Exhibit 10.2
QUAD CITY BANK AND TRUST COMPANY
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this 29th day of June 2001, by and between Quad City Bank
and Trust Company, a state chartered commercial bank located in Bettendorf,
Iowa. (the "Company"), and Larry J. Helling (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the Company is
willing to provide to the Executive a deferred compensation opportunity together
with matching contributions by the Company. The Company will pay the Executive's
benefits from the Company's general assets.
AGREEMENT
The Executive and the Company agree as follows:
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:
1.1 "Anniversary Date" means June 30 of each year.
1.2 "Change of Control" means:
a) The consummation of the acquisition by any person (as such
term is defined in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 33 percent or more of the
combined voting power of the then outstanding voting
securities of the Company; or
b) The individuals who, as of the date hereof, are members of the
Board of Directors of the Company (the "Board") cease for any
reason to constitute a majority of the Board, unless the
election, or nomination for election by the stockholders, of
any new director was approved by a vote of a majority of the
Board, and such new director shall, for purposes of this
Agreement, be considered a member of the Board; or
c) Approval by stockholders of the Company of (1) a merger or
consolidation if the stockholders, immediately before such a
merger or consolidation, do not, as a result of such merger or
consolidation, own, directly or indirectly, more than 67
percent of the combined voting power of the then outstanding
voting securities of the entity resulting from such merger or
consolidation, in substantially the same proportion as their
ownership of the combined voting power of the voting
securities outstanding immediately before such merger or
consolidation, or (2) a complete liquidation or dissolution or
an agreement for the sale or other disposition of two-thirds
or more of the consolidated assets of the Company.
Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur solely because 33 percent or more of the
combined voting power of the then outstanding securities of
the Company are acquired by (1) a trustee or other fiduciary
holding securities under one or more employee benefit plans
maintained for employees of the entity, or (2) any corporation
which, immediately prior to such acquisition, is owned
directly or indirectly by the stockholders in the same
proportion as their ownership of stock immediately prior to
such acquisition.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Company" means Quad City Bank and Trust Company.
1.5 "Compensation" means the total salary and bonus paid to the Executive
during a Plan Year.
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1.6 "Deferral Account" means the Company's accounting of the Executive's
accumulated Deferrals plus accrued interest.
1.7 "Deferrals" means the amount of the Executive's Compensation which the
Executive elects to defer according to this Agreement.
1.8 "Disability" means, if the Executive is covered by a Company sponsored
disability policy, total disability as defined in such policy without
regard to any waiting period. If the Executive is not covered by such a
policy, Disability means the Executive suffering a sickness, accident
or injury, which, in the judgment of a physician satisfactory to the
Company, prevents the Executive from performing substantially all of
the Executive's normal duties for the Company. As a condition to any
Disability benefits, the Company may require the Executive to submit to
such physical or mental evaluations and tests as the Company's Board of
Directors deems appropriate.
1.9 "Effective Date" means June 29, 2001.
1.10 "Election Form" means the Form attached as Exhibit 1.
1.11 "Fiscal Year" means a twelve-month period commencing on July 1 of one
year and ending June 30 of the following year.
1.12 "Normal Retirement Age" means the Executive's 65th birthday.
1.13 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Employment.
1.14 "Plan Year" means Fiscal Year.
1.15 "Termination of Employment" means that the Executive ceases to be
employed by the Company for any reason whatsoever other than by reason
of a leave of absence which is approved by the Company. For purposes of
this Agreement, if there is a dispute over the employment status of the
Executive or the date of the Executive's Termination of Employment, the
Company shall have the sole and absolute right to decide the dispute.
Article 2
Deferral Election
2.1 Initial Election. The Executive shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form
within thirty (30) days after the Effective Date of this Agreement. The
Election Form shall set forth the amount of Compensation to be deferred
and shall be effective to defer only Compensation earned after the date
the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Executive may
modify the amount of Compensation to be deferred annually by
filing a new Election Form with the Company prior to the
beginning of the Plan Year in which the Compensation is to be
deferred. The modified deferral election shall not be
effective until the Fiscal Year following the year in which
the subsequent Election Form is received and approved by the
Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury,
catastrophe or similar event outside the control of the
Executive occurs, the Executive, by written instructions to
the Company, may reduce future deferrals under this Agreement.
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Article 3
Deferral Account
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Executive and shall credit to the Deferral
Account the following amounts:
3.1.1 Deferrals. The Compensation deferred by the Executive as of
the time the Compensation would have otherwise been paid to
the Executive.
3.1.2 Matching Contribution. A matching contribution equal to (and
credited to the Deferral Account at the same time as) the
amounts credited to the Deferral Account under Section 3.1.1,
subject to an annual maximum matching contribution of 100
percent of the Compensation deferred by the Executive, said
matching contribution not to exceed $12,000 (Twelve Thousand
Dollars) annually; (prorated for any partial year of
participation).
3.1.3 Interest. On each Anniversary Date of this Agreement and
continuing until all benefit payments under this Agreement
have been made, interest is to be accrued on the account
balance and compounded at an annual rate equal to the Wall
Street Journal Prime Rate on the first business day of the
Plan Year. This interest rate shall have a minimum or floor of
8% and shall not exceed 10%.
3.2 Statement of Accounts. The Company shall provide to the Executive,
within one hundred twenty (120) days after each Anniversary Date, a
statement setting forth the Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account
is not a trust fund of any kind. The Executive is a general unsecured
creditor of the Company for the payment of benefits. The benefits
represent the mere Company promise to pay such benefits. The
Executive's rights are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by the Executive's creditors.
Article 4
Lifetime Benefits
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Executive the benefit described in this Section 4.1 in
lieu of any other benefit under this Agreement.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Executive's Normal Retirement
Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in 180 equal monthly installments commencing on the
first day of the month following the Executive's Normal
Retirement Date. The Company shall credit interest pursuant to
Section 3.1.3 on the remaining account balance during any
applicable installment period.
4.2 Early Retirement Benefit. Upon Termination of Employment prior to the
Normal Retirement Age for reasons other than death, Change of Control
or Disability, the Company shall pay to the Executive the benefit
described in this Section 4.2 in lieu of any other benefit under this
Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Executive's Termination of
Employment.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in 180 equal monthly installments commencing on the
first day of the month following the Executive's Termination
of Employment. The Company shall credit interest pursuant to
Section 3.1.3 on the remaining account balance during any
applicable installment period.
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4.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 4.3 in lieu of any
other benefit under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Executive's Termination of
Employment.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in 180 equal monthly installments commencing on the
first day of the month following the Executive's Termination
of Employment. The Company shall credit interest pursuant to
Section 3.1.3 on the remaining account balance during any
applicable installment period.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Executive the benefit described in this Section 4.4 in lieu
of any other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 shall be
the greater of: (a) the Deferral Account balance at the
Executive's Termination of Employment; or (b) $1,130,000 (One
Million One Hundred Thirty Thousand Dollars).
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in a lump sum within 60 days following the
Executive's Termination of Employment.
4.4.3 Obligation to Fund. Notwithstanding any provision to the
contrary contained herein, no later than the date of a Change
of Control, the Company shall fund a "Rabbi Trust" (as such
term is described in Revenue Procedure 92-64) in the amount of
the payment required under Section 4.4.1, with the trustee of
such trust being designated by the Board in its sole and
absolute discretion.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Executive) that the Executive has suffered
an unforeseeable financial emergency as described in Section 2.2.2, the
Company shall distribute to the Executive all or a portion of the
Deferral Account balance as determined by the Company, but in no event
shall the distribution be greater than is necessary to relieve the
financial hardship.
Article 5
Death Benefits
5.1 Death During Active Service. If the Executive dies while in the
employment of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in this Section 5.1 in lieu of any
other benefit under this Agreement.
5.1.1 Amount of Benefit. The benefit under Section 5.1 is the
greater of: (a) the Deferral Account balance; or (b)
$1,130,000 (One Million One Hundred Thirty Thousand Dollars).
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
beneficiary in the manner elected by the Executive on the
attached Beneficiary Designation form, or as such form may
have been amended by the Executive prior to his death. In the
event that the death benefit hereunder is paid in
installments, the Company shall credit interest pursuant to
Section 3.1.3 on the remaining account balance during any
applicable installment period.
5.2 Death During Payment of a Lifetime Benefit. If the Executive dies after
any Lifetime Benefit payments have commenced under this Agreement but
before receiving all such payments, the Company shall pay the remaining
benefits to the Executive's beneficiary at the same time and in the
same amounts they would have been paid to the Executive had the
Executive survived.
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5.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Executive is entitled to a Lifetime Benefit
under this Agreement, but dies prior to the commencement of said
benefit payments, the Company shall pay the Lifetime Benefit to the
Executive's beneficiary that the Executive was entitled to prior to
death except that the benefit payments shall commence on the first day
of the month following the date of the Executive's death.
Article 6
Beneficiaries
6.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new
designation. However, designations will only be effective if signed by
the Executive and accepted by the Company during the Executive's
lifetime. The Executive's beneficiary designation shall be deemed
automatically revoked if the beneficiary predeceases the Executive or
if the Executive names a spouse as beneficiary and the marriage is
subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's
estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to
the guardian, legal representative or person having the care or custody
of such minor, incompetent person or incapable person. The Company may
require proof of incompetence, minority or guardianship as it may deem
appropriate prior to distribution of the benefit. Such distribution
shall completely discharge the Company from all liability with respect
to such benefit.
Article 7
General Limitations
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this
Agreement that is attributable to the Company match credited under
Section 3.1.2 of this Agreement and the interest earned on the Deferral
Account if the Company terminates the Executive's employment for:
(a.) A material violation by the Executive of any applicable
material law or regulation respecting the business of the
Company;
(b) The Executive being found guilty of a felony, an act of
dishonesty in connection with the performance of his duties as
an officer of the Company, or which disqualifies the Executive
from serving as an officer or director of the Company or the
Company; or
(c) The willful or negligent failure of the Executive to perform
his duties for the Company or the Company in any material
respect.
7.2 Suicide or Misstatement. The Company shall not pay any death benefit
under this Agreement exceeding the Deferral Account if the Executive
commits suicide within two years after the date of this Agreement, or
if the Executive has made any material misstatement of fact on any
application for life insurance purchased by the Company.
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7.3 Excess Parachute Payment. If it is determined, in the opinion of the
Company's independent accountants, in consultation, if necessary, with
the Company's independent legal counsel, that any amount paid under
this Agreement due to a Change of Control, either separately or in
conjunction with any other payments, benefits and entitlements received
by the Executive in respect of a Change of Control under any other plan
or agreement under which the Executive participates or to which he is a
party, would constitute an "Excess Parachute Payment" within the
meaning of Section 280G of the Code, and thereby be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then
in such event the Company shall pay to the Executive a "grossing-up"
amount equal to the amount of such Excise Tax, plus all federal and
state income or other taxes with respect to the payment of the amount
of such Excise Tax, including all such taxes with respect to any such
grossing-up amount. If, at a later date, the Internal Revenue Service
assesses a deficiency against the Executive for the Excise Tax which is
greater than that which was determined at the time such amounts were
paid, then the Company shall pay to the Executive the amount of such
unreimbursed Excise Tax plus any interest, penalties and reasonable
professional fees or expenses incurred by the Executive as a result of
such assessment, including all such taxes with respect to any such
additional amount. The highest marginal tax rate applicable to
individuals at the time of the payment of such amounts will be used for
purposes of determining the federal and state income and other taxes
with respect thereto. The Company shall withhold from any amounts paid
under this Agreement the amount of any Excise Tax or other federal,
state or local taxes then required to be withheld with respect to the
amount paid hereunder. Computations of the amount of any grossing-up
supplemental compensation paid under this subparagraph shall be
conclusively made by the Company's independent accountants, in
consultation, if necessary, with the Company's independent legal
counsel. If, after the Executive receives any gross-up payments or
other amount pursuant to this Section 7.3, the Executive receives any
refund with respect to the Excise Tax, the Executive shall promptly pay
the Company the amount of such refund within ten (10) days of receipt
by the Executive.
Article 8
Claims and Review Procedures
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against the Agreement (the "Claimant") in writing, within
90 days of Claimant's written application for benefits, of his or her
eligibility or non-eligibility for benefits under the Agreement. If the
Company determines that the Claimant is not eligible for benefits or
full benefits, the notice shall set forth (1) the specific reasons for
such denial, (2) a specific reference to the provisions of the
Agreement on which the denial is based, (3) a description of any
additional information or material necessary for the Claimant to
perfect his or her claim, and a description of why it is needed, and
(4) an explanation of the Agreement's claims review procedure and other
appropriate information as to the steps to be taken if the Claimant
wishes to have the claim reviewed. If the Company determines that there
are special circumstances requiring additional time to make a decision,
the Company shall notify the Claimant of the special circumstances and
the date by which a decision is expected to be made, and may extend the
time for up to an additional 90 days.
8.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is
entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Company by filing a
petition for review with the Company within 60 days after receipt of
the notice issued by the Company. Said petition shall state the
specific reasons which the Claimant believes entitle him or her to
benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the petition, the Company shall afford the
Claimant (and counsel, if any) an opportunity to present his or her
position to the Company verbally or in writing, and the Claimant (or
counsel) shall have the right to review the pertinent documents. The
Company shall notify the Claimant of its decision in writing within the
60-day period, stating specifically the basis of its decision, written
in a manner calculated to be understood by the Claimant and the
specific provisions of the Agreement on which the decision is based.
If, because of the need for a hearing, the 60-day period is not
sufficient, the decision may be deferred for up to another 60 days at
the election of the Company, but notice of this deferral shall be given
to the Claimant.
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Article 9
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement signed
by the Company and the Executive.
Notwithstanding the previous paragraph, the Company may amend or terminate this
Agreement at any time if, pursuant to legislative, judicial or regulatory
action, continuation of the Agreement would (i) cause benefits to be taxable to
the Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In no event shall this
Agreement be terminated under this section without payment to the Executive of
the Deferral Account balance attributable to the Executive's Deferrals and
interest credited on such amounts.
Article 10
Miscellaneous
10.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators
and transferees.
10.2 No Guarantee of Employment. This Agreement is not a contract for
employment. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the shareholders'
rights to replace the Executive. It also does not require the Executive
to remain an employee nor interfere with the Executive's right to
terminate employment at any time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
10.4 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Iowa, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Executive and the Executive's beneficiary are
general unsecured creditors of the Company for the payment of benefits
under this Agreement. The benefits represent the mere promise by the
Company to pay such benefits. The rights to benefits are not subject in
any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors. Any
insurance on the Executive's life is a general asset of the Company to
which the Executive and the Executive's beneficiary have no preferred
or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or with
another Company, or reorganize, or sell substantially all of its assets
to another company, firm, or person unless such succeeding or
continuing company, firm, or person agrees to assume and discharge the
obligations of the Company under this Agreement.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof.
No rights are granted to the Executive by virtue of this Agreement
other than those specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
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10.10 Named Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, if applicable, the Company shall be the named
fiduciary and plan administrator under the Agreement. The named
fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the plan including the employment of
advisors and the delegation of ministerial duties to qualified
individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have
signed this Agreement.
COMPANY:
QUAD CITY BANK AND TRUST COMPANY
By:
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Title:
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EXECUTIVE:
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Larry J. Helling
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EXHIBIT 1
TO
QUAD CITY BANK AND TRUST COMPANY
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
Deferral Election
I elect to defer my Compensation received under the Executive Deferred
Compensation Agreement with the Bank, as follows:
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Amount of Deferral Duration
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[Initial and Complete one] [Initial One]
____ I elect to defer ____% of my ____ One Year only
Compensation.
____ For ______ [Insert
____ I elect to defer $______ of all Number] Years
Compensation.
_____ Until
____ I elect not to defer any of my Termination
Compensation. of Employment
____ Until ___________,
___________ (date)
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Upon the Bank's approval, I understand that I may change the amount and duration
of my deferrals by filing a new election form with the Bank; provided, however,
that any subsequent election will not be effective until the Fiscal Year
following the year in which the new election is received by the Bank.
Signature
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Date
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Accepted by the Bank this _____ day of ______________, 2001.
By
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Title
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Beneficiary Designation
QUAD CITY BANK AND TRUST COMPANY
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
I designate the following as beneficiary of benefits under the Executive
Deferred Compensation Agreement payable following my death:
Primary:
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Contingent:
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Note: To name a trust as beneficiary, please provide the name of the
trustee(s) and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
FORM OF PRE-RETIREMENT DEATH BENEFIT, Article 4, Section 4.3
I elect to have my beneficiary receive benefits under the Agreement in the
following form: [Initial One]
Lump Sum Equal monthly installments for 180 months
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Signature
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Date
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Accepted by the Bank this ____ day of ___________, 2001.
By
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Title
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