Exhibit 10.8
QCR HOLDINGS, INC.
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") is made this 1st day of January, 2004, by and
between QCR Holdings, Inc., a Delaware corporation (the "Company"), and TODD A.
GIPPLE (the "Executive").
INTRODUCTION
The Executive and the Company previously entered into that certain QCR Holding,
Inc. Executive Deferred Compensation Agreement dated January 1, 2002, to
encourage the Executive to remain an employee of the Company. The Company is
willing to continue to provide to the Executive a deferred compensation
opportunity together with matching contributions by the Company under the terms
of this Agreement. 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 December 31 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 QCR Holdings, Inc.
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 or a Company
affiliate's 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 or injury which, in the judgment of the Executive Committee of
the Board of Directors of the Company limits the Executive from
performing the material and substantial duties of his position(s) with
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 "Election Form" means the Form attached as Exhibit 1.
1.10 "Normal Retirement Age" means the Executive's 65th birthday.
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age or
Termination of Employment.
1.12 "Original Effective Date" means January 1, 2002.
1.13 "Plan Year" means the calendar year.
1.14 "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 Original 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 Plan
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.
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.
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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 $10,000 (Ten Thousand Dollars)
annually.
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 6% and shall not
exceed 12%.
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) $1,288,000 (One
Million Two Hundred Eighty-Eight 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 4.4.2, 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) $1,288,000 (One
Million Two Hundred Eighty-Eight 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.
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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.
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 or any
subsidiary 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 or any subsidiary of the
Company; or
(c) The willful or negligent failure of the Executive to perform his
duties for the Company or any subsidiary of 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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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 written 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, (4) an explanation of the
Agreement's claims review procedure, the time limits applicable and other
appropriate information as to the steps to be taken if the Claimant
wishes to have the claim reviewed, and (5) a statement of the Claimant's
right to bring a civil action under Section 502(a) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") following an
adverse benefit determination on review. If the Company determines that
there are special circumstances requiring additional time to make a
decision, the Company shall notify the Claimant, prior to the expiration
of the initial 90-day period, 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. In considering the review,
the Company shall take into account all materials and information
submitted by Claimant, without regard to whether the information was
submitted or considered in the initial benefit determination. The Company
shall notify the Claimant of its decision in writing within the 60-day
period, which notice shall set forth (a) the specific basis of its
decision, written in a manner calculated to be understood by the
Claimant, (b) the specific provisions of the Agreement on which the
decision is based, (c) a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to and copies
of all documents, records and other information (as defined in applicable
ERISA regulations) to the Claimant's claim for benefits, and (d) a
statement of the Claimant's right to bring a civil action under Section
502(a) of ERISA. 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.
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.
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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.
The decision or action of the Company with respect to any question
arising out of or in connection with the administration, interpretation,
and application of this Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in this Agreement.
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10.10 Payment of Legal Fees. The Company is aware that after a Change of
Control, management of the Company or its successor could cause or
attempt to cause the Company to refuse to comply with its obligations
under this Agreement, including the possible pursuit of litigation to
avoid its obligations under this Agreement. In these circumstances, the
purpose of this Agreement would be frustrated. It is the Company's
intention that the Executive not be required to incur the expenses
associated with the enforcement of his rights under this Agreement,
whether by litigation or other legal action, because the cost and expense
thereof would substantially detract from the benefits intended to be
granted to the Executive hereunder. It is the Company's intention that
the Executive not be forced to negotiate settlement of his rights under
this Agreement under threat of incurring expenses. Accordingly, if after
a Change of Control occurs it appears to the Executive that (a) the
Company has failed to comply with any of its obligations under this
Agreement, or (b) the Company or any other person has taken any action to
avoid its obligations under this Agreement, the Company irrevocably
authorizes the Executive from time to time to retain counsel of his
choice, at the expense of the Company as provided in this Section 10.10,
to represent the Executive in connection with the initiation or defense
of any litigation or other legal action, whether by or against the
Company or any director, officer, stockholder, or other person affiliated
with the Company, in any jurisdiction. Notwithstanding any existing or
previous attorney-client relationship between the Company and any counsel
chosen by the Executive under this Section 10.10, the Company irrevocably
consents to the Executive entering into an attorney-client relationship
with that counsel, and the Company and the Executive agree that a
confidential relationship shall exist between the Executive and that
counsel. The fees and expenses of counsel selected from time to time by
the Executive as provided in this Section 10.10 shall be paid or
reimbursed to the Executive by the Company on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared
by such counsel in accordance with such counsel's customary practices.
The Company's obligation to reimburse Executive for legal fees as
provided under this Section 10.10 and any separate employment, severance
or other agreement between the Executive and the Company shall not exceed
$200,000 in the aggregate. Accordingly, the Company's obligation to pay
the Executive's legal fees provided by this Section 10.10 shall be offset
by any legal fee reimbursement obligation the Company may have with the
Executive under any separate employment, severance or other agreement
between the Executive and the Company.
10.11 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: EXECUTIVE:
QCR HOLDINGS, INC.
By: /s/ James J. Brownson /s/ Todd A. Gipple
------------------------------ ---------------------------
James J. Brownson, Todd A. Gipple
Chairman, Executive Committee
of the Board
By: /s/ Douglas M. Hultquist
------------------------------
Douglas M. Hultquist,
President
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EXHIBIT 1
TO
QCR HOLDINGS, INC.
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
Deferral Election
I elect to defer my Compensation received under the Executive Deferred
Compensation Agreement with the Company, as follows:
- --------------------------------------------------------------------------------
Amount of Deferral Duration
================================================================================
[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)
- --------------------------------------------------------------------------------
Upon the Company's approval, I understand that I may change the amount and
duration of my deferrals by filing a new election form with the Company;
provided, however, that any subsequent election will not be effective until the
Plan Year following the year in which the new election is received by the
Company.
Signature
Date
Accepted by the Company this _____ day of ______________, 20___.
By
Title
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Beneficiary Designation
QCR HOLDINGS, INC.
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
I designate the following as beneficiary of benefits under the Executive
Deferred Compensation Agreement payable following my death:
Primary:
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Company. 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 5, Section 5.1.2
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
- ----------- --------------
Signature
Date
Accepted by the Company this ____ day of ___________, 20___.
By
Title
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