel to be includablein Total Payments shall be modified, reduced or eliminated as specified by theExecutive in writing delivered to the Bank within sixty (60) days of hisreceipt of such opinions or, if the Executive fails to so notify the Bank, thenas the Bank shall reasonably determine, so that under the bases of calculationset forth in such opinions there will be no excess parachute payment; provided,however, that any such specification by Executive or Bank shall not be 

 

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effectivewhere it would result in an imposition of any additional income tax under Section 409Aof the Code.”

 

7.             A new subsection 9(f) is addedto the Agreement to read as follows:

 

“(f)          Separation from Service Required.** **Notwithstanding any provision of this Agreement to thecontrary, no payment shall be due to Executive pursuant to this Section 9 as a result of histermination of employment, whether such termination is at the election of Bankor Executive, unless such termination of employment satisfies the definition ofa “separation from service” under Section 409A****of the Code.”

 

8.             A new Section 13is added to the Agreement to read as follows:

 

**“Section 13.         CodeSection 409A.**

 

(a)                                  To the extent that any ofthe terms and conditions contained herein which were modified by AmendmentNumber 1 (the “Amendment”)****constitute anamendment or modification of the time or manner of payment under anon-qualified deferred compensation plan (as defined under Code Section 409A(and the guidance issued thereunder) (collectively referred to herein as “Code Section 409A”)),then to the extent necessary under the transitional guidance under InternalRevenue Service Notice 2007-86, this Agreement, as amended by the Amendment,constitutes an amendment to, and a new election under, such deferredcompensation plan, in order to properly modify the time or manner of paymentconsistent with such guidance.

 

(b)                                 It is intended that theAgreement shall comply with the provisions of Code Section 409A so as notto subject Executive to the payment of additional taxes and interest under CodeSection 409A.  In furtherance ofthis intent, this Agreement shall be interpreted, operated and administered ina manner consistent with these intentions, and to the extent that anyregulations or other guidance issued under Code Section 409A would resultin the Executive being subject to payment of additional income taxes orinterest under Code Section 409A, the parties agree to amend the Agreementto maintain, to the maximum extent practicable, the original intent of theAgreement while avoiding the application of such taxes or interest under Code Section 409A.

 

(c)                                  Notwithstanding anyprovision in the Agreement to the contrary if, as of the effective date ofExecutive’s termination of employment, he is a “Specified Employee,” then, onlyto the extent required pursuant to Section 409A(a)(2)(B)(i), payments dueunder this Agreement which are deemed to be deferred compensation shall besubject to a six (6) month delay following the Executive’s separation fromservice.  For purposes of 

 

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Code Section 409A, all installment payments of deferredcompensation made hereunder, or pursuant to another plan or arrangement, shall bedeemed to be separate payments and, accordingly, the aforementioned deferralshall only apply to separate payments which would occur during the six (6) monthdeferral period and all other payments shall be unaffected.  All delayed payments shall be accumulated andpaid in a lump-sum catch-up payment as of the first day of the seventh-monthfollowing separation from service (or, if earlier, the date of death of theExecutive) with all such delayed payments being credited with interest(compounded monthly) for this period of delay equal to the prime rate in effecton the first day of such six-month period. Any portion of the benefits hereunder that were not otherwise due to bepaid during the six-month period following the termination shall be paid to theExecutive in accordance with the payment schedule established herein.

 

(d)                                 The term “**Specified Employee**” shall mean any personwho is a “key employee” (as defined in Code Section 416(i) withoutregard to paragraph (5) thereof), as determined by the Bank based upon the12-month period ending on each December 31st (such 12-month period isreferred to below as the “identification period”).  If Executive is determined to be a keyemployee under Code Section 416(i) (without regard to paragraph (5) thereof)during the identification period he shall be treated as a Specified Employeefor purposes of this Agreement during the 12-month period that begins on the April 1following the close of such identification period.  For purposes of determining whether Executiveis a key employee under Code Section 416(i), “compensation” shall meanEmployee’s W-2 compensation as reported by the Bank for a particular calendaryear.”

 

*[Signature page to follow]*

 

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All other terms and conditionsof the Agreement remain in full force and effect.

 

**IN WITNESS WHEREOF**, the parties hereto have executed this Agreement asof the date and year first above set forth.

 

 
| By:    | /s/ Joachim Brown                             |             | /s/ Don Harris |
|--------|-----------------------------------------------|------------------|----------------|
| Name:  | Joachim Brown                                 |             | Don Harris     |
| Its:   | President &  Chief Executive Officer |             |           |
|   |                                          |             |
|   |                                          | 300 Palmor Drive |
|   |                                          | Ottawa, IL 61350 |
|   |                                          | [Address]        |

 

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