Exhibit 10.22
QCR HOLDINGS, INC.
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") is made this 15th day of July, 2004, by and between
QCR Holdings, Inc., a Delaware corporation (the "Company"), and THOMAS BUDD (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 December 31 of each year.
1.2 "Change in 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) Consummation of (1) a merger or consolidation of the Company if the
Company's 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 in 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.
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.
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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 Board of Directors of the Company 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 "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 Effective Date of this Agreement. The
Election Form shall set forth the amount of Compensation to be deferred
up to a maximum of eight thousand dollars ($8000.00) of Executive's
annual Compensation 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.
3.1.2 Matching Contribution. A matching contribution equal to one
hundred percent (100%) of Executive's Deferrals, but not to
exceed eight thousand dollars ($8000.00), such matching
contribution to be credited to the Deferral Account at the same
time as Executive's Deferrals are credited under Section 3.1.1.
3.1.3 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until
commencement of the benefit payments under this Agreement,
interest is to be accrued on the account balance and compounded
at an annual rate equal to the Wall Street Journal Prime Rate
plus 1 one percentage point on the first business day of the Plan
Year. This interest rate shall have a minimum or floor of 4
percent and shall not exceed 8 percent.
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.
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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 in 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.
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 in Control Benefit. Upon Termination of Employment at or
following a Change in 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 is the
Deferral Account balance at the Executive's Termination of
Employment.
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 in 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.
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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 Deferral
Account balance at the Executive's death.
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.
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. If
the Executive's beneficiary dies prior to the receipt of all amounts
payable hereunder, the remaining balance will be paid in one (1) lump
sum to the beneficiary'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 a
Company subsidiary;
(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 a Company subsidiary, or which disqualifies the
Executive from serving as an officer or director of the Company or
a Company subsidiary; or
(c) The willful or negligent failure of the Executive to perform his
duties for the Company or a Company subsidiary in any material
respect.
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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.
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.
Article 10
Miscellaneous
10.1 Binding Effect. This Agreement shall bind the Executive and the Company,
and their beneficiaries, survivors, executors, administrators and
transferees.
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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 in
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 in 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.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have
signed this Agreement.
QCR HOLDINGS, INC.
By:
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Douglas M. Hultquist, THOMAS BUDD
President
By:
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James J. Brownson,
Chairman, Compensation Committee
of the Board of Directors
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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 (up to a maximum of
$8000.00 of Compensation). ____ For ______ [Insert
Number] Years
____ I elect not to defer any of my ____ Until 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
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Date
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Accepted by the Company this ___ day of ____________, 20_____.
By
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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:
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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 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
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Signature
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Date
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Accepted by the Company this ____ day of ___________, 20_____.
By
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Title
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