Exhibit 10.27

 

FIRST AMENDMENT TO THE

 

EMPLOYMENT AGREEMENT BETWEEN
ROCKFORD BANK AND TRUST COMPANY
AND THOMAS BUDD

 

This Amendment (the “Amendment”) is made this 30th day of December, 2008 (the
“Effective Date”) by and between Rockford Bank and Trust Company (the
“Employer”) and Thomas Budd (the “Employee”).

 

WHEREAS, the Employer and the Employee have entered into that certain Employment
Agreement dated June 22, 2004 (the “Agreement”);

 

WHEREAS, the Employee was employed as an Executive Vice President of the
Rockford office of QCR Holdings, Inc. and subsequently became President of
Rockford Bank and Trust Company;

 

WHEREAS, pursuant to Section 1 of the Agreement it was agreed by the parties
that when the necessary approvals and charters were obtained, the employer would
become Rockford Bank and Trust Company and all references in the Agreement to
the employer would mean Rockford Bank and Trust Company;

 

WHEREAS, the Employer and the Employee desire to amend certain provisions of the
Agreement in order to bring such provisions into compliance with the applicable
provisions of Section 409A of the Internal Revenue Code of 1986, as amended (and
guidance issued thereunder) (“409A”);

 

WHEREAS, pursuant to Section 14(e) of the Agreement, the Agreement may be
amended in writing with the signature of each party; and

 

WHEREAS, the parties desire to amend the Agreement on the terms hereinafter set
forth.

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is
agreed and acknowledged by the parties hereto, effective as of the Effective
Date (unless otherwise stated herein) the Agreement be and is hereby amended in
the following particulars:

 

1.     As specified in the Agreement, all references herein to the Employer
shall refer to Rockford Bank and Trust Company.

 

2.     The first sentence of Section 2 shall be deleted and replaced with the
following:

 

“The Employee agrees to provide all services necessary, incidental or convenient
as the President and Chief Executive Officer of the Employer.”

  

 
 

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3.     The following sentence shall be added following the last sentence of
subsection 4(b):

 

“Payment of such Cash Bonus(es) will be made as soon as practicable, but in no
event later than two and one-half (2½) months following the end of the year in
which earned.”

 

4.     The last sentence of the first paragraph of subsection 4(c)(i) shall be
deleted and replaced with the following:

 

“The incentive amount payable hereunder shall be paid within two and one-half
(2½) months after the end of such year.”

 

5.     The following sentence shall be added following the last sentence of
subsection 4(d)(2):

 

“Such reimbursement payments will be made as soon as practicable, but in no
event later than two and one-half (2½) months following the end of the year in
which the corresponding expenses are incurred.”

 

6.     The penultimate sentence in Section 6 shall be deleted and replaced with
the following:

 

“‘Disability’ for the purposes of this Agreement shall mean that (i) the
Employee is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, or (ii) the Employee is, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Employer.”

 

7.     The following sentence shall be added as an introductory paragraph in
Section 10, before subsection (a):

 

“Employee’s employment during the term of this Agreement may be terminated by
the Employer or Employee without any breach of this Agreement only under the
circumstances described in this Section 10 (where such termination constitutes a
“separation from service” pursuant to Code Section 409A), other than the
termination of this Agreement pursuant to Sections 6 and 7.”

 

8.     The second sentence of subsection 10(a) shall be deleted and replaced
with the following:

 

“Such payment will be made in a lump sum within fifteen (15) days of
termination.”

  

 
 

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9.     The following sentence shall be added following the first sentence of
subsection 10(b):

 

“Such amounts shall be paid to the Employee in accordance with the Employer’s
regular payroll on the next regular payroll date following the Employee’s
voluntary termination or termination for Cause.”

 

10.     The following sentence shall be added following the first sentence of
subsection 10(c)(4):

 

“Such grossing-up payment shall be made with or following the payment under this
Agreement which constitutes an Excess Parachute Payment, but in no event later
than the end of the year following the year in which Employee remits the related
taxes to the Internal Revenue Service.”

 

11.     The following sentence shall be added following the second sentence of
subsection 10(c)(4):

 

“Such deficiency payment shall be made no later than the end of the year
following the year in which Employee remits the payment to the Internal Revenue
Service in satisfaction of the deficiency, or if no payment is remitted, the end
of the year following the year in which the audit is completed or there is a
final and nonappealable settlement or other resolution.”

 

12.     Subsection 10(c)(5) shall be deleted in its entirety and replaced with
the following:

 

“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 delayed until the earliest date at which the Employer reasonably
anticipates the making of such payment will not cause the Employer’s capital to
be reduced below its minimum capital requirements. Such payments shall not be
reduced in the event Employee obtains other employment following the termination
of employment by the Employer.”

 

13.     The following sentence shall be added after the last sentence in
subsection 11(b):

 

“Any payments pursuant to this indemnification will be made as soon as
practicable, but in no event later than two and one-half (2½) months following
the end of the year in which the corresponding expenses are incurred.”

 

14.     The following sentence shall be added before the penultimate sentence in
Section 12:

 

“Any such reimbursements of legal fees will be made as soon as practicable, but
in no event later than two and one-half (2½) months following the end of the
year in which the corresponding legal fees are incurred.”

  

 
 

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15.     The following Section 15 shall be added:

 

“Section 15.     Code Section 409A.

 

(a)     To the extent that any of the terms and conditions contained herein
which were modified by this amendment constitute an amendment or modification of
the time or manner of payment under a non-qualified deferred compensation plan
(as defined under Code Section 409A), then to the extent necessary under the
transitional guidance under Internal Revenue Service Notice 2007-86, this
Agreement constitutes an amendment to, and a new election under, such deferred
compensation plan, in order to properly modify the time or manner of payment
consistent with such guidance.

 

(b)     It is intended that the Agreement shall comply with the provisions of
Code Section 409A and the Treasury regulations relating thereto so as not to
subject Employee to the payment of additional taxes and interest under Code
Section 409A. In furtherance of this intent, this Agreement shall be
interpreted, operated and administered in a manner consistent with these
intentions, and to the extent that any regulations or other guidance issued
under Code Section 409A would result in the Employee being subject to payment of
additional income taxes or interest under Code Section 409A, the parties agree
to amend the Agreement to maintain to the maximum extent practicable the
original intent of the Agreement while avoiding the application of such taxes or
interest under Code Section 409A.

 

(c)     Notwithstanding any provision in the Agreement to the contrary if, as of
the effective date of Employee’s termination of employment, he is a “Specified
Employee,” then, only to the extent required pursuant to Section
409A(a)(2)(B)(i), payments due under this Agreement which are deemed to be
deferred compensation shall be subject to a six (6) month delay following the
Employee’s separation from service. For purposes of Code Section 409A, all
installment payments of deferred compensation made hereunder, or pursuant to
another plan or arrangement, shall be deemed to be separate payments and,
accordingly, the aforementioned deferral shall only apply to separate payments
which would occur during the six (6) month deferral period and all other
payments shall be unaffected. All delayed payments shall be accumulated and paid
in a lump-sum catch-up payment as of the first day of the seventh-month
following separation from service (or, if earlier, the date of death of the
Employee) with all such delayed payments being credited with interest
(compounded monthly) for this period of delay equal to the prime rate in effect
on the first day of such six-month period. Any portion of the benefits hereunder
that were not otherwise due to be paid during the six-month period following the
termination shall be paid to the Employee in accordance with the payment
schedule established herein.

  

 
 

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(d)     The term “Specified Employee” shall mean any person who is a “key
employee” (as defined in Code Section 416(i) without regard to paragraph (5)
thereof), as determined by the Bank based upon the 12-month period ending on
each December 31st (such 12-month period is referred to below as the
“identification period”). If Employee is determined to be a key employee under
Code Section 416(i) (without regard to paragraph (5) thereof) during the
identification period he shall be treated as a Specified Employee for purposes
of this Agreement during the 12-month period that begins on the April 1
following the close of such identification period. For purposes of determining
whether Employee is a key employee under Code Section 416(i), “compensation”
shall mean Employee’s W-2 compensation as reported by the Employer for a
particular calendar year.”

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above set forth.

 

 

ROCKFORD BANK AND                     

TRUST COMPANY 

 

 

 

 

 

 

 

 

 

 

By: 

/s/ Douglas M. Hultquist 

 

/s/ Thomas D. Budd 

 

Douglas M. Hultquist 

 

Thomas D. Budd 

 

President and CEO