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Exhibit 10.3 PRINCETON NATIONAL BANCORP,
INC.
2005 DEFERRED COMPENSATION PLAN
1. Establishment . Princeton National Bancorp, Inc., a
Delaware corporation (the "Company"), hereby amends and restates
the Princeton National Bancorp, Inc. 2005 Deferred Compensation
Plan (the "Plan") in order to comply with the applicable provisions
of the American Jobs Creation Act of 2004.
2. Effective Date . The
Plan shall become effective January 1, 2005.
3. Purpose . The Plan
has the purpose of advancing the interests of the Company, the
Company’s subsidiary corporation and the shareholders of the
Company by helping the Company attract and retain the services of
highly qualified executives, upon whose judgment, initiative and
efforts the Company is substantially dependent. The Plan also has
the objective of providing a means for executives of the Company to
accumulate savings through deferral of the payment of their
Compensation and to defer the taxation of such Compensation.
4. Compliance with Law .
The Company intends that this Plan comply with the applicable
provisions of applicable law, including, by way of example and not
limitation, Section 409A of the Internal Revenue Code of 1986
("Section 409A") and the regulations promulgated thereunder.
Any provision of this Plan which is not in compliance with such
laws shall be deemed amended in such matter as is necessary to
comply with applicable law and the Participant’s rights under
this Plan shall be subject to the provisions of the Plan so
amended. 5. Definitions
Bank . The term "Bank" shall
mean Citizens First National Bank.
Board of Directors . The term "Board of Directors" or
"Board" shall mean the Board of Directors of the Company.
Change in Control . A "Change
in Control" shall be deemed to occur on the earliest of:
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(i)
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The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership, as that term is defined in Rule 13d-3
under the Exchange Act, of capital stock of Company entitled to
exercise more than 30% or more of the outstanding voting power of
all capital stock of Company entitled to vote for the election of
directors ("Voting Stock");
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(ii)
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The commencement by any entity, person, or group (other than
Company or a subsidiary of Company) of a tender offer or an
exchange offer for more than 30% of the outstanding Voting Stock of
Company;
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(iii)
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The effective time of (A) a merger or consolidation of
Company with one or more other corporation as a result of which the
holders of the outstanding Voting Stock of Company immediately
prior to such merger or consolidation hold less than 70% of the
Voting Stock of the surviving or resulting corporation or
(B) a transfer of 30% or more of the Voting Stock, or
substantially all of the property of Company, other than to an
entity of which Company owns at least 50% of the Voting Stock;
or
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(iv)
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The effective time of (A) a merger or consolidation of the
Bank with one or more other corporations as a result of which the
holders of the outstanding Voting Stock of the Bank immediately
prior to such merger or consolidation hold less than 70% of the
Voting Stock of the surviving or resulting corporation or
(B) a transfer of 30% or more of the Voting Stock, or
substantially all of the property of the Bank, other than to an
entity of which Company or the Bank owns at least 50% of the Voting
Stock.
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Notwithstanding
the above, no event shall be considered a Change of Control, unless
the event also constitutes a change in the ownership or effective
control pursuant to Code Section 409A(a)(2)(A)(v) and the final
regulations promulgated thereunder.
Company . The term "Company" shall mean the Princeton
National Bancorp, Inc., a Delaware Corporation and its successors
and assigns. Compensation .
The term "Compensation" shall mean the total salary, bonus and
other cash compensation payable to a Participant.
Compensation Committee . The
term "Compensation Committee" shall mean the Compensation Committee
of the Company’s Board of Directors.
Crediting Rate . Except as
provided below, for any Plan Year, the term "Crediting Rate" shall
mean the prime rate as of the first day of the applicable Plan Year
minus one and one-half percent. Effective for Plan Years beginning
on or after January 1, 2009, the term "Crediting Rate" shall
mean the greater of the prime rate as of the first day of the
applicable Plan Year minus one and one-half percent or four percent
(4%). In all cases, the prime rate shall be the prime rate that is
published in the Wall Street Journal, Midwest Edition.
Deferral Account . The term
"Deferral Account" shall have the meaning given in Section 7
of the Plan. Discretionary
Contribution . The term "Discretionary Contribution" shall mean
a contribution by the Company to a Participant’s Deferral
Account as authorized by the Compensation Committee of the Board of
Directors of the Bank, in its sole discretion. Such contributions
may be authorized and further subject to the terms and conditions
of an employment agreement between the Company and a
Participant.
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Discretionary Contribution
Account . The term "Discretionary Contribution Account" shall
mean the portion of the Deferral Account attributable to
Discretionary Contributions.
Disability . The term "Disability" shall mean an inability
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months or is by reason of any
medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period
of not less than 3 months under an accident and health plan
covering employees of the Company.
Election Agreement . The term "Election Agreement" shall
mean each and every Election Agreement executed by an Eligible
Executive and delivered to the Company hereunder, the form of which
is attached to the Plan as Exhibit A, and is incorporated by
reference herein. Eligible
Executive . The term "Eligible Executive" shall mean any
present or future executive of the Company, or any affiliate of
Company, that adopts this Plan.
Key Employee . The term "Key Employee" shall have the
meaning as set forth in Section 416(i) of the Internal Revenue Code
of 1986. Matching
Contribution . The term "Matching Contribution" shall mean any
contribution to a Participant’s Deferral Account made by the
Company, in its sole discretion, based on the amount of the
Participant’s deferral of Compensation.
Participant . The term
"Participant" shall mean any past or present Eligible Executive who
has executed and delivered an Election Agreement to the Company.
The Compensation Committee shall have the discretion to determine
whether any executive of the Company shall be eligible to
participate in this Plan, provided that the executive selected for
participation in the Plan is a member of a select group of
management or a highly compensated employee.
Payment Date . The term
"Payment Date" shall mean the earliest to occur of the following
dates:
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(i)
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Separation from Service, or in the case of a Key Employee,
6 months following Separation from Service; or;
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(ii)
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the Participant’s death;
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(iii)
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the Participant’s Separation from Service due to
Disability;
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(iv)
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the date of a Change in Control of the Company; or
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(v)
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the date of an Unforeseeable Emergency.
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Plan. The term "Plan"
shall mean the Princeton National Bancorp 2005 Deferred
Compensation Plan, as it may be amended from time to time.
Plan Year . The Plan Year
shall be January 1 to December 31 of each year.
Separation from Service . The
term "Separation from Service" shall mean the Participant’s
termination of employment for any reason other than death provided
that the termination of employment is a Separation from Service as
defined in Section 409A and the regulations promulgated
thereunder. Specified
Employee . The term "Specified Employee" shall mean a key
employee (as defined in Section 416(i) of the Code without regard
to paragraph 5 thereof) of the Company or its Affiliates if any
stock of the Company is publicly traded on an established
securities market or otherwise.
Unforeseeable Emergency. The term "Unforeseeable Emergency"
shall mean a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the
Participant’s spouse, or a dependent of the Participant, loss
of the Participant’s property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.
6. Executive Elections .
Each Eligible Executive shall be given an opportunity by the
Company on an annual basis to defer Compensation which such
Eligible Executive has the opportunity to earn during the next
succeeding Plan Year through service as an Eligible Executive. In
order to participate in the Plan for a particular Plan Year, an
Eligible Executive must elect in writing to participate, and such
election must be made at least one month prior to the first day of
the applicable Plan Year, unless otherwise specified by the
Compensation Committee, except that the election for the first Plan
Year may be made at any time prior to the first day of its
effective date. Newly Eligible Executives shall make his or her
election within 30 days following the date on which he or she
first becomes eligible to participate in the Plan. An Eligible
Executive may elect to defer receipt of any portion of Compensation
payable for the next succeeding Plan Year. An Eligible Executive or
Participant may not change an election for a Plan Year on or after
the first day of that Plan Year (except in the case of an
Unforeseeable Emergency, and then, only to the extent permitted by
Section 409A and the regulations promulgated thereunder, as
determined by the Compensation Committee).
To make an effective election, a
properly completed and executed Election Agreement must be received
by the Company at the address specified on such Election Agreement.
7. Deferral Account
(a) Establishment of Deferral Account . The Company
shall establish and maintain a Deferral Account for each
Participant. The Deferral Account shall reflect all entries
required to be made pursuant to the terms and conditions of the
Participant’s Election Agreements made under Plan.
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(b) Credits to Deferral Account . The Company shall
credit to a Participant’s Deferral Account the Compensation
that would be payable to the Participant, had the Participant not
elected to participate in the Plan. Such crediting shall occur as
of the date on which the Participant would have otherwise received
the Compensation being deferred pursuant to the Plan absent the
Participant’s deferral election.
The
Participant’s Deferral Account shall be credited with a
Matching Contribution as of the date and in such amount as is
determined by the Company in its sole discretion.
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