NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

 

Exhibit 10.20

 

                      NON-QUALIFIED SUPPLEMENTAL EXECUTIVE

                              RETIREMENT AGREEMENT

 

 

                        QUAD CITY BANK AND TRUST COMPANY

                                Bettendorf, Iowa

 

 

 

                                February 1, 2004

 

 

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            NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

 

This   Non-qualified    Supplemental   Executive   Retirement   Agreement   (the

"Agreement"),  effective as of the first day of February,  2004,  formalizes the

agreements by and between QUAD CITY BANK AND TRUST COMPANY (the "Bank"), a state

chartered commercial bank, and certain key employees, hereinafter referred to as

"Executive(s)", who shall be selected and approved by the Bank to participate in

this Agreement by execution of a Non-qualified Supplemental Executive Retirement

Joinder  Agreement  ("Joinder  Agreement")  in a form provided by the Bank.  QCR

HOLDINGS, INC. (the "Holding Company") is a party to this Agreement for the sole

purpose of guaranteeing the Bank's performance hereunder.

 

                              W I T N E S S E T H :

 

WHEREAS,  the Executives are employed by the Bank or by both the Holding Company

and the Bank as a dual employee; and

 

WHEREAS,  the Bank recognizes the valuable services heretofore  performed for it

by such  Executives and wishes to encourage  their  continued  employment and to

provide them with additional incentive to achieve corporate objectives; and

 

WHEREAS, the Bank wishes to provide the terms and conditions upon which the Bank

shall pay additional retirement benefits to the Executives; and

 

WHEREAS,   the  Bank  intends  this  Agreement  to  be  considered  an  unfunded

arrangement,  maintained primarily to provide supplemental retirement income for

its  Executives,  members of a select group of management or highly  compensated

employees  of the  Bank,  for tax  purposes  and for  purposes  of the  Employee

Retirement Income Security Act of 1974, as amended; and

 

WHEREAS,  the  Bank  has  adopted  this  Non-qualified   Supplemental  Executive

Retirement   Agreement  which  controls  all  issues  relating  to  Supplemental

Retirement Benefits as described herein.

 

NOW,  THEREFORE,  in  consideration  of the premises and of the mutual  promises

herein contained, the Bank and the Executive agree as follows:

 

                                    SECTION I

                                   DEFINITIONS

 

When used herein,  the following words and phrases shall have the meanings below

unless the context clearly indicates otherwise:

 

1.1     "Accrued Benefit" means as of any date, that portion of the Supplemental

        Retirement  Benefit  which is required to be expensed and accrued  under

        generally accepted accounting principles (GAAP).

 

1.2     "Act" means the Employee  Retirement  Income  Security  Act of 1974,  as

        amended from time to time.

 

1.3     "Administrator" means the Bank and/or its Board.

 

1.4     "Bank" means Quad City Bank and Trust Company and any successor thereto.

 

1.5     "Beneficiary"  means the person or persons (and their heirs)  designated

        as  Beneficiary  by the  Executive  to  whom  the  deceased  Executive's

        benefits are  payable.  If no  Beneficiary  is so  designated,  then the

        Executive's  Spouse, if living,  will be deemed the Beneficiary.  If the

        Executive's  Spouse is not living,  then the  Children of the  Executive

        will be deemed the  Beneficiaries  and will take on a per stirpes basis.

        If there are no living  Children,  then the Estate of the Executive will

        be deemed the Beneficiary.

 

1.6     "Benefit Age" shall be the birthday on which the  Executive  attains the

        age set forth in such Executive's Joinder Agreement.

 

1.7     "Benefit  Eligibility Date" shall be the later of (1) the 1st day of the

        month  following  the month in which the  Executive  attains the Benefit

        Age, or (ii) the 1st day of the month  following  the month in which the

        Executive actually retires.

 

1.8     "Board"  shall  mean  the  Board  of  Directors  of  the  Bank,   unless

        specifically noted otherwise.

 

1.9     "Cause" shall mean:

 

        (1)  a material  violation by the Executive of any  applicable  material

             law or regulation respecting the business of the Bank;

 

        (2)  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 Bank, or an act or acts which  disqualify  the  Executive  from

             serving as an officer or director of the Bank; or

 

        (3)  the willful or  negligent  failure of the  Executive to perform his

             duties in any material respect.

 

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1.10    A "Change in Control"  shall mean and include the following with respect

        to the Bank or the Holding Company:

 

        (1)  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

             thirty-three  percent (33%) or more of the combined voting power of

             the then outstanding voting securities of the Holding Company; or

 

        (2)  The  individuals  who,  as of the date  hereof,  are members of the

             Board of Directors of the Holding  Company  (the  "Holding  Company

             Board")  cease  for any  reason to  constitute  a  majority  of the

             Holding  Company  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  Holding  Company  Board,  and such new

             director shall, for purposes of this Agreement,  be considered as a

             member of the Holding Company Board; or

 

        (3)  Consummation   by  the   Holding   Company   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 Holding Company  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 Holding Company or the Bank.

 

             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 Holding Company 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  Holding   Company  in

             substantially  the same  proportion as their  ownership of stock of

             the Holding Company immediately prior to such acquisition.

 

1.11    "Children" means the Executive's  children, or the issue of any deceased

        Children,  then living at the time  payments are due the Children  under

        this  Agreement.  The term  "Children"  shall  include  both natural and

        adopted Children.

 

1.12    "Code"  means  the  Internal  Revenue  Code of  1986,  as  amended,  and

        regulations promulgated thereunder from time to time.

 

1.13    "Disability  Benefit" means the monthly benefit payable to the Executive

        following a determination, in accordance with Subsection 3.7, that he is

        disabled.

 

1.14    "Effective Date" of this Agreement shall be February 1, 2004.

 

1.15    "Estate" means the estate of the Executive.

 

1.16    "Full-Time"  means employment  during a Plan Year in which the Executive

        works at least 2,080 hours.

 

1.17    "Holding Company" means QCR Holdings, Inc.

 

1.18    "Interest  Factor"  unless  specifically  designated  otherwise  in this

        Subsection  or  in  another  place  in  this  Agreement,   means  annual

        compounding or discounting,  as applicable,  at six percent (6%). In the

        event a lump sum benefit is paid to Executive  upon a Change in Control,

        for  purposes  of  determining  the  value  of an  Executive's  lump sum

        benefit,   the  Interest  Factor  shall  mean  120%  of  the  semiannual

        applicable federal rate (AFR) as determined under Code section 1274(d).

 

1.19    "Joinder  Agreement"  means  the  NON-QUALIFIED  SUPPLEMENTAL  EXECUTIVE

        RETIREMENT JOINDER AGREEMENT.

 

1.20    "Part-Time" means employment on less than a Full-Time basis.

 

1.21    "Payout  Period"  means the time frame  during  which  benefits  payable

        hereunder shall be distributed. Unless otherwise payable in one (1) lump

        sum under this Agreement, payments shall be made in monthly installments

        commencing within thirty (30) days following the occurrence of the event

        which  triggers  distribution  and continue for One Hundred Eighty (180)

        months.   In  certain  cases  set  forth  herein,   an  Executive's  (or

        Beneficiary's) benefit shall be paid in a single lump sum payment.

 

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1.22    "Plan Year" shall mean the calendar year.

 

1.23    "Spouse" means the  individual to whom the Executive is legally  married

        at the time of the Executive's death,  provided,  however, that the term

        "Spouse"  shall  not refer to an  individual  to whom the  Executive  is

        legally  married  at the  time  of  death  if  the  Executive  and  such

        individual  have entered into a formal  separation  agreement  (provided

        that such separation  agreement does not provide otherwise or state that

        such  individual  is entitled to a portion of the benefit  hereunder) or

        formally initiated divorce proceedings through the courts.

 

1.24    "Supplemental  Retirement Benefit" means an annual amount (before taking

        into account federal and state income taxes),  equal to two and one-half

        percent  (2 1/2%) (or a pro-rata  percentage  of 2 1/2% for each Year of

        Service in which the Executive is employed  Part-Time)  for each Year of

        Service  until  the  Executive  attains  his  Benefit  Age in which  the

        Executive is a Full-Time  employee  (not to exceed 40 Years of Service),

        multiplied  by the  average  annual  base salary plus cash bonus for the

        three (3) most  recently  completed  Plan Years in which  Executive is a

        Full-Time  Employee  with a  maximum  of  seventy  percent  (70%).  Such

        Supplemental  Retirement  Benefit  shall  be  reduced  by  any  employer

        contributions  plus  earnings  thereon to the credit of Executive in the

        Bank or Holding Company's 401(k) or other deferred compensation plans in

        which Executive is also a participant  calculated in accordance with the

        projections  conducted  at  the  time  the  Agreement  is  adopted.  The

        Supplemental Retirement Benefit shall be payable in monthly installments

        throughout the Payout Period.

 

1.25    "Supplemental  Early Retirement  Benefit" means an annual amount (before

        taking  into  account  federal and state  income  taxes)  payable  under

        Subsection  3.4  of  the  Agreement  in the  event  of  the  Executive's

        termination  of employment  after  attainment of age 55 with 10 Years of

        Service  (so  long  as  Executive  has  been a  participant  under  this

        Agreement for two (2) years).

 

1.26    "Survivor's  Benefit"  means if the Bank has  obtained  insurance on the

        life of the Executive,  an annual amount  payable to the  Beneficiary in

        monthly  installments  throughout the Payout Period, equal to the amount

        designated in the  Executive's  Joinder  Agreement.  If the Bank has not

        obtained insurance on the life of the Executive,  the Survivor's Benefit

        shall be equal to the Accrued Benefit of the Executive as of Executive's

        date of death,  annuitized  (using the  Interest  Factor) and payable in

        monthly installments throughout the Payout Period.

 

1.27    "Year of Service"  means a 12 month  period  during  which  Executive is

        employed on a Full-Time  or  Part-Time  basis.  A year of service can be

        measured on the basis of anniversary  dates from the Executive's date of

        hire in the discretion of the Board.

 

                                   SECTION II

                          ESTABLISHMENT OF RABBI TRUST

 

The Bank  intends to  establish  a rabbi  trust  into which the Bank  intends to

contribute  assets  which  shall be held  therein,  subject to the claims of the

Bank's  creditors  in the event of the  Bank's  "Insolvency"  as  defined in the

agreement which establishes such rabbi trust,  until the contributed  assets are

paid to the Executives and their  Beneficiaries in such manner and at such times

as  specified  in  this  Agreement.  It is the  intention  of the  Bank  to make

contributions  to the rabbi  trust to provide the Bank with a source of funds to

assist it in meeting the liabilities of this Agreement.  The rabbi trust and any

assets held  therein  shall  conform to the terms of the rabbi  trust  agreement

which has been established in conjunction with this Agreement. To the extent the

language  in this  Agreement  is  modified  by the  language  in the rabbi trust

agreement,  the rabbi  trust  agreement  shall  supersede  this  Agreement.  Any

contributions  to the  rabbi  trust  shall  be made  during  each  Plan  Year in

accordance with the rabbi trust  agreement.  The amount of such  contribution(s)

shall be equal to the full  present  value of all  benefit  accruals  under this

Plan, if any, less: (i) previous  contributions  made on behalf of the Executive

to  the  rabbi  trust,   and  (ii)   earnings  to  date  on  all  such  previous

contributions.  In the event of a Change in Control,  the Bank shall transfer to

the rabbi trust  within  thirty  (30) days prior to such Change in Control,  the

present  value of an amount  sufficient  to fully  fund the  Supplemental  Early

Retirement  Benefit for each Executive  covered by this  Agreement.  SECTION III

BENEFITS

 

3.1     Retirement  Benefit.  If the Executive is in service with the Bank until

        reaching  his  Benefit  Age,  the  Executive  shall be  entitled  to the

        Supplemental  Retirement  Benefit.  Such benefit  shall  commence on the

        Executive's  Benefit  Eligibility  Date and shall be  payable in monthly

        installments  throughout the Payout  Period.  In the event the Executive

        dies  at any  time  after  attaining  his  Benefit  Age,  but  prior  to

        completion of all such payments due and owing hereunder,  the Bank shall

        pay  to the  Executive's  Beneficiary  a  continuation  of  the  monthly

        installments for the remainder of the Payout Period.

 

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3.2     Death Prior to Benefit Age. If the Executive dies prior to attaining his

        Benefit Age but while employed at the Bank, the Executive's  Beneficiary

        shall be entitled to the  Survivor's  Benefit.  The  Survivor's  Benefit

        shall  commence  within  thirty (30) days of the  Executive's  death and

        shall be payable in monthly  installments  throughout the Payout Period.

        In the sole  discretion  of the Bank's  Board of  Directors,  if no life

        insurance has been obtained on Executive's life, the Survivor's  Benefit

        may be paid in a lump sum.

 

3.3     Involuntary  Termination (Other Than for Cause) or Voluntary Termination

        of  Employment.   If  the  Executive's   employment  with  the  Bank  is

        involuntarily terminated prior to the attainment of his Benefit Age, for

        any reason other than for Cause, the Executive's death,  disability,  or

        following a Change in Control (as defined), or the Executive voluntarily

        terminates  his  employment,  other  than  due to Early  Retirement,  as

        defined below, the Executive (or his  Beneficiary)  shall be entitled to

        Executive's  Accrued  Benefit  determined at the time of the Executive's

        termination   of   employment.   Such  benefit  shall  commence  at  the

        Executive's Benefit Age, shall be annuitized (using the Interest Factor)

        and be payable in monthly installments  throughout the Payout Period. In

        the event the Executive dies prior to commencement of such payments, the

        Bank  shall pay to the  Executive's  Beneficiary  a  Survivor's  Benefit

        calculated as if the Bank had not obtained  insurance on the  Executive.

        In the event the Executive dies prior to completion of all such payments

        due  and  owing  hereunder,  the  Bank  shall  pay  to  the  Executive's

        Beneficiary a continuation  of the monthly  installments  payable to the

        Executive  for  the  remainder  of the  Payout  Period.  Notwithstanding

        anything to the contrary herein,  the Administrator may determine to pay

        the  Executive's  Accrued  Benefit to the Executive in a lump sum within

        sixty (60) days of his termination.

 

3.4