Exhibit 10.5
NON-COMPETITION AGREEMENT
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This Non-Competition Agreement dated as of May 31, 1997 (the
"Agreement"), is entered into by and between Xxxxxx X. Xxxx ("Covenantor") and
Popular, Inc., formerly known as BanPonce Corporation, a Puerto Rico corporation
("Popular").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Popular, National Bancorp, Inc., a Delaware corporation
(collectively, with its subsidiaries "NBI"), and stockholders of NBI entered
into a Stock Purchase Agreement dated as of December 6, 1996 (the "Acquisition
Agreement") providing, among other things, for the acquisition of all of the
outstanding common stock of NBI (the "Acquisition") and its wholly-owned
subsidiary, American Midwest Bank & Trust, an Illinois state bank ("AmMid");
WHEREAS, Covenantor is a stockholder, a director and an executive
officer of NBI and, pursuant to Section 6.16 of the Acquisition Agreement,
hereby enters into this Non-Competition Agreement; and
WHEREAS, Covenantor acknowledges that as a director, executive officer
and stockholder of NBI, he has become familiar with the customers and related
customer information of NBI.
NOW, THEREFORE, in consideration of and as a condition and inducement
to Popular consummating the transactions contemplated by the Acquisition
Agreement, and in consideration of the premises and the mutual covenants,
representations, warranties and agreements herein contained, Covenantor and
Popular agree as follows:
1. Covenants.
(a) Covenantor covenants and agrees that for a period of three
(3) years beginning upon the Closing Date (as defined in the Acquisition
Agreement) (the "Non-Competition Period") he shall not knowingly:
(i) solicit or cause to be solicited retail or commercial
banking business or related business from any of AmMid's customers existing
on the signing hereof and AmMid's customers existing on the Closing Date;
provided, however, that nothing in this Section 1(a)(i) shall be deemed or
construed to prevent general advertisement, mass mailings or other
marketing efforts soliciting retail or commercial banking business provided
that such advertisement, mass mailings or other marketing efforts are not
specifically targeted at customers of AmMid; and provided, further, that
nothing contained in this Section 1(a)(i) shall prevent, or be deemed to
prevent, the rendering of, or the making of a proposal to render, retail or
commercial banking services by Covenantor to any customer of AmMid in
response to an unsolicited request from such customer therefor,
or prevent the withdrawal of any account or termination of relationship of
any entity owned or controlled by Covenantor or in which Covenantor is a
general partner; or
(ii) without the prior written consent of Popular, within a
five (5) mile radius of AmMid, either alone or in partnership or jointly or
in conjunction with any person or persons, financial institution, firm,
association, syndicate, company or corporation as principal, agent,
employee, officer, director, shareholder, consultant, investor or advisor
or in any other manner whatsoever establish a facility to: (A) carry on or
be engaged in the commercial or retail banking or related business or do
any other business under the name of "American Midwest Bank & Trust" (or
any derivation thereof); or (B) carry on or engage in the commercial or
retail banking business generally; provided, however, that this Section
1(a)(ii) shall not prohibit Covenantor from owning less than 5% of the
outstanding stock of any class of a retail or commercial banking
institution or corporation controlling a retail or commercial banking
institution which is publicly traded, so long as he has no active
participation in the business or management of such corporation or
financial institution.
(b) Covenantor agrees that during the Non-Competition Period, he
will not offer or cause to be offered employment to or hire or cause to be hired
any person who is employed by AmMid on the date hereof or on the Closing Date,
except with the prior written consent of Popular; provided, however, that
Covenantor shall not be prohibited from either:
(i) placing in any mass media any general advertisement for
prospective employees, provided that such advertisement is not specifically
targeted at employees of AmMid; or
(ii) employing a person whose employment was terminated by
Popular.
(c) Covenantor agrees that he shall not disclose to others or
use, or allow others to use, for business solicitation purposes, whether
directly or indirectly, any information about AmMid's customers, including but
not limited to the identity thereof and loan and account balances, which is not
available to the general public and was learned by Covenantor as a consequence
of his relationship with NBI or AmMid. Covenantor acknowledges that such
information is specialized, unique in nature and of great value to Popular, as
purchaser of NBI.
2. Remedies. Covenantor acknowledges that the covenants and agreements
which he has made in this Agreement are reasonable and are required for the
reasonable protection of Popular's purchase of NBI. Covenantor agrees that the
breach of any covenant or agreement contained herein will result in irreparable
injury to Popular, and that in addition to all other remedies provided by law or
in equity with respect to the breach of any provision of this Agreement,
Popular, its subsidiaries and their successors and assigns will be entitled to
enforce the specific performance by Covenantor of his obligations hereunder and
to enjoin him from engaging in any activity in violation hereof and that no
claim by Covenantor against Popular, its
subsidiaries or their successors or assigns will constitute a defense or bar to
the specific enforcement of such obligations. In the event of a lawsuit, Popular
shall be entitled to recover from Covenantor reasonable attorney's fees and
costs of litigation. In the event of a breach or a violation by Covenantor of
any of the provisions of this Agreement, the running of the Non-Competition
Period (but not of Covenantor's obligations hereunder) shall be tolled during
the period of the continuance of any actual breach or violation.
3. Partial Invalidity. The various covenants and provisions of this
Agreement are intended to be severable and to constitute independent and
distinct binding obligations. Should any covenant or provision of this Agreement
be determined to be void and unenforceable, in whole or in part, it shall not be
deemed to affect or impair the validity of any other covenant or provision or
part thereof, and such covenant or provision or part thereof shall be deemed
modified to the extent required to permit enforcement. 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 Covenantor hereby
agrees that such scope may be judicially modified accordingly.
4. Assignment. Covenantor agrees that this Agreement may be assigned
by Popular to any direct or indirect majority owned affiliate of Popular and
that upon such assignment, such affiliate shall acquire all of Popular's rights
under this Agreement, including, without limitation, the right of assignment set
forth in this Section 4.
5. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any person.
6. Notice. Any notice or other communication required or permitted to
be given hereunder shall be determined to have been duly given to any party or
parties:
(a) upon delivery to the address of such party or parties
specified below if delivered in person or by courier, or if sent by certified or
registered mail (return receipt requested), postage prepaid, or
(b) one business day following dispatch if transmitted by
confirmed telecopy or other means of facsimile, in any case to the party or
parties at the following address(es) or telecopy number(s), as the case may be:
If to Covenantor:
Xx. Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Office of Xxxxxx X. Xxxxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Popular:
Popular, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Attention: President
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxxxx, Esq.
7. Waiver of Breach. The waiver by either party hereto of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach.
8. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois, without
giving effect to the principles of conflicts of laws thereof.
9. Entire Understanding. This Agreement and the agreements referred to
herein constitute the entire understanding and shall not be changed, altered, or
modified except by the written consent of both parties.
10. Survival. If the Acquisition Agreement is terminated in accordance
with its terms, this Agreement shall terminate and be null and void. All of the
provisions herein shall survive the Closing Date.
11. Binding Effect. This Agreement shall be binding upon Covenantor's
executors, administrators, legal representatives, heirs and legatees and the
successors and permitted assigns of Popular.
[SIGNATURES FOLLOW]
IN WITNESS WHEREOF, the party has executed this Non-Competition
Agreement on the date first above written.
XXXXXX X. XXXX
/s/ Xxxxxx X. Xxxx
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POPULAR, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Its: President, Chairman of the
Board & CEO
