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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
DONALD FRALEY ("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.
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(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 ex
