EMPLOYMENT AGREEMENT BETWEEN
QCR HOLDINGS, INC.,
QUAD CITY BANK AND TRUST COMPANY
AND MICHAEL A. BAUER
(As Amended and Restated December 14, 2006)
THIS
EMPLOYMENT AGREEMENT (this “ Agreement ”),
dated as of the 14 th day of December, 2006 (the “ Effective
Date ”), is between QCR HOLDINGS, INC. (the
“ Company ”) and QUAD CITY BANK AND TRUST
COMPANY (the “ Bank ”) (collectively, the
“ Employer ”), and MICHAEL A. BAUER (the
“ Employee ”).
WHEREAS,
Employee is currently serving as an executive of the Company and
the Bank pursuant to that certain Employment Agreement as amended
and restated March 21, 2006 (the “ Prior Employment
Agreement ”); and
WHEREAS,
the parties desire to further 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:
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 an
officer and employee of the Company and the Bank as provided
herein. The Employer shall designate the location or locations for
the performance of the Employee’s services. Consistent with
the Company’s corporate succession plan, Employee shall serve
as President and Chief Executive Officer (“ CEO
”) of the Bank through May 2, 2007. Upon relinquishing
the above titles with the Bank, Executive shall continue as an
employee of the Employer and shall become Vice Chairman of the
board of directors of the Bank, until otherwise provided by the
Company’s board of directors (the “ Board
”). Executive shall, subject to stockholder approval and the
discretion of the Board, continue to serve on the Board during the
Term (as defined below) and shall serve as its chairman through
December 31, 2006, and as Vice Chairman thereafter, until
otherwise provided by the Board. 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 the Effective Date, and shall continue through
the date of the annual meeting of the Company’s stockholders
to be held in May of 2009, at which time it shall terminate (the
“ Term ”), unless it is earlier terminated
pursuant to Sections 6, 7 or 10 hereunder.
Section 4. Compensation . As compensation for
the services to be provided by the Employee hereunder:
(a) Base Salary . The Bank shall pay Employee an
annual base salary of two hundred and twenty thousand five hundred
dollars ($220,500) (“ Base Salary ”). Base
Salary shall be payable bi-weekly, in equal installments in
accordance with the Employer’s payroll practice. The Company
shall reimburse the Bank for Employee’s Base Salary
attributable to services for the Company. The Employee’s Base
Salary shall be subject to
review during
the Term in the sole and absolute discretion of the Executive
Committee of the board of directors of the Company (the “
Committee ”).
(b) Annual 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,
which may be based upon performance criteria or levels independent
of any such criteria or levels that may established for other
executive management, as modified from time to time, in the sole
discretion of the Committee.
(c) Transition Incentive Bonus . The Employee shall
be eligible to receive an additional bonus of up to eighty thousand
dollars ($80,000) per year (the “ Transition Bonus
”). The performance cycle for the Transition Bonus shall run
between the dates of the Company’s annual stockholders’
meetings, with the first cycle beginning with the May 2006
meeting and the last cycle ending as of the annual meeting of the
Company’s stockholders to be held in May of 2009. The amount
of Transition Bonus earned shall be determined by the Committee and
may be deferred by Mr. Bauer. Any Transition Bonus paid hereunder
shall not constitute a Cash Bonus and shall not be considered when
determining the Annual Average Bonus (as defined below).
(d) Non-Qualified Supplemental Executive Retirement
Agreement . Employee shall participate in the Non-Qualified
Supplemental Executive Retirement Agreement, as amended, in
accordance with its terms.
(e) 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 quarterly automobile allowance of
$2,000, fuel, maintenance and insurance expense of such automobile,
and the annual reimbursement of club dues for the Crow Valley
Club.
(iii)
Personal Days. The Employee will initially be entitled to
five (5) weeks of personal days, which may be increased in
accordance with the Employer’s established policies and
practices.
(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
Employee’s 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 that same amount through such plan.
(vii)
Stock Options . In the event that Employee is granted
additional stock options during the Term, such option awards shall
provide for the full vesting of such awards upon the
Employee’s retirement from employment from the Company, the
Bank or any subsidiary (based upon the latest such
retirement).
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Section 5. Time Requirement . Subject to the
direction of the Board, 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 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 Committee 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, 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.
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 later of Employee’s employment with the Employer or
any subsidiaries and affiliates or the end of any consulting
arrangement with the Employer or any subsidiaries and affiliates
(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
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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.
(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
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