EXHIBIT 10.19
CONSULTING AND NON-COMPETITION AGREEMENT
THIS CONSULTING AND NON-COMPETITION AGREEMENT (this "AGREEMENT"), is
entered into as of February 6, 2004, between HEARTLAND FINANCIAL USA, INC., a
Delaware corporation ("HEARTLAND"), and XXXXXX XXXXXX ("CONSULTANT").
RECITALS
A. Heartland, Rocky Mountain Bancorporation, Inc., a Montana corporation
("RMB"), and RMB Acquisition Corporation, a Montana corporation and a
wholly-owned subsidiary of Heartland ("ACQUISITION CORP"), have entered into an
Agreement and Plan of Merger of even date herewith (the "MERGER AGREEMENT")
providing for the merger of Acquisition Corp with and into RMB (the "MERGER"),
with the effect that RMB will become a wholly subsidiary of Heartland.
B. Consultant is currently the Chairman of the Board of RMB and of Rocky
Mountain Bank, a Montana chartered, commercial bank with its main office located
in Billings, Montana, and a wholly owned subsidiary of RMB (the "BANK"), and is
familiar with the business, operations and properties of RMB and the Bank.
C. For purposes of facilitating a smooth transition in ownership and
control, and an effective consolidation of RMB's and the Bank's operations with
those of Heartland, Heartland wishes to secure Consultant's services for a
period following the Closing Date.
D. Consultant is willing to make his services available to Heartland on the
terms and conditions hereinafter set forth.
AGREEMENTS
In consideration of the foregoing premises and the following mutual
promises, covenants and agreements, the parties hereby agree as follows:
SECTION 1. DEFINITIONS; CONSTRUCTION.
(a) In addition to those terms defined throughout this Agreement, the
following terms, when used herein, shall have the following meanings:
(i) "AFFILIATE" means any entity which owns or controls, is
owned by or is under common ownership or control with, Heartland or the Bank.
(ii) "CONFIDENTIAL INFORMATION" means ideas, information,
knowledge and discoveries (whether or not patentable) about Heartland or any of
its Affiliates which Consultant has knowledge of as a result of his services for
Heartland hereunder, including information regarding the products, product
specifications, technology, computer programs, methods of sale, trade secrets,
price lists and names of customers and suppliers of Heartland or any of its
Affiliates, or other information regarding the business affairs or business
methods of Heartland or any of its Affiliates. Confidential Information does not
include information that becomes generally available to the public other than as
a result of disclosure by Consultant.
(iii) "FINANCIAL INSTITUTION" means 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.
(b) In this Agreement, unless otherwise stated or the context
otherwise requires, the following uses apply: (i) "including" means "INCLUDING,
BUT NOT LIMITED TO"; (ii) all references to sections are to sections in this
Agreement unless otherwise specified; (iii) all words used in this Agreement
will be construed to be of such gender or number as the circumstances and
context require; and (iv) the captions and headings of sections appearing in
this Agreement have been inserted solely for convenience of reference and shall
not be considered a part of this Agreement nor shall any of them affect the
meaning or interpretation of this Agreement or any of its provisions.
(c) The subject matter and language of this Agreement have been the
subject of negotiations between the parties and their respective counsel, and
this Agreement has been jointly prepared by their respective counsel.
Accordingly, this Agreement shall not be construed against either party on the
basis that the Agreement was drafted by such party or its counsel.
SECTION 2. ENGAGEMENT; PERIOD OF ENGAGEMENT.
(a) Heartland offers to engage Consultant, and Consultant hereby
accepts such engagement, to provide services to Heartland as a consultant for
the period established under this Section (the "PERIOD OF ENGAGEMENT"). The
Period of Engagement shall be for one year beginning at the Effective Time.
(b) Notwithstanding anything herein to the contrary, the Period of
Engagement shall end upon any termination of this Agreement pursuant to SECTION
8.
SECTION 3. EXTENT OF SERVICES. During the Period of Engagement, Consultant
shall hold himself available during regular business hours to perform such
services in connection with the transition of the ownership and operation of the
businesses and assets of RMB and the Bank acquired by Heartland pursuant to the
Merger Agreement as Heartland through its executive officers may reasonably
request. The services which may be required of Consultant hereunder may include,
but are not limited to, promoting Heartland and its products and services in
communities that are served by RMB and the Bank and its affiliates; promoting
the recognition and acceptance of Heartland among RMB and the Bank's customers;
and otherwise facilitating the transition of ownership and control and an
effective consolidation of RMB and the Bank's operations with those of
Heartland. Heartland may, in its sole and absolute discretion, engage other
employees or independent contractors to perform any or all of the services for
which Consultant is available under this Section.
SECTION 4. COMPENSATION FOR CONSULTING SERVICES. In consideration for the
consulting services to be provided under SECTION 3, Heartland shall:
(a) pay to Consultant One Hundred Thousand Dollars ($100,000) for the
Period of Engagement, payable in equal monthly installments in advance on the
first business day of each month over the Period of Engagement;
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(b) pay through the Period of Engagement the lease payments for the
automobile currently leased by the Bank for Consultant's use and reimburse
Consultant for business-related fuel expenses in accordance with the Heartland's
policy regarding such reimbursements, and Consultant shall report his business
use of the automobile in conformity with policies adopted by Heartland;
(c) pay through the Period of Engagement Consultant's monthly
membership dues at Canyon Gate Country Club; and
(d) pay through the Period of Engagement, either through payment of
COBRA premiums or through extension to Consultant of health insurance coverage
consistent with Heartland's coverage of persons who provide services to
Heartland in capacities similar to that of Consultant, the cost of providing
Consultant medical insurance under Heartland's group medical insurance plan.
SECTION 5. COMPENSATION FOR RESTRICTIVE COVENANT. In consideration for
Consultant's compliance with the Restrictive Covenant, as defined and described
in SECTION 8, Heartland shall pay to Consultant the annual sum of One Hundred
Fifty Thousand Dollars ($150,000) commencing with the Effective Time and ending
on the third anniversary of the Effective Time (the "RESTRICTIVE PERIOD"),
payable in equal monthly installments in advance on the first business day of
each month over the Restrictive Period.
SECTION 6. EXPENSES.
(a) Heartland shall provide Consultant with office facilities and
secretarial and other support services on its premises to the extent required to
perform the consulting services contemplated herein, as determined by Heartland
in its discretion.
(b) If, in connection with the performance of services hereunder at
the request of Heartland, Consultant incurs out-of-pocket costs for expenses for
travel, meals and lodging or other reasonable expenses of a type for which other
providers of professional services to Heartland would be reimbursed by
Heartland, he shall be entitled to reimbursement therefor by Heartland in
accordance with the reasonable standards and procedures established by Heartland
and communicated to Consultant.
SECTION 7. CONFIDENTIALITY AND LOYALTY. Consultant acknowledges that during
the course of his employment he may produce and have access to Confidential
Information. Accordingly, during and subsequent to termination of this
Agreement, Consultant agrees to hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any 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
Heartland, required by a law or any competent administrative agency or judicial
authority, or otherwise as reasonably necessary or appropriate in connection
with performance by Consultant of his services hereunder. All records, files,
documents and other materials or copies thereof relating to the respective
businesses of Heartland and its Affiliates that Consultant shall prepare or use,
shall be and remain the sole property of Heartland, and other than in connection
with performance by Consultant of his services hereunder, shall not be removed
from the premises of Heartland or any
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of its Affiliates without Heartland's written consent, and shall be promptly
returned to Heartland upon termination of Consultant's services hereunder.
Consultant agrees to abide by Heartland's reasonable policies, as in effect from
time to time, respecting avoidance of interests conflicting with those of
Heartland and its Affiliates. Nothing in this Agreement modifies or reduces
Consultant's obligations to comply with applicable laws related to trade
secrets, confidential information or unfair competition.
SECTION 8. TERMINATION OF AGREEMENT. This Agreement shall terminate
immediately upon the occurrence of any of the following events: (a) Consultant's
death; (b) Consultant's material breach of his obligations under any of SECTIONS
3, 7 or 9 and subsequent failure to substantially cure such breach after notice
of such breach; or (c) Consultant's voluntary termination, upon 30 days' written
notice to Heartland, of this Agreement. Following the termination of this
Agreement, Heartland shall have no further obligations hereunder.
SECTION 9. NON-COMPETITION COVENANT.
(a) Heartland and Consultant have jointly reviewed the customer lists
and operations of the Bank and have agreed that the primary service area of the
Bank's lending and deposit taking functions in which Consultant has previously,
and will likely in the future, participate extends separately to an area that
encompasses a thirty-five (35) mile radius from each banking or other office
location of the Bank (the "RESTRICTIVE AREA"). Therefore, as an essential
ingredient of and in consideration of this Agreement and Heartland's agreement
to pay the compensation described in SECTION 4 (Compensation) and SECTION 5
(Compensation for Restrictive Covenant), Consultant hereby agrees that, except
with the express prior written consent of Heartland, during the Restrictive
Period Consultant will not directly or indirectly compete with the business of
Heartland or the Bank, including, by directly or indirectly, taking any of the
following actions (collectively, the "RESTRICTIVE COVENANT"):
(i) owning, managing, operating, controlling, or financing a
Financial Institution within the Restrictive Area;
(ii) serving as the agent, broker or representative of, or
otherwise assisting, any person or entity in obtaining services or products from
any Financial Institution within the Restrictive Area;
(iii) directly or indirectly serving as an employee, officer or
director of, or consultant to, a Financial Institution within the Restrictive
Area;
(iv) soliciting or inducing, or attempting to solicit or induce,
any current or former customer of Heartland or any of its Affiliates to (A)
terminate any business relationship with Heartland or any of its Affiliates, or
(B) obtain services or products from a Financial Institution with the
Restrictive Area; and
(v) soliciting or inducing, or attempting to solicit or induce,
any employee, agent or supplier of Heartland or any of its Affiliates to
terminate any employment or business relationship with Heartland or any of its
Affiliates, and become employed by, or to establish a business relationship
with, a Financial Institution within the Restrictive Area.
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(b) If Consultant violates the Restrictive Covenant and Heartland
brings legal action for injunctive or other relief, Heartland 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 Consultant. If a successor assumes and agrees to
perform this Agreement, this Restrictive Covenant shall continue to apply only
to the offices of Bank as they existed immediately before such assumption and
shall not apply to any of the successor's other offices. The Restrictive
Covenant shall not prohibit Consultant from owning directly or indirectly
capital stock or similar securities that are listed on a securities exchange or
quoted on the NASDAQ Stock Market that do not represent more than one percent
(1%) of the outstanding capital stock of any Financial Institution.
(c) Consultant acknowledges that the restrictions contained in Section
5 (Confidentiality and Loyalty) and this Section of this Agreement are
reasonable and necessary for the protection of the legitimate business interests
of Heartland and the Bank, that any violation of these restrictions would cause
substantial injury to Heartland, the Bank and such interests, that Heartland
would not have entered into this Agreement with Consultant without receiving the
additional consideration offered by Consultant in binding himself to these
restrictions and that such restrictions were a material inducement to Heartland
to enter into this Agreement. In the event of any violation or threatened
violation of these restrictions, either of Heartland or the Bank, in addition to
and not in limitation of, any other rights, remedies or damages available to
Heartland and the Bank 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 Consultant and any and all persons directly or
indirectly acting for or with Consultant, as the case may be.
SECTION 10. NO EMPLOYMENT RELATIONSHIP CREATED. The relationship between
Heartland and Consultant shall be that of client and independent contractor.
Heartland shall not assume, and specifically disclaims, any obligations of an
employer to an employee which may exist under applicable law. Consultant shall
be treated as an independent contractor for all purposes of federal, state and
local income taxes and payroll taxes. Consultant shall be responsible for
payment of all taxes, including federal, state and local taxes arising out of
Consultant's activities in accordance with this Agreement, including by way of
illustration, but not limitation, federal and state personal income tax and
social security tax, all as may be required by applicable law or regulation and
Heartland or the Bank, as applicable, shall file the appropriate IRS Form 1099s.
Consultant shall have the full authority to select the means, manner and method
of performing the services to be performed under this Agreement. Consultant
shall not be considered by reason of the provisions of this Agreement or
otherwise as being an employee of Heartland. Consultant shall not be eligible to
participate in any employee benefit plans offered by Heartland or any of its
subsidiaries to their respective employees.
SECTION 11. SUCCESSORS AND ASSIGNS. This Agreement will inure to the
benefit of and be binding upon Consultant, his legal representatives and testate
or intestate distributees, and Heartland, and their respective successors and
assigns, including, in the case of Heartland, any successor by merger or
consolidation or a statutory receiver or any other person or firm or
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corporation to which all or substantially all of the respective assets and
business of Heartland may be sold or otherwise transferred.
SECTION 12. ENTIRE AGREEMENT; MODIFICATIONS; SURVIVAL. This Agreement
constitutes the entire agreement between the parties respecting the subject
matter hereof, and supersedes all prior negotiations, undertakings, agreements
and arrangements with respect thereto, whether written or oral. Consultant
agrees that any employment or consulting agreement or arrangement between
Consultant and any of the Bank or RMB shall terminate at the Effective Time and
that Consultant is entitled to receive no payments thereunder except for accrued
compensation for services rendered. Except as otherwise explicitly provided
herein, this Agreement may not be amended or modified except by written
agreement signed by Consultant and Heartland. Consultant further acknowledges
and agrees that SECTION 7 and SECTION 9 shall survive the termination of this
Agreement.
SECTION 13. ENFORCEMENT. The provisions of this Agreement shall be regarded
as divisible and separate; if any of said provisions should be declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remaining provisions shall not be affected thereby.
Furthermore, if the scope and any restriction or requirement contained in this
Agreement is too broad to permit enforcement of such restriction or requirement
to its fullest extent, then such restriction or requirement shall be enforced to
the maximum extent permitted by law, and Consultant consents and agrees that any
court of competent jurisdiction may so modify such scope in any proceeding
brought to enforce such restriction or requirement.
SECTION 14. GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal laws of
the State of Iowa applicable to contracts made and wholly to be performed in
such state without regard to conflicts of laws.
SECTION 15. JURISDICTION AND SERVICE OF PROCESS. Any action or proceeding
seeking to enforce, challenge or avoid any provision of, or based on any right
arising out of, this Agreement shall be brought only in the courts of the State
of Iowa, County of Dubuque or, if it has or can acquire jurisdiction, in the
United States District Court serving the County of Dubuque, and each of the
parties consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to jurisdiction or venue laid therein. Process in any action or
proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
SECTION 16. LEGAL FEES. All reasonable legal fees paid or incurred by
Heartland or Consultant pursuant to any dispute or question of interpretation
relating to this Agreement shall be paid or reimbursed by the party who or which
is not successful on the merits pursuant to a legal judgment or settlement.
SECTION 17. WAIVER. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
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SECTION 18. NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to Heartland, addressed to the principal headquarters of
Heartland, attention: Chairman; or, if to Consultant, to the address set forth
below Consultant's signature on this Agreement, or to such other address as the
party to be notified shall have given to the other.
[THIS SPACE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
HEARTLAND FINANCIAL USA, INC. XXXXXX XXXXXX
By: /s/ Xxxx X. Xxxxxx /s/ Xxxxxx Xxxxxx
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Xxxx X. Xxxxxx
Chairman, President and Chief 8708 Canyon View
Executive Officer --------------------------------------------
Xxx Xxxxx, Xxxxxx 00000
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(Address)
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