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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this "AGREEMENT"), is entered into as of
February 6, 2004, between HEARTLAND
FINANCIAL USA, INC., a Delaware corporation
("EMPLOYER"), and DANNY SKARDA
("EXECUTIVE").
RECITALS
A. A. Employer,
Rocky Mountain Bancorporation, Inc., a Montana corporation
("RMB"), and RMB Acquisition Corporation, a
Montana corporation and a
wholly-owned subsidiary of Employer
("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. Executive
currently serves as the President 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").
C. After the
Merger, Employer intends to maintain the separate existence of
the Bank and Employer desires Executive to
continue to serve the Bank in his
present capacity as President.
D. Employer and
Executive have made commitments to each other on a variety
of important issues concerning Executive's
continued employment, including the
performance that will be expected of
Executive, the compensation that Executive
will be paid, how long and under what
circumstances Executive will remain
employed and the financial details relating
to any decision that either
Executive or Employer might ever make to
terminate this Agreement.
E. Employer
recognizes that circumstances may arise in which a change in
control of Employer or the Bank through
acquisition or otherwise may occur
thereby causing uncertainty of employment
without regard to the competence or
past contributions of Executive which
uncertainty may result in the loss of
valuable services of Executive, and
Employer and Executive wish to provide
reasonable security to Executive against
changes in the employment relationship
in the event of any such change in
control.
F. Employer and
Executive believe that the commitments they have made to
each other should be memorialized in
writing, and that is the purpose of this
Agreement.
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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, Employer or the Bank.
(II) "CONFIDENTIAL INFORMATION" means ideas, information,
knowledge and discoveries (whether or not
patentable) about Employer or any of
its Affiliates which Executive has
knowledge of as a result of his services for
Employer 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 Employer or any of its
Affiliates, or other information regarding
the business affairs or business
methods of Employer 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 Executive.
(III) "TERMINATION DATE" means the effective date of the
termination of Executive's employment with
Employer, whether such termination is
initiated by Employer
or Executive.
(b) Except as
the context may clearly require otherwise, all references in
this Agreement to "EMPLOYER," shall include
both Heartland Financial USA, Inc.
and the Bank.
(c) 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.
(d) 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.
EFFECTIVE TIME. The parties agree that the Effective Time under
this Agreement shall be the same as the
Effective Time as defined in the Merger
Agreement,
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provided, however, that if the Merger
Agreement is terminated, this Agreement
shall also automatically terminate.
SECTION 3.
POSITION AND DUTIES. Employer hereby employs Executive as the
President of the Bank. During the period of
Executive's employment hereunder,
Executive shall devote his best efforts and
full business time, energy, skills
and attention to the business and affairs
of Employer and the Bank. Executive's
duties and authority shall consist of and
include all duties and authority
customarily performed and held by persons
holding equivalent positions with
Employer's Affiliates engaged in the
banking business ("BANKING AFFILIATES"), as
such duties and authority are reasonably
defined, modified and delegated from
time to time by the Boards of Directors of
Employer and the Bank, as applicable.
Executive shall have the powers necessary
to perform the duties assigned to him
and shall be provided such supporting
services, staff, secretarial and other
assistance, office space and accoutrements
as shall be reasonably necessary and
appropriate in the light of such assigned
duties.
SECTION 4.
COMPENSATION. As compensation for the services to be provided
by
Executive hereunder, Executive shall
receive the following compensation, expense
reimbursement and other benefits:
(a) BASE COMPENSATION. Executive shall receive an aggregate
annual
minimum base salary at the rate of One
Hundred Fifty Thousand Dollars ($150,000)
payable in installments in accordance with
the regular payroll schedule of the
Bank. Such base salary shall be subject to
review annually commencing in the
year 2005 and such salary shall be
maintained or increased during the term
hereof in accordance with Employer's
established management compensation
policies and plans (as the same may be
adjusted, "BASE COMPENSATION").
Notwithstanding anything contained herein
to the contrary, Employer shall be
entitled in its sole and absolute
discretion to allocate between Employer and
the Bank the amount of Base Compensation
payable to Executive and to cause all
or any of such Base Compensation or any
other benefits payable or to be provided
to Executive under the terms of this
Agreement to be paid or provided directly
by the Bank to Executive.
(b) PERFORMANCE BONUS. Executive may be entitled to receive an
annual
performance bonus of up to thirty percent
(30%) of his Base Compensation,
payable within ninety (90) days after the
end of the fiscal year of Employer,
which shall be based upon performance
criteria mutually agreed upon by Executive
and the Executive Committee of the Bank's
Board of Directors (the "EXECUTIVE
COMMITTEE"), and which shall not be deemed
earned, in whole or in part, until
such time as the amount of such bonus is
determined by the Executive Committee.
The amount (if any) of and the form of
payment (i.e., cash, stock options, stock
grants or any combination thereof) shall be
determined by the Executive
Committee.
(c) AUTOMOBILE. Employer shall provide an automobile for
Executive's
use in the performance of his duties
hereunder and shall pay all expenses for
maintenance, repairs and insurance relating
to that automobile, provided,
however, that Executive shall pay for all
fuel charges and be reimbursed for
business-related fuel expenses in
accordance with the Employer's policy
regarding such reimbursements. Executive
shall report his business and personal
use of the automobile in conformity with
policies adopted by Employer and his
personal use shall be
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reflected annually on the IRS Form W-2 of
Executive as additional compensation
for income tax purposes.
(d) LIFE INSURANCE. Employer shall provide to Executive, at
Employer's
expense, life insurance in an amount equal
to two (2) times Executive's Base
Compensation.
(e) VACATIONS. Executive shall be entitled to an annual vacation
in
accordance with the vacation policy of
Bank, which vacation shall be taken at a
time or times mutually agreeable to
Employer and Executive.
(f) OTHER BENEFITS. Executive shall be entitled to all benefits
specifically established for him and, when
and to the extent he is eligible
therefor, to participate in all plans and
benefits not otherwise provided to him
and that are generally accorded to senior
executives of the Bank and Employer's
Banking Affiliates, including, pension,
profit-sharing, supplemental retirement,
incentive compensation, bonus, disability
income, medical and hospitalization
insurance, and similar or comparable plans,
and also to perquisites extended to
senior executives, provided, however, that
such plans, benefits and perquisites
shall be no less than those made available
to all other employees of the Bank.
(g) REIMBURSEMENT OF EXPENSES. Executive shall be reimbursed,
upon
submission of appropriate vouchers and
supporting documentation, for all travel,
entertainment and other out-of-pocket
expenses reasonably and necessarily
incurred by Executive in the performance of
his duties hereunder.
(h) WITHHOLDING. Employer shall be entitled to withhold from
amounts
payable to Executive hereunder, any
federal, state or local withholding or other
taxes or charges which it is from time to
time required to withhold. Employer
shall be entitled to rely upon the opinion
of its legal counsel with regard to
any question concerning the amount or
requirement of any such withholding.
SECTION 5.
CONFIDENTIALITY AND LOYALTY. Executive 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, Executive 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 Executive of his duties
hereunder. All records, files, documents
and other materials or copies thereof
relating to the respective businesses of
Heartland and its Affiliates that Executive
shall prepare or use, shall be and
remain the sole property of Heartland, and
other than in connection with
performance by Executive of his duties
hereunder, shall not be removed from the
premises of Heartland or any of its
Affiliates without Heartland's written
consent, and shall be promptly returned to
Heartland upon termination of
Executive's employment hereunder. Executive
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
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Executive's obligations to comply with
applicable laws related to trade secrets,
confidential information or unfair
competition.
SECTION 6. TERM
AND TERMINATION.
(a) TERM. Executive's employment hereunder shall be for a term of
five
(5) years commencing on the Effective Date
and ending on the fifth anniversary
thereof, unless terminated sooner in
accordance with the terms of this Agreement
(the "TERM").
(b) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate
his
employment under this Agreement at any time
by giving to Employer written notice
of such intent. Executive's employment
shall terminate effective with the
delivery of such notice. If Executive
voluntarily terminates his employment
under this Agreement, other than pursuant
to SECTION 6(d) (Constructive
Termination) or SECTION 6(h) (Payments Upon
Change in Control), then Employer
shall only be required to pay Executive his
Base Compensation as shall have
accrued through the effective date of such
termination, and Employer shall not
be obligated to pay any performance bonus
with respect to the then current
fiscal year of Employer, nor shall Employer
have any further obligations to
Executive.
(c) PREMATURE TERMINATION BY EMPLOYER.
(i) Employer may terminate this Agreement and Executive's
employment hereunder at any time by giving
to Executive written notice of such
termination and designating the effective
time thereof. If Employer terminates
this Agreement prior to the last day of the
Term for any reason other than a
termination in accordance with the
provisions of SECTION 6(h) (Payments Upon
Change in Control) or SECTION 6(e)
(Termination for Cause), then notwithstanding
any mitigation of damages by Executive,
Employer shall pay Executive an amount
equal to the total amount of compensation
that he would have received had he
remained employed through the remaining
portion of the Term, which shall be
equal to the sum of the following amounts
calculated for the remaining portion
of the Term: (A) Base Compensation at the
annual rate then payable to Executive;
(B) annual performance bonuses based upon
the average of the three (3) (or less,
if applicable) most recent performance
bonuses paid to the Executive; and (C)
contributions made by Employer on behalf of
the Executive to Employer's
tax-qualified retirement plans based upon
the average of the three (3) (or less,
if applicable) most recent contributions
made by Employer on behalf of the
Executive to any of Employer's
tax-qualified retirement plans that include
employees of its Banking Affiliates. The
payment of amounts under this
subsection by Employer shall not offset or
diminish any compensation or benefits
accrued as of the date of termination.
(ii) Payment to Executive will be made on a monthly basis
during
the remaining Term. At the election of
Employer, payments may be made in a lump
sum discounted to their present value using
the prime rate of interest as
reported in The Wall Street Journal, or if
not then being published, a daily
national business periodical of similar
nature reasonably selected by Employer
(the "PRIME RATE"). Such payments shall not
be reduced in the event Executive
obtains other employment following the
termination of employment by Employer.
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(d) CONSTRUCTIVE TERMINATION.
(i) If at any time during the Term, except in connection with a
termination pursuant to SECTION 6(h)
(Payments Upon Change in Control) or
SECTION 6(e) (Termination for Cause),
Executive is Constructively Discharged (as
defined below), then Executive shall have
the right, by written notice given to
Employer not later than thirty (30) days
after such Constructive Discharge, to
terminate his services hereunder, effective
as of thirty (30) days after the
date of such notice, and Executive shall
have no rights or obligations under
this Agreement other than as provided in
SECTION 5 (Confidentiality and Loyalty)
and SECTION 7 (Non-Competition Covenant).
In such event, Executive shall be
entitled to receive a lump sum payment of
compensation as if such termination of
his employment were pursuant to SECTION
6(c) (Premature Termination by
Employer).
(ii) For purposes of this Agreement, Executive shall be
"CONSTRUCTIVELY DISCHARGED" upon the
occurrence of any one of the following
events:
(x) Executive is not re-elected or is removed from the
position with Employer or the Bank set
forth in SECTION 3 (Position and Duties),
other than as a result of Executive's
election or appointment to a position or
positions of equal or superior scope and
responsibility;
(y) Executive shall fail to be vested by Employer with the
powers, authority and support services of
any of said office or offices; or
(z) Employer otherwise commits a material breach of its
obligations under this Agreement.
(e) TERMINATION
FOR CAUSE. This Agreement and Executive's employment
hereunder may be terminated for cause as
hereinafter defined. "CAUSE" shall
mean: (i) Executive's death; (ii)
Executive's "PERMANENT DISABILITY," which
shall mean Executive's inability, as a
result of physical or mental incapacity,
substantially to perform his duties
hereunder for an aggregate of ninety (90)
days out of any rolling period of one
hundred eighty (180) days; (iii) a
material violation by Executive of any
applicable material law or regulation
respecting the business of Employer or the
Bank; (iv) Executive being found
guilty of a felony or an act of dishonesty
in connection with the performance of
his duties as an officer of Employer or the
Bank, or which disqualifies
Executive from serving as an officer or
director of Emp
