Exhibit 10.11
EMPLOYMENT AGREEMENT BETWEEN
QCR HOLDINGS, INC.
AND XXXX X. XXXXXX
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of the 1st day of January,
2004, is between QCR Holdings, Inc. (the "Employer") and XXXX X. XXXXXX (the
"Employee").
RECITALS
WHEREAS, Employee is currently serving as an executive of the Employer pursuant
to that certain Employment Agreement dated January 5, 2000 (the "Prior
Employment Agreement"); and
WHEREAS, the parties desire to amend and restate the Prior Employment Agreement
on the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and among the
parties hereto as follows:
AGREEMENTS
Section 1. Employment. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
Section 2. Duties. The Employee agrees to provide all services necessary,
incidental or convenient as Executive Vice President and Chief Financial Officer
of the Employer, and such similar duties for the Employer's subsidiaries as a
dual employee of the Employer's subsidiaries. The Employer shall designate the
location or locations for the performance of the Employee's services. The
Employer shall furnish or make available to the Employee such equipment, office
space and other facilities and services as shall be adequate and necessary for
the performance of his duties.
Section 3. Term. The term of this Agreement shall commence on January 1, 2004
(the "Effective Date"), and shall continue for a period of three (3) years. This
Agreement shall automatically extend for one (1) year on each anniversary of the
Effective Date, unless terminated by either party effective as of the last day
of the then current three (3) year extension by written notice to that effect
delivered to the other not less than ninety (90) days prior to the anniversary
of such Effective Date.
Section 4. Compensation. As compensation for the services to be provided by the
Employee hereunder:
(a) Base Salary. The Employer shall pay Employee an annual base salary of one
hundred and forty thousand five hundred dollars ($140,500) ("Base Salary").
Base Salary shall be payable bi-weekly, in equal installments in accordance
with the Employer's payroll practice. The Employee's Base Salary shall be
subject to review annually, commencing January 1, 2005, and shall be
maintained or increased during the term hereof in accordance with the
Employer's established management compensation policies and plan.
(b) Bonuses. The Employee shall be entitled to receive cash bonuses ("Cash
Bonus" or "Cash Bonuses"), based upon performance, which may be granted in
the future in the discretion of the Employer, consistent with Employer's
incentive bonus formula for executive management, as modified from time to
time. In addition, the Employee may receive such additional bonuses or
awards in the form of stock options, restricted stock or other equity
compensation, as determined in the discretion of the Employer.
(c) Non-Qualified Supplemental Executive Retirement Agreement. Employee shall
participate in the Non-Qualified Supplemental Executive Retirement
Agreement, as amended from time to time in accordance with its terms.
(d) Benefits. The Employer shall provide the following additional benefits to
the Employee:
(i) Medical Insurance. Family medical insurance, provided that Employee
shall be responsible for paying any portion of the premium in
accordance with the Employer's policy applied to similarly situated
employees.
(ii) Reimbursements. Reimbursement of reasonable expenses advanced by the
Employee in connection with performance of his duties hereunder,
including, but not limited to, two (2) paid weeks of continuing
education, a monthly automobile allowance of $500, fuel, maintenance
and insurance expense of such automobile, and the annual
reimbursement of club dues for the Xxxxxxxxx Country Club.
(iii) Personal Days. The Employee will initially be entitled to
twenty-five (25) personal days, which may be increased in accordance
with the Employer's established policies and practices.
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(iv) Disability Coverage. Long-term and short-term disability coverage
equal to 66-2/3% of Base Salary and Average Annual Bonus. For
purposes of this Agreement, "Average Annual Bonus" shall mean the
average of the three (3) most recent annual Cash Bonuses paid to the
Employee immediately preceding the determination date.
(v) Employee Benefits. Participation in a 401(k)/profit sharing plan,
deferred compensation program and such other benefits as are
specifically granted to Employee or in which he participates as an
employee of the Employer.
(vi) Life Insurance. Term life insurance of two (2) times Base Salary and
Average Annual Bonus as of the date of this Agreement; which
insurance may be provided through a group term carve-out plan at the
Employer's election. The Employee will be allowed to purchase
additional life insurance of at least two (2) times that same amount
through such plan.
(vii) Stock Options. Non-qualified options in accordance with the
Employer's current stock incentive plan enabling the Employee to
acquire 1,500 shares of the Employer's stock on each of January 5,
2004 and January 5, 2005, with an exercise price for all such
options equal to the market price of the Employer's stock as of the
close of business on the day prior to the date of grant and,
concurrently with each grant of such options, 1,500 tax benefit
rights.
Section 5. Time Requirement. The Employee shall devote his best efforts and full
business time to his duties under this Agreement. The Employee shall be allowed
to serve on outside boards subject to the consent of the Employer.
Section 6. Termination upon Disability. In the event of the Employee's
Disability (as defined below) during the employment term, payments based upon
the Employee's then current annual Base Salary and Average Annual Bonus shall
continue thereafter through the last day of the one (1) year period beginning on
the date of such Disability, after which time Employee's employment shall
terminate. Payments made in the event of the Employee's Disability shall be
equal to 66-2/3% of Employee's Base Salary and Average Annual Bonus, less any
amounts received under the Employer's short or long-term disability programs, as
applicable. Disability for purposes of this Agreement shall mean that the
Employee is limited from performing the material and substantial duties of the
positions set forth in Section 2 due to the Employee's sickness or injury for a
period of six (6) consecutive months. The Executive Committee of the Board of
Directors of the Employer shall determine whether and when the Employee has
incurred a Disability under this Agreement.
Section 7. Payment upon Death. In the event of the Employee's death during the
term of this Agreement, the Employee shall be paid his accrued and unpaid Base
Salary, and his earned Cash Bonus for the year in which he died prorated on a
per diem basis through the date of death. The earned Base Salary shall be paid
in accordance with the Employer's regular payroll on the next regular payroll
date following the Employee's death. The earned Cash Bonus for the year shall be
paid when Cash Bonuses are paid to other executive officers of the Employer with
respect to such year. Such amounts shall be payable to the persons designated in
writing by the Employee, or if none, to his estate.
Section 8. Confidentiality and Loyalty. The Employee acknowledges that during
the course of his employment he has produced and will produce and have access to
material, records, data, trade secrets and information not generally available
to the public (collectively, "Confidential Information") regarding the Employer
and any subsidiaries and affiliates. Accordingly, during and subsequent to
termination of this Agreement, the Employee shall hold in confidence and not
directly or indirectly disclose, use, copy or make lists of any such
Confidential Information, except to the extent that such information is or
thereafter becomes lawfully available from public sources, or such disclosure is
authorized in writing by the Employer, required by a law or any competent
administrative agency or judicial authority, or otherwise as reasonably
necessary or appropriate in connection with performance by the Employee of his
duties hereunder. All records, files, documents and other materials or copies
thereof relating to the Employer's business which the Employee shall prepare or
use, shall be and remain the sole property of the Employer, shall not be removed
from the Employer's premises without its written consent, and shall be promptly
returned to the Employer upon termination of the Employee's employment
hereunder. The Employee agrees to abide by the Employer's reasonable policies,
as in effect from time to time, respecting avoidance of interests conflicting
with those of the Employer.
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Section 9. Non-Competition.
(a) Restrictive Covenant. The Employer and the Employee have jointly reviewed
the operations of the Employer and have agreed that the primary service
areas of the Employer's lending and deposit taking functions extends to the
areas encompassing the sixty (60) mile radii from each of the offices of
the Employer. Therefore, as an essential ingredient of and in consideration
of this Agreement and the payment of the amounts described in Sections 4
and 10, the Employee hereby agrees that, except with the express prior
written consent of the Employer, for a period of two (2) years after the
termination of the Employee's employment with the Employer (the
"Restrictive Period"), he will not directly or indirectly compete with the
business of the Employer, including, but not by way of limitation, by
directly or indirectly owning, managing, operating, controlling, financing,
or by directly or indirectly serving as an employee, officer or director
of, or consultant to, or by soliciting or inducing, or attempting to
solicit or induce, any employee or agent of the Employer to terminate
employment with the Employer and become employed by any person, firm,
partnership, corporation, trust or other entity which owns or operates, a
bank, savings and loan association, credit union or similar financial
institution (a "Financial Institution") within the sixty (60) mile radii of
each of the Employer's offices (the "Restrictive Covenant"). If the
Employee violates the Restrictive Covenant and the Employer brings legal
action for injunctive or other relief, the Employer shall not, as a result
of the time involved in obtaining such relief, be deprived of the benefit
of the full period of the Restrictive Covenant. Accordingly, the
Restrictive Covenant shall be deemed to have the duration specified in this
Section computed from the date the relief is granted but reduced by the
time between the period when the Restrictive Period began to run and the
date of the first violation of the Restrictive Covenant by the Employee.
The foregoing Restrictive Covenant shall not prohibit the Employee from
owning directly or indirectly capital stock or similar securities which are
listed on a securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation System which do not represent more
than one percent (1%) of the outstanding capital stock of any Financial
Institution. Notwithstanding anything contained herein to the contrary, the
Employee shall be permitted to remain as a director and a shareholder of
Buffalo Savings Bank, Buffalo, Iowa.
(b) Remedies for Breach of Restrictive Covenant. The Employee acknowledges that
the restrictions contained in this Section 9 and Section 8 are reasonable
and necessary for the protection of the legitimate business interests of
the Employer, that any violation of these restrictions would cause
substantial injury to the Employer and such interests, that the Employer
would not have entered into this Agreement with the Employee without
receiving the additional consideration offered by the Employee in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of
any violation or threatened violation of these restrictions, the Employer,
in addition to and not in limitation of, any other rights, remedies or
damages available to the Employer under this Agreement or otherwise at law
or in equity, shall be entitled to preliminary and permanent injunctive
relief to prevent or restrain any such violation by the Employee and any
and all persons directly or indirectly acting for or with him, as the case
may be.
Section 10. Severance.
(a) Termination Without Cause. If the Employee is terminated without "Cause"
(as defined below), the Employer will pay the Employee a sum equal to
one-half of his then current annual Base Salary plus one-half of his
Average Annual Bonus. Such payment shall be made in a lump sum within 15
days of termination or in equal installments over the six (6) month period,
at the Employer's option. In addition, the Employer shall provide
reasonable out-placement services for up to three (3) months following
termination.
(b) Termination for Cause or Voluntary Termination. If the Employee is
terminated for Cause (as defined below) or voluntarily terminates his
employment, then the Employer shall pay Employee any accrued and unpaid
Base Salary, and any accrued and unpaid personal days and shall have no
further obligations to the Employee under this Agreement. For purposes of
this Agreement, "Cause" shall mean:
(i) a material violation by the Employee of any applicable material law
or regulation respecting the business of the Employer;
(ii) the Employee being found guilty of a felony, an act of dishonesty in
connection with the performance of his duties as an officer of the
Employer, or which disqualifies the Employee from serving as an
officer or director of the Employer; or
(iii) the willful or negligent failure of the Employee to perform his
duties hereunder in any material respect.
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The Employee shall be entitled to at least thirty (30) days' prior written
notice of the Employer's intention to terminate his employment for any
Cause specifying the grounds for such termination, a reasonable opportunity
to cure any conduct or act, if curable, alleged as grounds for such
termination, and a reasonable opportunity to present to the Board his
position regarding any dispute relating to the existence of such Cause.
(c) Termination Upon Change in Control. If a Change in Control (as defined
below) of the ownership of the Employer occurs and the Employee is
terminated within one (1) year following the Change in Control or the
Employee elects to terminate his employment within six (6) months following
the Change in Control, a severance payment will be made within 15 days of
termination equal to the sum of two (2) times the sum of his then current
Base Salary and Average Annual Bonus. In addition, the Employer shall
continue, or cause to be continued, Employee's health insurance as in
effect on the date of termination (including, if applicable, family
coverage) for three (3) years.
For purposes of this paragraph, the term "Change in Control" shall mean the
following:
(i) 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 0000 Xxx) of
thirty-three percent (33%) or more of the combined voting power of
the then outstanding voting securities of the Employer; or
(ii) The individuals who, as of the date hereof, are members of the Board
of Directors of the Employer (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 as a member of
the Board; or
(iii) Consummation by the Employer of (i) a merger or consolidation if the
stockholders, immediately before such merger or consolidation, do
not, as a result of such merger or consolidation, own, directly or
indirectly, more than sixty-seven percent (67%) 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 of the Employer outstanding immediately before
such merger or consolidation or (ii) 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 Employer.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because thirty-three percent (33%) or more of
the combined voting power of the then outstanding securities of the
Employer is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for
employees of the entity or (ii) any corporation which, immediately
prior to such acquisition, is owned directly or indirectly by the
stockholders of the Employer in substantially the same proportion as
their ownership of stock of the Employer immediately prior to such
acquisition.
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(iv) If it is determined, in the opinion of the Employer's independent
accountants, in consultation, if necessary, with the Employer's
independent legal counsel, that any amount paid under this Agreement
due to a Change in Control, either separately or in conjunction with
any other payments, benefits and entitlements received by the
Employee in respect of a Change in Control under any other plan or
agreement under which the Employee 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 Employer shall pay to the Employee 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
Employee for the Excise Tax which is greater than that which was
determined at the time such amounts were paid, then the Employer
shall pay to the Employee the amount of such unreimbursed Excise Tax
plus any interest, penalties and reasonable professional fees or
expenses incurred by the Employee 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 Employer 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 Employer's independent
accountants, in consultation, if necessary, with the Employer's
independent legal counsel. If, after the Employee receives any
gross-up payments or other amount pursuant to this Section 10, the
Employee receives any refund with respect to the Excise Tax, the
Employee shall promptly pay the Employer the amount of such refund
within ten (10) days of receipt by the Employee.
(v) If the Employer is not in compliance with its minimum capital
requirements or if the payments required under this Section 10 would
cause the Employer's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the
Employer is in capital compliance. At the election of the Employee,
which election is to made within thirty (30) days of the Employee's
termination, such payments shall be made in a lump sum or paid
monthly during the remaining term of this Agreement following the
Employee's termination. In the event that no election is made,
payment to the Employee will be made on a monthly basis during the
remaining term of this Agreement. Such payments shall not be reduced
in the event the Employee obtains other employment following the
termination of employment by the Employer.
Section 11. Indemnification.
(a) The Employer shall provide the Employee (including his heirs, personal
representatives, executors and administrators) for the term of this
Agreement with coverage under a standard directors' and officers' liability
insurance policy at its expense.
(b) In addition to the insurance coverage provided for in this Section, the
Employer shall hold harmless and indemnify the Employee (and his heirs,
executors and administrators) to the fullest extent permitted under
applicable law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his having been an officer of the
Employer (whether or not he continues to be an officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees
and the cost of reasonable settlements.
(c) In the event the Employee becomes a party, or is threatened to be made a
party, to any action, suit or proceeding for which the Employer has agreed
to provide insurance coverage or indemnification under this Section, the
Employer shall, to the full extent permitted under applicable law, advance
all expenses (including reasonable attorneys' fees), judgments, fines and
amounts paid in settlement (collectively "Expenses") incurred by the
Employee in connection with the investigation, defense, settlement, or
appeal of any threatened, pending or completed action, suit or proceeding,
subject to receipt by the Employer of a written undertaking from the
Employee (i) to reimburse the Employer for all Expenses actually paid by
the Employer to or on behalf of the Employee in the event it shall be
ultimately determined that the Employee is not entitled to indemnification
by the Employer for such Expenses and (ii) to assign to the Employer all
rights of the Employee to indemnification, under any policy of directors'
and officers' liability insurance or otherwise, to the extent of the amount
of Expenses actually paid by the Employer to or on behalf of the Employee.
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Section 12. Payment of Legal Fees. The Employer is aware that after a Change in
Control, management of the Employer or its successor could cause or attempt to
cause the Employer 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 Employer's intention that the Employee 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 Employee hereunder. It is the Employer's intention that the
Employee 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 Employee that (a) the Employer has failed to
comply with any of its obligations under this Agreement, or (b) the Employer or
any other person has taken any action to avoid its obligations under this
Agreement, the Employer irrevocably authorizes the Employee from time to time to
retain counsel of his choice, at the expense of the Employer as provided in this
Section 12, to represent the Employee in connection with the initiation or
defense of any litigation or other legal action, whether by or against the
Employer or any director, officer, stockholder, or other person affiliated with
the Employer, in any jurisdiction. Notwithstanding any existing or previous
attorney-client relationship between the Employer and any counsel chosen by the
Employee under this Section 12, the Employer irrevocably consents to the
Employee entering into an attorney-client relationship with that counsel, and
the Employer and the Employee agree that a confidential relationship shall exist
between the Employee and that counsel. The fees and expenses of counsel selected
from time to time by the Employee as provided in this Section 12 shall be paid
or reimbursed to the Employee by the Employer on a regular, periodic basis upon
presentation by the Employee of a statement or statements prepared by such
counsel in accordance with such counsel's customary practices. The Employer's
obligation to reimburse Employee for legal fees as provided under this Section
12 and any separate employment, deferred compensation, severance or other
agreement between the Employee and the Employer shall not exceed $200,000 in the
aggregate. Accordingly, the Employer's obligation to pay the Employee's legal
fees provided by this Section 12 shall be offset by any legal fee reimbursement
obligation the Employer may have with the Employee under any separate
employment, deferred compensation, severance or other agreement between the
Employee and the Employer.
Section 13. Regulatory Suspension and Termination.
(a) If the Employee is suspended from office and/or temporarily prohibited from
participating in the conduct of the Employer's affairs by a notice served
under Section 8(e)(3) (12 U.S.C. ss. 1818(e)(3)) or 8(g) (12 U.S.C. ss.
1818(g)) of the Federal Deposit Insurance Act, as amended, the Employer's
obligations under this contract shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Employer shall (A) pay the Employee all of the
compensation withheld while their contract obligations were suspended and
(B) reinstate any of the obligations, which were suspended.
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(b) If the Employee is removed and/or permanently prohibited from participating
in the conduct of the Employer's affairs by an order issued under Section
8(e) (12 U.S.C. ss. 1818(e)) or 8(g) (12 U.S.C. ss. 1818(g)) of the Federal
Deposit Insurance Act, as amended, all obligations of the Employer under
this contract shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.
(c) If the Employer is in default as defined in Section 3(x) (12 U.S.C. ss.
1813(x)(1)) of the Federal Deposit Insurance Act, as amended, all
obligations of the Employer under this contract shall terminate as of the
date of default, but this paragraph shall not affect any vested rights of
the contracting parties.
(d) All obligations of the Employer under this contract shall be terminated,
except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution by the Federal
Deposit Insurance Corporation (the "FDIC"), at the time the FDIC enters
into an agreement to provide assistance to or on behalf of the Employer
under the authority contained in Section 13(c) (12 U.S.C. ss. 1823(c)) of
the Federal Deposit Insurance Act, as amended, or when the Employer is
determined by the FDIC to be in an unsafe or unsound condition. Any rights
of the parties that have already vested, however, shall not be affected by
such action.
(e) Any payments made to the Employee pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with Section 18(k) (12
U.S.C. ss. 1828(k)) of the Federal Deposit Insurance Act as amended, and
any regulations promulgated thereunder.
Section 14. General Provisions.
(a) This Agreement supersedes all prior agreements and understandings between
the parties relating to the subject matter of this Agreement. It binds and
benefits the parties and their successors in interest, heirs,
beneficiaries, legal representatives and assigns. The Company agrees that
it shall not merge or consolidate into or with another company, or
reorganize, or sell substantially all 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.
(b) This Agreement is governed by and construed in accordance with the laws of
the State of Iowa.
(c) The provisions of Sections 8 and 9 shall survive the termination of this
Agreement.
(d) No amendment or modification of this Agreement is effective unless made in
writing and signed by each party.
(e) This Agreement may be signed in several counterparts, each of which will be
an original and all of which will constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above set forth.
QCR HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxx
------------------------------ ------------------------
Xxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx
Chairman, Executive Committee
of the Board
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxxx,
President
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