CHANGE OF CONTROL AGREEMENT
THIS
CHANGE OF CONTROL AGREEMENT (this “Agreement”) is made as of
the [__] day of [_________________] 2007, (the
“Effective Date”) by and between HEARTLAND
FINANCIAL USA, INC.,
an Iowa corporation, (the “Company”) and «Employee» (the
“Employee”).
RECITALS
A. The
Employee is currently serving as an employee of the Company or one of its
Affiliates.
B. The
Company desires to continue to employ the Employee as an employee of the Company
or one of its Affiliates and the Employee is willing to continue such
employment.
C. The
Company recognizes that circumstances may arise in which a change of control
of
the Company through acquisition or otherwise may occur thereby causing
uncertainty of employment without regard to the competence or past contributions
of the Employee, which uncertainty may result in the loss of valuable services
of the Employee, and the Company and the Employee wish to provide reasonable
security to the Employee against changes in the employment relationship in
the
event of any such change of control.
NOW,
THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between
the
parties hereto as follows:
1. Payment
of Severance Amount. If the Employee’s employment by the
Company, or any Affiliate or successor of the Company, shall be subject to
a
Termination within the Covered Period, then the Company shall provide the
Employee the following benefits:
A. Commencing
on the Termination Date, the Employee shall receive the applicable Severance
Amount (less any amount described in Section 1B
below) paid in twelve (12) substantially equal monthly
installments, with each successive payment being due on the monthly anniversary
of the Termination Date.
B. To
the
extent any portion of the applicable Severance Amount exceeds the “safe harbor”
amount described in Treasury Regulations Section 1.409A-1(b)(9)(iii)(A), the
Employee shall receive such portion of the applicable Severance Amount that
exceeds the “safe harbor” amount in a single lump sum payment payable within
five (5) days after the Employee’s Termination that is related to the Change of
Control.
C. Within
five (5) days after the Employee’s Termination that is related to the Change of
Control, the Company shall pay the Employee a lump sum payment in an amount
equal to the sum of all amounts earned or accrued through the Termination Date,
including any annual salary, bonus, vacation pay, sick pay or other paid time
off, which has accrued but has not been paid or used.
The
Employee’s rights following a Termination with respect to any benefits,
incentives or awards provided to the Employee pursuant to the terms and
conditions of any plan, program or arrangement sponsored or maintained by the
Company, whether tax-qualified or not, including but not limited to the
Company’s 2005 Long-Term Incentive Plan, which are not specifically addressed
herein, shall be subject to the terms and conditions of such plan, program
or
arrangement and this Agreement shall have no effect upon such terms and
conditions except as specifically provided herein.
2. Definitions. As
used throughout this Agreement, all of the terms defined in this paragraph
2
shall have the meanings given below.
A. An
“Affiliate” shall mean any entity which owns or controls, is
owned by or is under common ownership or control with, the Company.
B. “Base
Compensation” shall mean the amount equal to the sum of (i) the greater
of Employee’s then-current annual salary or the Employee’s annual salary as of
the date one (1) day prior to the Change of Control; (ii) the average of the
three (3) most recent bonuses paid to the Employee; and (iii) the average of
the
three (3) most recent contributions made by the Company on behalf of the
Employee to the Company’s tax-qualified retirement plans (which, as of the date
hereof, includes the profit sharing plan, the money purchase pension plan and
the 401(k) plan).
C. A
“Change of Control” shall mean:
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(i)
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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 fifty-one
percent
(51%) or more of the combined voting power of the then outstanding
Voting
Securities of the Company; or
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(ii)
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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 as a member
of the
Board; or
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(iii)
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the
consummation by the Company of: (1) 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 fifty-one percent (51%) 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
Company outstanding immediately before such merger or consolidation;
or
(2) a complete liquidation or dissolution or an agreement for the
sale or other disposition of all or substantially all of the assets
of the
Company.
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Notwithstanding
the foregoing, a Change of Control shall not be deemed to occur solely because
fifty-one percent (51%) 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.
D. “Covered
Period” shall mean the period beginning six (6) months prior to a
Change of Control and ending twenty-four (24) months after a Change of
Control.
E. “Good
Reason” shall mean the Employee’s voluntary Termination of employment
for one or more of the following reasons; provided, however, that for
any of the following events that occur during the six (6) month period prior
to
a Change of Control, the Employee may only voluntarily terminate employment
for
Good Reason based upon such circumstances by giving written notice (as described
below) on or before the date which is 30 days following such Change of
Control:
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(i)
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an
adverse change in the nature, scope or status of the Employee’s position,
authorities or duties from those in effect immediately prior to the
Covered Period, including, without limitation, if the Employee ceases
to
be an executive officer of a public company, if immediately prior
to the
Covered Period the Employee was an executive officer of a public
company;
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(ii)
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a
reduction in Employee’s annual salary, bonus opportunity, benefits, or
other compensation plan;
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(iii)
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relocation
of Employee’s primary place of employment of more than 50 miles from
Employee’s primary place of employment prior to the Covered Period or a
requirement that Employee engage in travel that is materially greater
than
prior to the Covered Period;
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(iv)
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failure
by the acquirer to assume this Agreement at the time of the Change
of
Control, or;
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(v)
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a
material breach by the Company, or its successor, of this
agreement.
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Notwithstanding
the foregoing, prior to the Employee’s voluntary Termination for Good Reason,
the Employee must give the Company written notice of the existence of any
condition set forth in clause (i) – (v) above within 90 days of such initial
existence and the Company shall have 30 days from the date of such notice in
which to cure the condition giving rise to Good Reason, if
curable. If, during such 30-day period, the Company cures the
condition giving rise to Good Reason, no benefits shall be due under paragraph
1
of this Agreement with respect to such occurrence. If, during such
30-day period, the Company fails or refuses to cure the condition giving rise
to
Good Reason, the Employee shall be entitled to benefits under paragraph 1 of
this Agreement upon such Termination; provided such Termination occurs within
24
months of such initial existence of the applicable condition.
F. “Severance
Amount” shall mean an amount equal to [2.0 – Xxxxxx] [1.75 –
Xxxxxxx] [1.50 – Xxxxxxxx and Xxxxxx] [1.0 - others] times the
Employee’s Base Compensation.
G. “Termination”
shall mean termination of the Employee’s employment either:
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(i)
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by
the Company or its successor, as the case may be, other than a Termination
for Cause or any termination as a result of death or disability;
or
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(ii)
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by
the Employee for Good Reason.
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(iii)
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Voluntary
retirement by the Employee shall not constitute a “Termination” hereunder,
unless it otherwise constitutes a Good Reason
termination.
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H. “Termination
Date” shall mean the date of employment termination indicated in the
written notice provided by the Company or the Employee to the
other.
I. “Termination
for Cause” shall mean only a termination by the Company as a result of:
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(i)
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Employee’s
willful and continuing failure, that is not remedied within twenty
days
after receipt of written notice of such failure from the Company,
to
perform his obligations hereunder;
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(ii)
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Employee’s
conviction of, or the pleading of nolo contendre to, a crime of
embezzlement, fraud or a felony under the laws of the United States
or any
state thereof;
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(iii)
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Employee’s
breach of fiduciary responsibility; or
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(iv)
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an
act of dishonesty by Employee which is materially injurious to the
Company.
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Any
determination of Cause under this Agreement shall be made by resolution adopted
by unanimous vote of the Board at a meeting called and held for that
purpose. Employee shall be provided with reasonable notice of such
meeting and shall be given the opportunity to be heard, with the presence of
counsel, prior to the vote being taken by the Board.
J. “Voting
Securities” shall mean any securities which ordinarily possess the
power to vote in the election of directors without the happening of any
pre-condition or contingency.
3. Excise
Tax Limitation.
A. It
is the
intention of the Company and the Employee that no portion of any payment under
this Agreement, or payments to or for the benefit of the Employee under any
other agreement or plan, be deemed to be an “Excess Parachute Payment” as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”), or its successors. It is agreed that the
present value of and payments to or for the benefit of the Employee in the
nature of compensation, receipt of which is contingent on the Change of Control,
and to which Section 280G of the Code applies (in the aggregate “Total
Payments”) shall not exceed an amount equal to one dollar less than the
maximum amount which the Company may pay without loss of deduction under Section
280G(a) of the Code. Present value for purposes of this Agreement
shall be calculated in accordance with Section 280G(d)(4) of the
Code. Within one hundred and twenty (120) days following the earlier
of (A) the giving of the notice of termination or (B) the giving of notice
by
the Company to the Employee of its belief that there is a payment or benefit
due
the Employee which will result in an excess parachute payment as defined in
Section 280G of the Code, the Employee and the Company, at the Company’s
expense, shall obtain the opinion of an Independent Advisor (as defined below),
which opinion need not be unqualified, which sets forth (A) the Employee’s
applicable Base Amount (as defined under Section 280G of the Code), (B) the
present value of Total Payments and (C) the amount and present value of any
excess parachute payments. In the event that such opinion determines
that there would be an excess parachute payment, the payment hereunder or any
other payment determined by such Independent Advisor to be includable in Total
Payments shall be modified, reduced or eliminated as specified by the Employee
in writing delivered to the Company within ninety (90) days of his receipt
of
such opinions or, if the Employee fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculation
set
forth in such opinions there will be no excess parachute payment. The
provisions of this paragraph, including the calculations, notices and opinion
provided for herein shall be based upon the conclusive presumption that (A)
the
compensation and benefits provided for in Section 2.B
hereof and (B) any other compensation earned by the Employee pursuant to the
Company’s compensation programs which would have been paid in any event, are
reasonable compensation for services rendered, even though the timing of such
payment is triggered by the Change of Control. In the event that the
provisions of Sections 280G and 4999 of the Code are repealed without
succession, this paragraph shall be of no further force or effect.
B. The
Company and the Employee hereby recognize that the restrictive covenants under
Section 6have
value and that the value shall be recognized in the Section 280G
calculations by an allocation of a portion of the termination benefits to the
restrictive covenant provisions based on the fair market value of such
restrictive covenant provisions. The Independent Advisor shall make
the determination of the fair value to be allocated to the restrictive covenant
provisions.
C. For
purposes of this Agreement, “Independent Advisor” shall mean an
independent nationally recognized accounting firm approved by the Company and
the Employee, where such approval shall not be unreasonably withheld by either
party.
4. Medical
and Dental Benefits. If the Employee’s employment by the
Company or any Affiliate or successor of the Company shall be subject to a
Termination within the Covered Period, then to the extent that the Employee
or
any of the Employee’s dependents may be covered under the terms of any medical
and dental plans of the Company (or any Affiliate) for active employees
immediately prior to the termination, the Company will provide the Employee
and
those dependents with equivalent coverages for [the shorter of
(A) [twenty-four (24) months – Xxxxxx] [twenty-one (21) months -
Xxxxxxx] or (B) the maximum period allowed pursuant to Treasury
Regulations Section 1.409A-1(b)(9)(v) which would be exempt from the definition
of “deferred compensation” thereunder] [a period not to exceed [eighteen
(18) months – Xxxxxxxx and Xxxxxx] [twelve (12) months – others]], with
the Employee required to make no contribution to such Insurance Benefit during
such period. The coverages may be procured directly by the Company
(or any Affiliate, if appropriate) apart from, and outside of the terms of
the
plans themselves; provided that the Employee and the Employee’s dependents
comply with all of the conditions of the medical or dental plans, with the
cost
to the Company not to exceed the cost for continued COBRA
coverage. In the event the Employee or any of the Employee’s
dependents become eligible for coverage under the terms of any other medical
and/or dental plan of a subsequent employer which plan benefits are comparable
to Company (or any Affiliate) plan benefits, coverage under Company (or any
Affiliate) plans will cease for the eligible Employee and/or
dependent. The Employee and Employee’s dependents must notify the
Company (or any Affiliate) of any subsequent employment and provide information
regarding medical and/or dental coverage available. In the event the
Company (or any Affiliate) discovers that the Employee and/or dependent has
become employed and not provided the above notification, all payments and
benefits under this Agreement will cease.
5. Out-Placement
Counseling. If the Employee’s employment by the Company
or any Affiliate or successor of the Company shall be subject to a Termination
within the Covered Period, the Company will provide out-placement counseling
assistance in the form of either (i) reimbursement of the expenses incurred
for such assistance within the twelve (12) month period following the
Termination Date, or (ii) a pre-paid executive-level program, in either case,
the amount shall not exceed one-quarter (1/4) of the Employee’s Base
Compensation on the Termination Date.
6. Restrictive
Covenants.
A. Confidential
Information. Employee acknowledges
that, during the course of his employment with the Company, Employee
may produce and have access to confidential and/or proprietary non-public
information concerning the Company and its Affiliates, including marketing
materials, financial and other information concerning customers and prospective
customers, customers lists, records, data, trade secrets, proprietary business
information, pricing and profitability information and policies, strategic
planning, commitments, plans, procedures, litigation, pending litigation and
other information not generally available to the public (collectively,
“Confidential Information”). Employee agrees not to
directly or indirectly use, disclose, copy or make lists of Confidential
Information for the benefit of anyone other than the Company, either during
or
after his employment with the Company, 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 Company, required by law or
any
competent administrative agency or judicial authority, or otherwise as
reasonably necessary or appropriate in connection with performance by Employee
of his duties hereunder. Employee agrees that, if he
receives a subpoena or other court order or is otherwise required by law to
provide information to a governmental authority or other person concerning
the
activities of the Company or any of its Affiliates, or his activities
in connection with the business of the Company or any of its Affiliates,
Employee will immediately notify the Company of such subpoena, court order
or
other requirement and deliver forthwith to the Company a copy thereof and any
attachments and non-privileged correspondence related
thereto. Employee shall take reasonable precautions to protect
against the inadvertent disclosure of Confidential
Information. Employee agrees to abide by the Company’s reasonable
policies, as in effect from time to time, respecting avoidance of interests
conflicting with those of the Company and its Affiliates. In this
regard, Employee shall not directly or indirectly render services to any person
or entity where Employee’s service would involve the use or disclosure of
Confidential Information. Employee agrees not to use any Confidential
Information to guide him in searching publications or other publicly available
information, selecting a series of items of knowledge from unconnected sources
and fitting them together to claim that he did not violate any agreements set
forth in this Agreement. For purposes of this Agreement, the
Company’s “Affiliates” include each company, corporation,
partnership, bank, savings bank, savings and loan association, credit union
or
other financial institution, directly or indirectly, which is controlled by,
controls, or is under common control with, the Company, and “control” means
(x) the ownership of 51% or more of the voting securities or other voting
interest or other equity interest of any corporation, partnership, joint venture
or other business entity, or (y) the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such corporation, partnership, joint venture or other business
entity.
B. Documents
and Property. All records, files,
documents and other materials or copies thereof relating to the business of
the
Company and its Affiliates, which Employee shall prepare, receive, or use,
shall
be and remain the sole property of the Company and, other than in connection
with performance by Employee of his duties hereunder, shall not be
removed from the premises of the Company or any of its Affiliates without the
Company’s prior written connect, and shall be promptly returned to the Company
upon Employee’s termination of employment together with all copies (including
copies or recordings in electronic form), abstracts, notes or reproductions
of
any kind made from or about the records, files, documents or other
materials.
C. Non-Competition
and Non-Solicitation. The Company and
Employee have jointly reviewed the operations of the Company and have agreed
that the primary service area of the Company’s lending and deposit taking
functions in which Employee has actively participated extends to an area
encompassing a fifty (50) mile radius from the main office of Dubuque Bank
and
Trust Company (“DB&T”) and a twenty-five (25) mile radius
of any office of the Company or any Affiliate where the Employee has provided
any services during the twelve (12) month period preceding the Change
of
Control (the “Restrictive
Area”). Therefore, as an essential ingredient of and in
consideration for the Company’s entering into this Agreement and his continued
employment by the Company, Employee agrees that, during
his employment with the Company and for a period of
[twenty-four (24) months - Xxxxxx] [twenty-one (21) months - Xxxxxxx]
[eighteen (18) months – Xxxxxxxx and Xxxxxx] [twelve (12) months - others]
immediately following the termination of his employment for any reason,
whether or not Employee is then receiving or will receive benefits under this
Agreement, provided such termination occurs during the term of this Agreement
(the “Restrictive Period”), he will not, except with the
express prior written consent of the Company, directly or indirectly, do any
of
the following (all of which are collectively referred to in this agreement
as
the “Restrictive Covenant”):
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(i)
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Engage
or invest in, own, manage, operate, finance, control, or participate
in
the ownership, management, operation or control of, be employed by,
associated with, or in any manner connected with, serve as a director,
officer or consultant to, lend his name or any similar name to, lend
his
credit to, or render services or advice to, any person, firm, partnership,
corporation or trust which owns or operates, a bank, savings and
loan
association, credit union or similar financial institution (a
“Financial Institution”) with an office located, or to be
located at an address identified in a filing with any regulatory
authority, within the Restrictive Area; provided however, that
the ownership by Employee of shares of the capital stock of any Financial
Institution which shares are listed on a securities exchange or quoted
on
the National Association of Securities Dealers Automated Quotation
System
and which do not represent more than five percent (5%) of the
institution’s outstanding capital stock, shall not violate any terms of
this Agreement;
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(ii)
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Employee
will not, directly or indirectly, either for himself, or any Financial
Institution: (1) induce or attempt to induce any employee of the
Company or any of its Affiliates to leave the employ of the Company
or any
of its Affiliates; (2) in any way interfere with the relationship
between the Company or any of its Affiliates and any employee of
the
Company or any of its Affiliates; (3) employ, or otherwise engage as
an employee, independent contractor or otherwise, any employee of
the
Company or any of its Affiliates; or (4) induce or attempt to induce
any customer, supplier, licensee, or business relation of the Company
or
any of its Affiliates to cease doing business with the Company or
any of
its Affiliates or in any way interfere with the relationship between
the
Company or any of its Affiliates and their respective customers,
suppliers, licensees or business relations.
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(iii)
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Employee
will not, directly or indirectly, either for himself, or any Financial
Institution, solicit the business of any person or entity known to
Employee to be a customer of the Company or any of its Affiliates,
where
Employee, or any person reporting to Employee, had personal contact
with
such person or entity, with respect to products, activities or services
which compete in whole or in part with the products, activities or
services of the Company or any of its Affiliates.
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(iv)
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Employee
will not, directly or indirectly, serve as the agent, broker or
representative of, or otherwise assist, any person or entity in obtaining
services or products from any Financial Institution within the Restrictive
Area, with respect to the products, activities or services which
compete
in whole or in part with the products, activities or services of
the
Company or any of its Affiliates.
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D. Work
for Hire Provisions.
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(i)
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Exclusive
Rights of the Company in Work
Product. The parties acknowledge
and agree that all work performed by Employee for the Company or
any of
its Affiliates shall be deemed “work for hire.” The Company
shall at all times own and have exclusive right, title and interest
in and
to all Confidential Information and Inventions (as defined below),
and the
Company shall retain the exclusive right to license, sell, transfer
and
otherwise use and dispose of the same. Any and all enhancements
of the technology of the Company or any of its Affiliates that are
developed by Employee shall be the exclusive property of the
Company. Employee hereby assigns to the Company any right,
title and interest in and to all Inventions that he may have, by
law or
equity, without additional consideration of any kind whatsoever from
the
Company or any of its Affiliates. Employee agrees to execute
and deliver any instruments or documents and to do all other things
(including the giving of testimony) requested by the Company (both
during
and after the termination of his employment with the Company) in
order to
vest more fully in the Company or any of its Affiliates all ownership
rights in the Inventions (including obtaining patent, copyright or
trademark protection therefore in the United States and/or foreign
countries).
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(ii)
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Definitions
and Exclusions. For purposes of
this Agreement, “Inventions” means all systems,
procedures, techniques, manuals, data bases, plans, lists, inventions,
trade secrets, copyrights, patents, trademarks, discoveries, innovations,
concepts, ideas and software conceived, compiled or developed by
Employee
in the course of his employment with the Company or any of its Affiliates
and/or comprised, in whole or part, of Confidential
Information. Notwithstanding the foregoing, Inventions shall
not include: (i) any inventions independently developed by
Employee and not derived, in whole or part, from any Confidential
Information or (ii) any invention made by Employee prior to his
exposure to any Confidential Information.
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E. Remedies
for Breach of Restrictive
Covenants. Employee has reviewed the
provisions of this Agreement with legal counsel, or has been given adequate
opportunity to seek such counsel, and Employee acknowledges and expressly agrees
that the covenants contained in this Section 6
are reasonable with respect to their duration, geographical area and
scope. Employee further acknowledges that the restrictions contained
in this Section 6are
reasonable and necessary for the protection of the
legitimate business interests of the Company, that they create no undue
hardships, that any violation of these restrictions would cause substantial
injury to the Company and such interests, that the Company would not have agreed
to employ Employee without receiving Employee’s agreement to be bound by these
restrictions and that such restrictions were a material inducement to the
Company to hire Employee and to enter into this Agreement. In the
event of any violation or threatened violation of these restrictions, the
Company, in addition to and not in limitation of, any other rights, remedies
or
damages available to the Company 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 Employee and any and all persons
directly or indirectly acting for or with her, as the case may be.
7. Notices. Notices
and all other communications under this Agreement shall be in writing and shall
be deemed given when mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the
Company to:
Heartland
Financial USA, Inc.
Attention: President
0000
Xxxxxxx Xxxxxx
Xxx
000
Xxxxxxx,
Xxxx 00000-0000
If
to the
Employee to:
«Employee»
«Street»
«City»,
«State» «Zip»
or
to
such other address as either party may furnish to the other in writing, except
that notices of changes of address shall be effective only upon
receipt.
8. Applicable
Law. This Agreement is entered into under, and shall be
governed for all purposes by, the laws of the state of Iowa.
9. Severability. If
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or unenforceability
of that provision shall not affect the validity or enforceability of any other
provision of this Agreement and all other provisions shall remain in full force
and effect. The various covenants and provisions of this Agreement
are intended to be severable and to constitute independent and distinct binding
obligations. Without limiting the generality of the foregoing, if the
scope of any covenant contained in this Agreement is too broad to permit
enforcement to its full extent, such covenant shall be enforced to the maximum
extent permitted by law, and the Employee hereby agrees that such scope may
be
judicially modified accordingly.
10. Withholding
of Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may
be
required pursuant to any law, governmental regulation or ruling.
11. Not
an Employment Agreement. Nothing in this Agreement shall
give the Employee any rights (or impose any obligations) to continued employment
by the Company or any Affiliate or successor of the Company, nor shall it give
the Company any rights (or impose any obligations) for the continued performance
of duties by the Employee for the Company or any Affiliate or successor of
the
Company.
12. No
Assignment. The Employee’s rights to receive payments or
benefits under this Agreement shall not be assignable or transferable whether
by
pledge, creation of a security interest or otherwise, other than a transfer
by
will or by the laws of descent or distribution. In the event of any
attempted assignment or transfer contrary to this paragraph, the Company shall
have no liability to pay any amount so attempted to be assigned or
transferred. This Agreement shall inure to the benefit of and be
enforceable by the Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
13. Successors. This
Agreement shall be binding upon and inure to the benefit of the Company, its
successors and assigns (including, without limitation, any company into or
with
which the Company may merge or consolidate). The Company agrees that
it will not effect the sale or other disposition of all or substantially all
of
its assets unless either (a) the person or entity acquiring the assets, or
a
substantial portion of the assets, shall expressly assume by an instrument
in
writing all duties and obligations of the Company under this Agreement, or
(b)
the Company shall provide, through the establishment of a separate reserve,
for
the payment in full of all amounts which are or may reasonably be expected
to
become payable to the Employee under this Agreement.
14. Legal
Fees. All reasonable legal fees and related expenses
(including the costs of experts, evidence and counsel) paid or incurred by
the
Employee pursuant to any dispute or question of interpretation relating to
this
Agreement shall be paid or reimbursed by the Company if the Employee is
successful on the merits pursuant to a legal judgment, arbitration or
settlement.
15. Term. The
“Term” of this Agreement shall be the period commencing on the
Effective Date and ending on December 31, 2009. As of December 31,
2009, and each December 31 thereafter, the Term shall automatically renew for
an
additional one-year period unless the Company notifies the Employee in writing
that the Term will not be renewed. Any such notice of non-renewal
must be delivered to the Employee at least 180 days before the date on which
the
Term would otherwise automatically renew. In the event of a Change of
Control during the Term, this Agreement shall remain in effect for the Covered
Period.
16. Survival. The
provisions of Section 6 shall
survive the termination of this Agreement.
17. Amendment. This
Agreement may not be amended or modified except by written agreement signed
by
the Employee and the Company.
18. Internal
Revenue Code Section 409A.
A. Six-Month
Delay in Payment. If, as of the Termination Date, the
Employee is a Specified Employee (as defined below), then, to the extent
required pursuant to Code Section 409A, payment of any portion of the Severance
Amount that would otherwise have been paid to the Employee during the six-month
period following the Termination Date and which would constitute deferred
compensation under Code Section 409A (the “Delayed Payments”)
shall be delayed until the date that is six months and one day following the
Termination Date or, if earlier, the date of the Employee’s death (the
“Delayed Payment Date”). As of the Delayed Payment
Date, the Delayed Payments [plus interest at a rate equal to the then
current prime rate, for the period of delay] shall be paid to the
Employee in a single lump sum. Any portion of the Severance Amount
that was not otherwise due to be paid during the six-month period following
the
Termination Date shall be paid to the Employee in accordance with the payment
schedule established under paragraph 1 of this Agreement.
B. Separation
Pay Not Subject to Code Section 409A. To the extent that
any portion, or all, of the Severance Amount meets the requirements of (i)
and
(ii) of this subparagraph B, the six-month delay rule set forth in subparagraph
A above shall not apply to such portion of the Severance Amount. The
Severance Amount, or any portion thereof, will not be subject to the six-month
delay rule set forth in subparagraph A above if and to the extent it is paid
to
the Employee no later than the last day of the second calendar year following
the year in which the Termination occurs and it does not exceed two times the
lesser of:
|
(i)
|
The
sum of the Employee’s annual compensation (as determined in accordance
with Section 1.409A-1(b)(9)(iii) of the regulations issued under
Code
Section 409A) for the calendar year preceding the year of Termination;
or
|
|
(ii)
|
The
maximum amount that may be taken into account under a qualified plan
pursuant to Code Section 401(a)(17) for the calendar year in which
the
Termination occurs.
|
C. Definitions.
|
(i)
|
“Specified
Employee” shall mean an individual who is a “key employee” (as
defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (without regard
to
Code Section 416 (i)(5))) of the Company at any time during the twelve
(12) month period ending on the Specified Employee Identification
Date (as
defined below). If the Employee is a key employee as of the
Specified Employee Identification Date, the Employee will be treated
as a
key employee for purposes of this Agreement for the entire twelve
(12)
month period beginning on the Specified Employee Effective Date (as
defined below). For purposes of determining whether the
Employee is a key employee (as defined in Code Section 416(i)), the
Company shall use the same definition of “compensation” as is used for
purposes of the Company’s 401(k) plan.
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|
(ii)
|
“Specified
Employee Identification Date” shall mean December 31 of any
calendar year.
|
|
(iii)
|
“Specified
Employee Effective Date” shall mean April 1 of the calendar year
following the year of the Specified Employee Identification
Date.
|
19. Other
Agreements. In the event of the existence of another
agreement between the parties which (i) is in effect during the Restricted
Period, and (ii) which contains restrictive covenants that conflict with any
the
provisions of Section 6,
then the more restrictive of such provisions from the two agreements shall
control for the period during which both agreements would otherwise be in
effect.
20. References. Masculine
pronouns are used herein solely for convenience of reference, and are intended
to have general application.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first written.
HEARTLAND
FINANCIAL USA, INC.
By:
/s/
Xxxxx X. Xxxx /s/
Employee
Xxxx
X.
Xxxx «Employee»
Director
Chairman,
Compensation Committee
