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EXHIBIT 10(a)
EMPLOYMENT AGREEMENT Amended as of 2/1/97
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THIS AGREEMENT, dated as of January 1, 1992, by and between XXXXXXXXXXX
X. XXXXXX III, hereinafter referred to as "Executive', and 1st SOURCE
CORPORATION, an Indiana corporation, hereinafter referred to as "Employer,'
WITNESSETH; That
WHEREAS, Executive is currently employed as the President of Employer
and Employer's subsidiary, 1st Source Bank, hereinafter referred to as
"Bank,' pursuant to the terms of an Employment Agreement between Employer and
Executive dated as of March 1, 1988, hereinafter referred to as the "Prior
Agreement'; and
WHEREAS, Employer desires to assure the continued service of Executive,
and Executive is willing to provide such service on the terms and conditions
specified herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, Employer and Executive
hereby agree as follows:
1. Employment Position. The parties agree that the employment of
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Executive by Employer shall continue for the term referred to in Section 2.
Employer agrees to continue the employment of Executive in a senior officer
position with a title of not less than President of either Employer or Bank,
or both of them, and agrees that Executive will serve as a director of both
Employer and Bank.
Executive shall devote his full time during business hours to the
performance of his duties hereunder and shall at all times use his best
effort to promote the best interests of Employer. Executive shall report to
the Chairman of the Board of Employer, or the Board of Directors of Employer,
or such person or persons as shall be designated by either the Board of
Directors or the Executive Committee of Employer, from time to time and
consistent with the position of Executive. The assignments of Executive
initially shall include:
(a) full management responsibility for all operating divisions of
Employer and its subsidiaries;
(b) such additional and specific duties as may be reasonably assigned
to Executive by either the Board of Directors or Executive
Committee of Employer.
Employer also agrees to provide to Executive during the term of this
Agreement an adequate staff, together with such facilities and secretarial
support consistent with a senior employment position to permit the
performance by Executive of the duties assigned to him.
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EXHIBIT 10(a)
For the purpose of this Agreement, the Board of Directors of Employer
is sometimes referred to herein as "Board.'
2. Term. The term of this Agreement shall be from the date hereof
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until December 31, 1997, unless terminated sooner in accordance with section
5 or section 6 hereof, provided, however, that the term shall be
automatically extended for an additional year on January 1, 1993, and on
January 1 of each year thereafter, unless either party hereto gives written
notice of an intention not to extend this Agreement on or before September 30
of the preceding year, in which case no further automatic extension shall
occur and the term of this Agreement shall end on December 31, five (5) years
subsequent to the date of the last automatic extension.
3. Compensation and Benefits.
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(a) Base Salary. Executive shall be paid a base salary of not less
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than Three Hundred Thousand Dollars ($300,000) and with ($20,000)
of such base paid on January 1 of each calendar year, with
increases thereafter each year as may be determined by Employer,
but not less than five percent (5%) in excess of the base salary
paid during the previous year.
(b) Incentive Compensation. In addition to amounts paid to Executive
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as salary and for other benefits, Executive will participate on a
"phantom' basis in the Company's Executive Incentive Plan at a
minimum "partnership' rate of 15% of base salary. All amounts
awarded will be received and earned as if awarded under the plan
except that Executive will receive cash compensation in lieu of
stock.
(c) Benefit Plans. During the term of this agreement, Executive shall
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be entitled to participate, at a level commensurate with his
position, in all benefit plans Employer presently has or hereafter
adopts for its officers or employees, including (without
limitation) pension, profit sharing, or any group life or health
insurance, hospitalization or other similar plans, any eligibility
or waiting periods to be waived to the extent feasible. In plans
where stock is awarded and Executive is not permitted to receive
such stock; cash or its equivalent will be paid to Executive.
(d) Stock Option. As of January 1, 1992, and on each of the next four
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anniversary dates, Employee is granted an option to purchase
10,000 shares of company stock at a price of $29.75 per share, or
an aggregate of 50,000 optioned shares. The options may be
exercised at any time up to ten years following the date of grant.
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EXHIBIT 10(a)
(e) Life Insurance. Company will purchase $1 million ($1,000.000.00)
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of life insurance for the benefit of Executive, his family or
estate as he may direct.
(f) Death Benefit. If Executive should die during the term of this
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Agreement, the Corporation shall pay to his estate or such other
beneficiary that the Executive may designate in writing an
additional death benefit equal to three (3) times the base salary
and bonus paid to Executive in the preceding year.
(g) Additional Benefits. Executive shall be entitled to receive four
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(4) weeks vacation each year without reduction of compensation
during the term of this Agreement.
A club membership will be provided by Employer for Executive to at least
one country club and to one club in downtown South Bend, Indiana, with
the initiation fees, monthly fee and appropriate business related
expenses paid by Employer.
One automobile shall be provided by Employer to Executive on a full
lease basis consistent with the title and position of Executive.
4. Disability. In the event that this Agreement is terminated by
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reason of Executive's Disability, Executive will continue to receive his base
salary for up to one year from the date of the termination and shall also
participate in any other disability compensation programs, including any
Salary Continuance Plan in effect at that time for officers or executives of
Employer. For purposes of this Agreement, "Disability' means Executive's
inability by reason of illness or other physical or mental impairment to
perform the duties required by his employment for any consecutive one hundred
eighty (180) day period, provided that written notice of any termination for
Disability shall have been given by Employer to Executive prior to the full
resumption by him of the performance of such duties.
5. Termination by Employer; Death or Disability.
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(a) With Cause. In the event the Board determines that Executive is
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guilty of gross dereliction of duty or of fraud or dishonesty in
connection with the performance of his duties under this
Agreement, the Board may terminate this Agreement such termination
to be effective thirty (30) days after the Board gives written
notice to Executive setting forth with specificity the reason or
cause for terminating the Agreement. In such event, the
compensation and other benefits provided for in this Agreement
shall terminate on the date specified by the Board in the written
notice of termination delivered to Executive.
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EXHIBIT 10(a)
(b) Without Cause. If Employer shall discharge Executive from his
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employment hereunder for any reason other than one set forth in
section 5(a), or if it shall be determined by a court of competent
jurisdiction that the discharge under section 5(a) was not
justified, or if Employer violates the provisions of this
Agreement in a material manner, Executive shall have the right to
terminate his obligations and duties hereunder, but the rights of
Executive to receive the compensation provided for in Section 3
shall continue nevertheless to be fully in effect for the
remaining term of this Agreement in the same manner as would have
been payable absent such termination. Notwithstanding the
foregoing Employer shall have the right at any time after the
termination contemplated by this section 5(b) to pay Executive in
a lump sum the then present value of the amount payable to
Executive discounted at the then current savings rate for the Bank
under this section 5(b).
(c) Death or Disability. This Agreement shall terminate in the event
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of the death or Disability of Executive. In such event,
Executive, his estate or designee shall be entitled to the death
or Disability benefits provided in sections 3(e) and 4 of this
Agreement.
6. Termination By Executive. Executive may, at any time upon
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written notice to Employer, immediately terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason' shall mean any adverse
change in Executive's status or position as President of Employer or Bank or
as a director of either including, without limitation, as a result of a
material diminution of his duties or responsibilities or the assignment to
him of duties or responsibilities which, in his reasonable judgment, are
inconsistent with such status or positions, or any removal of Executive from,
or any failure to reappoint or reelect him to, any such position (except in
connection with the termination of his employment pursuant to section 5(a) or
5(c) or by him for other than Good Reason), or any attempt to require
Executive to relocate outside of the metropolitan area of his current
residence.
(a) If such termination does not follow a Change of Control of
Employer or Bank, Executive shall continue to receive his Base
Salary as then in effect for a period of twelve (12) months after
the effective date of such termination, in the same manner as such
Base Salary would have become payable pursuant to this Agreement
absent such termination.
(b) If such termination occurs within one (1) year after a Change of
Control of Employer or Bank, as severance pay and in lieu of any
further compensation for periods subsequent to the effective date
of such termination, Executive shall receive an amount in cash
equal to 2.99 times his "annualized includable compensation for
the base period' (as defined in Section 28OG(d)(1) of the Internal
Revenue Code of 1986, as amended (the "Code')).
(c) Each of the events specified in the following clauses (i) through
(iii) of this section 6(c) shall be deemed a "Change in Control':
(i) any third person, including a "group' as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the
beneficial owner of 20% or more of the then outstanding shares of
common stock of Employer or Bank or
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EXHIBIT 10(a)
the combined voting power of the then outstanding voting securities
of Employer or Bank entitled to vote for the election of the Board
of Directors of Employer or Bank (ii) as a result of, or in
connection with, any cash tender offer, exchange offer, merger or
other business combination, sale of assets or contested election, or
combination of the foregoing, the persons who were directors of
Employer or Bank shall cease to constitute a majority of such Board
of Directors or (iii) the shareholders of Employer shall approve an
agreement providing a sale or other disposition of all or
substantially all the assets of Employer.
7. Assignment. This Agreement is a personal contract, and the
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rights and interest of Executive hereunder may not be sold, transferred,
assigned, pledged or hypothecated. Except as otherwise may be herein expressly
provided, this Agreement shall inure to the benefit of and be binding upon
Employer and its successors and assigns.
8. Amendment. This Agreement may be amended only by a written
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instrument signed by the parties hereto after approval by either the Board or
Executive Committee of Employer.
9. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Indiana.
10. Fees and Expenses. If a dispute arises regarding the
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interpretation or enforcement of this Agreement and Executive obtains a final
judgment in his favor in a court of competent jurisdiction or his claim is
settled by Employer prior to the rendering of a judgment by such a court, all
reasonable legal fees and expenses incurred by Executive in seeking to obtain
or enforce any right or benefit provided for in this Agreement or otherwise
pursuing his claim shall be paid by Employer, to the fullest extent permitted
by law.
11. Miscellaneous. No provision of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed
to in a writing signed by the parties hereto. No waiver by any party hereto
at any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Except for the
award of stock options made under the Prior Agreements which remain in
effect, this Agreement supersedes the Prior Agreement in its entirety.
12. Restrictive Covenants. In order to induce Employer to enter into
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this Agreement, Executive hereby agrees as follows:
(a) While Executive is employed by Employer and for a period of twelve
(12) months after the effective date of termination of such
employment for reasons other than those set forth in section 5(b)
of this Agreement, Executive shall not divulge or furnish any
trade secrets (as defined in IND. CODE Sec. 24-2-3-2) of Employer
or any confidential information acquired by him while employed by
Employer concerning the policies, plans, procedures or customers
of Employer to any person, firm or corporation,
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EXHIBIT 10(a)
other than Employer or with its prior written consent, or use any
such trade secret or confidential information directly or indirectly
for Executive's own benefit or for the benefit of any person, firm
or corporation other than Employer, as such trade secrets and
confidential information are confidential and shall at all times
remain the property of Employer.
(b) For a period of twelve (12) months after the effective date of
termination of Executive's employment hereunder for reasons other
than those set forth in section 5(b) of this Agreement, Executive
shall not, directly or indirectly, provide banking or bank-related
services to, or solicit the banking or bank-related business of,
any customer of Employer at the time of such provision of services
or solicitation which Employee served either alone or with others
while employed by Employer within St. Xxxxxx, Elkhart, Xxxxxxxx or
LaPorte Counties in the State of Indiana, or assist any actual or
potential competitor of Employer to provide banking or
bank-related services to, or solicit the banking or bank-related
business of, any such customer in any such area, and Executive
shall not, directly or indirectly, as principal, agent, or
trustee, or through the agency of any corporation, partnership,
trade association, agent or agency, engage in any banking or
bank-related business or venture which competes with the business
of Employer as conducted during Executive's employment by Employer
within such area; provided, however, that Executive may own not
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more than five percent of the voting securities of any entity
providing banking or bank-related services within such area if the
voting securities of such entity are traded on a national
securities exchange or quoted on a national interdealer quotation
system.
(c) Executive acknowledges that any violation of this section 12 would
cause irreparable harm to Employer, that damages for such harm
would be incapable of precise measurement and that, accordingly,
Employer would not have an adequate remedy at law to redress the
harm caused by such violation. Therefore, Executive agrees that,
in addition to any other remedy, Employer shall be entitled to
immediate (i.e., without prior notice) preliminary and final
injunctive relief to enjoin and restrain any violation of this
section 12.
If Executive's employment is terminated during the Term of this
Agreement for reasons set forth in section 5(b) of this Agreement, Executive
shall have no obligations to Employer with respect to trade secrets,
confidential information or noncompetition under this section 12.
13. Tax Matters. Anything in this Agreement to the contrary
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notwithstanding, in the event that Employer's independent public accountants
determine that any payment by Employer to or for the benefit of Executive,
whether paid or payable pursuant to the terms of this Agreement, would
constitute an "excess parachute payment' within the meaning of Section 28OG
of the Code, then such amount payable or any other amount payable to or for
the benefit of Executive pursuant to this Agreement shall be reduced (but not
below zero) to an amount
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EXHIBIT 10(a)
which maximizes the amount payable to or for the benefit of Executive without
causing the payment to be non-deductible by Employer because of Section 28OG of
the Code.
14. No Duty to Mitigate. Executive is not required to mitigate the
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amount of salary or benefits payable pursuant to this Agreement upon
termination of his employment by seeking other employment or otherwise, nor
shall any amount provided to be paid by Employer pursuant to this Agreement
upon termination of Executive's employment be reduced by any compensation
earned by Employee as a result of employment by another employer that is not
in violation of Executive's obligations under section 12.
15. Severability. The invalidity or unenforceability of any
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provisions of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force
and effect.
16. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
/s/ XXXXXXXXXXX X. XXXXXX, III
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Xxxxxxxxxxx X. Xxxxxx, III
1st SOURCE CORPORATION, an
Indiana corporation
By /s/ XXXXXXXXX X. XXXXXX
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Xxxxxxxxx X. Xxxxxx,
Chairman
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EXHIBIT 10(a)
Attest:
/s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
Its
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Secretary
(Corporate Seal)
Ratified by the Board of Directors of Employer as of April 21, 1992.
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/s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
Secretary
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EXHIBIT 10(a)
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment') is made as of the
1st day of March , 1997, between 1st SOURCE CORPORATION ("Employer')
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and XXXXXXXXXXX X. XXXXXX, III ("Executive').
RECITALS
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1. Employer and Executive have entered into an Employment Agreement
dated as of January 1, 1992 ("Agreement').
2. Employer and Executive desire to amend the Agreement as provided
below.
AGREEMENT
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In consideration of the premises and the following undertakings,
Employer and Executive agree as follows:
1. Effective February 1, 1997, Section 13 is amended to read as
follows:
13. CERTAIN ADDITIONAL PAYMENTS BY EMPLOYER.
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(a) In the event that Section 28OG of the Code is determined to
apply to the payments to be made by Employer to Executive
under this Agreement or other compensation or benefit
programs, and in the event of any excise tax ("Excise
Tax") that may be imposed by Section 4999 of the Code
become payable by Executive because of any of the payments
made to Executive under this Agreement or otherwise, the
Employer will pay to Executive an additional amount
("Gross-up Payment') at least 60 days prior to the due date
for payment of the Excise Tax. The Gross-up Payment shall
be in an amount such that, after payment by Executive of
all taxes (including, without limitation, all income and
employment tax and Excise Tax and treating as a tax the
disallowance of any deduction of Executive by virtue of
the inclusion of the Gross-up Payment in Executive's
adjusted gross income) and interest and penalties with
respect to such taxes imposed upon the Gross-up Payment,
Executive retains an amount equal to the Excise Tax.
Employer shall notify Executive of its determination of
the amount of payments under this Agreement subject to the
Excise Tax (which determination shall be made by an
accounting firm selected by Employer) and shall provide
Executive with a receipt for the Excise Tax paid.
Executive shall report the amount indicated in Employer's
notice as the amount subject to the Excise Tax on
Executive's Federal income tax return.
(b) If, for any reason, the Internal Revenue Service or any
other taxing authority proposes an adjustment to the amount
of Excise Tax due with respect to any payments or with
respect to any additional amounts received by Executive
pursuant to this Agreement, Executive will notify Employer
immediately of such proposed adjustment and shall give
Employer the right to contest such
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EXHIBIT 10(a)
proposed adjustment on Executive's behalf; provided, however,
that Executive may pay such claim if Employer does not take
any action prior to the time such payment is due. Employer
shall bear and pay directly all costs related to or
associated with any contest, regardless of outcome, and shall
have complete control over such contest as it relates to the
Excise Tax, including whether such contest shall be by way
of non-payment of the Excise Tax, payment of the Excise Tax
under protest, or payment of the Excise Tax accompanied by
a claim for a refund. Employer shall pay to Executive (i)
an amount equal to the Excise Tax required to be paid to
the Internal Revenue Service by Executive as a result of
the outcome of any contest, any penalties or interest
thereon, and (ii) a Gross-up Payment computed in the same
manner and subject to the same adjustments as other
Gross-up Payments previously described. Payment by
Employer of an amount equal to the Excise Tax and Gross-up
Payment shall be made to Executive in advance of the due
date for payment of Excise Taxes.
(c) In the event that the amount of any additional payments
made pursuant to this Section 13 exceeds the amount
determined to have been due, the excess additional amounts
made shall constitute a loan by Employer to Executive
payable within 30 days after receipt by Executive of the
refund from the Internal Revenue Service together with any
interest received.
2. Effective February 1, 1997, a new section 17 is added to
read as follows:
17. RESOLUTION OF DISPUTES.
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Employer agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which Executive may reasonably
incur as a result of any contest, regardless of outcome, by Employer,
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance (including as
a result of any contest by Executive concerning the amount of any payment
pursuant to this Agreement).
All terms and conditions of the Agreement, except those expressly
amended by this Amendment, shall remain in full force and effect.
1st SOURCE CORPORATION
Signed by Directive of Xxxxxx X. Xxxxxxxx, By: /s/ XXXXX X. XXXXXXX
Chairman of the Executive Compensation -------------------------------
Committee Xxxxx X. Xxxxxxx
Printed Name: Xxxxx X. Xxxxxxx
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Title: CFO
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/s/ XXXXXXXXXXX X. XXXXXX, III
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Xxxxxxxxxxx X. Xxxxxx III
