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EXHIBIT 10(k)
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is entered into
this 14th day of April, 1998, between XXXXXXXXX X. XXXXXX ("Xxxxxx") and 1ST
SOURCE CORPORATION ("1ST Source").
RECITALS
A. Effective April 16, 1998, Xxxxxxxxx X. Xxxxxx is retiring
after long and distinguished service as Chairman of the Board of 1ST Source and
its bank subsidiary.
B. Because Raclin possesses valuable experience, knowledge,
and expertise concerning the operations, customers, markets, business plans, and
other matters of vital importance to 1ST Source and its subsidiaries, 1ST Source
desires to ensure its continued and exclusive access to that experience,
knowledge, and expertise by entering into a consulting arrangement with her.
X. Xxxxxx desires to make herself available as a consultant to
1ST Source.
D. 1ST Source and Raclin desire to set forth in writing the
terms and conditions of the consulting relationship.
AGREEMENT
In consideration of the premises and the following mutual
undertakings, the parties agree as follows:
1. Consulting Relationship. Effective April 16, 1998, Raclin
shall provide consulting services to 1ST Source under the terms of this
Agreement.
2. Term. Raclin's consulting relationship under this Agreement
shall commence as of April 16, 1998, and shall continue through April 15, 2008,
unless and until otherwise terminated pursuant to Paragraph 6 (the "Term").
3. Responsibilities of Raclin.
3.1 Consultant. As requested by 1ST Source, Raclin,
shall use her best efforts to consult with the Board of
Directors and executive officers of 1ST Source, to xxxxxx
existing and potential customer relationships for the benefit
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1ST Source, to represent the interests of 1ST Source in civic,
banking, and other business organizations, and otherwise to
make available her experience, knowledge, and expertise for
the benefit of 1ST Source. Raclin shall be available to
provide up to 400 hours of service per calendar year under the
terms of this Agreement.
3.2 Independent Contractor. Raclin shall perform her
services under this Agreement as an independent contractor.
Except as otherwise provided in this Agreement, she shall have
the sole discretion and responsibility for the selection of
procedures, processes, personnel, materials, working hours,
and other incidents of performance of services. So long as
Raclin performs services in accordance with this Agreement and
complies with the restrictive covenants of Paragraph 7,
nothing shall prevent her from performing services for other
noncompeting businesses or entities.
3.3 Taxes. Raclin shall be solely responsible for all
tax obligations with respect to consulting fees received under
this Agreement.
3.4 Authority and Responsibilities. Raclin's specific
responsibilities shall be assigned, from time to time, by the
Chairman and Chief Executive Officer of 1ST Source. Except as
expressly provided by the terms of a particular assignment,
Raclin shall not have the authority to bind 1ST Source.
4. Consulting Fees and Support Services. For the first
five years of the Term, Raclin shall receive an annual consulting fee of
$150,000, payable monthly or as the parties may from time to time agree; for the
remainder of the Term, Raclin shall receive an annual consulting fee of
$100,000. In addition, 1ST Source shall provide Raclin the following:
4.1 Office Facilities and Clerical Services. To
assist Raclin in performing consulting services under this
Agreement, 1ST Source shall provide Raclin with an office
suite and clerical services.
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4.2 Other Support Services. To assist her in
performing consulting services under this Agreement, 1ST
Source shall make available to Raclin the use of its corporate
aircraft for up to 50 hours per calendar year. 1ST Source
shall also provide, at its expense, memberships in one country
club and one business club located in the area of South Bend,
Indiana, or other geographic area in which a membership can
reasonably be used for the benefit of 1ST Source.
4.3 Expense Reimbursement. 1ST Source shall reimburse
Raclin for reasonable and necessary business and travel and
entertainment expenses that she incurs in performing
consulting services under this Agreement.
4.4 Medical/Physical Exam. 1ST Source shall reimburse
Raclin for the monthly insurance premiums required for the
purchase of Medicare supplemental insurance Plan J and shall
also reimburse Raclin for her annual physical conducted at the
Mayo Clinic or such other comparable diagnostic facility for
the period of this Agreement.
5. Deferral of Fees. In Raclin's discretion, she may
elect to defer the payment of all or a portion of the consulting fees that she
is to receive under this Agreement, according to the following procedures:
5.1 Election. To defer fees to be earned during a
calendar year, Raclin shall deliver a written deferral
election to 1ST Source before the beginning of that calendar
year. For the period from April 16, 1998, through December 31,
1998, however, Raclin may make such an election before the
beginning of that period. Each election shall be irrevocable
and shall designate the amount to be deferred and the date the
deferred amounts are to be paid.
5.2 Account. 1ST Source shall maintain an individual
bookkeeping account in Raclin's name on the accounting records
of 1ST Source. The account shall be credited monthly with the
amount of Raclin's deferrals, as well as earnings at 1ST
Source Bank's current prime lending rate.
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5.3 Unfunded Status. The obligation of 1ST Source to
pay the deferred fees is only a contractual obligation to make
payments when due. The obligation shall not be secured, and
1ST Source shall not set aside assets beyond the reach of its
general creditors for the purpose of paying the deferred fees.
5.4 Payment of Deferred Fees. The account balance
shall be paid in a lump sum payment to Raclin (or, in the
event of her death, to her beneficiary) upon the earlier of
the date designated by her written election or the termination
of the consulting relationship under Paragraph 6. In
accordance with procedures prescribed by 1ST Source, Raclin
may designate as beneficiary the person or persons, including
a trustee, to receive the balance of her account in the event
of her death. If no beneficiary has been designated or if no
designated beneficiary survives Raclin, her beneficiary shall
be her estate.
5.5 Transferability. Neither Raclin nor her
beneficiary shall have the power to transfer, pledge, or
otherwise encumber any of the deferred fees due under this
Agreement, and any attempt to do so shall be void. Any rights
to deferred fees under this Agreement shall not be subject to
attachment, garnishment, execution, or other transfer by
operation of law in the event of bankruptcy, insolvency, or
otherwise.
6. Termination. Raclin's consulting relationship under
this Agreement shall terminate upon the earliest to occur of the following
events:
6.1 Death. The death of Raclin.
6.2 Disability. Raclin's incapacity to perform her
responsibilities under this Agreement by reason of physical or
mental condition for a period of at least 365 consecutive
days, as reasonably determined by 1ST Source.
6.3 Termination for Cause. Termination of Raclin's
consulting relationship by 1ST Source for cause. For purposes
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of this Agreement, "cause" shall mean solely (i) conviction of
a felony or a lesser crime, which lesser crime results in
injury to the business, reputation or property of 1ST Source,
(ii) material acts of malfeasance in the performance of
Raclin's duties, including misuse or diversion of 1ST Source
funds or willful and material misrepresentations or
concealments on any reports submitted to 1ST Source, or (iii)
material breach of this Agreement.
6.4 Termination Not for Cause. Termination of
Raclin's consulting relationship by 1ST Source for reasons
that do not constitute cause.
6.5 Resignation. Termination of Raclin's consulting
relationship voluntarily by Raclin.
6.6 Accrual of Fees Through Termination. Upon
termination of Raclin's consulting relationship under
Paragraph 6.3 or 6.5, Raclin's accrual of fees shall cease as
of the date of the termination. Upon termination of Raclin's
consulting relationship under Paragraph 6.4, Raclin's accrual
of fees shall continue through April 15, 2008. Upon
termination of Raclin's consulting relationship under other
circumstances, Raclin's accrual of fees shall cease as of the
end of the year in which the termination occurs.
7. Restrictive Covenants. In connection with Raclin's
consulting relationship, Raclin will become acquainted with 1ST Source's
services, products, business practices, current and prospective customers and
their requirements, trade secrets, and other information that is not generally
known or readily ascertainable by others (collectively, the "Confidential
Information") and will develop business relationships with employees, customers,
and potential customers of 1ST Source and its subsidiaries. Therefore, as an
essential ingredient and consideration of this Agreement, Raclin enters into the
following covenants:
7.1 Confidential Information. Raclin shall use the
Confidential Information only in the course of her duties as a
consultant to 1ST Source, and she shall not disclose, during
or at any time after the term of her consulting relationship,
any Confidential Information to anyone except as authorized by
1ST Source.
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7.2 Corporation Records. Raclin agrees that all
records of 1ST Source containing or referring to Confidential
Information are the sole property of 1ST Source. Raclin shall
keep those records subject to 1ST Source's custody and control
and shall return them promptly to 1ST Source at the
termination of her consulting services, without retaining any
copies or notes of those records.
7.3 Competition. During the term of Raclin's
consulting relationship and for the period of two (2) years
after her consulting relationship terminates for any reason,
Raclin shall not directly or indirectly - whether as an
individual, employee, sole proprietor, partner, corporate
shareholder, officer, director, agent, consultant, formal or
informal advisor or by lending any other form of assistance -
do any of the following:
(a) Engage in any activity that is in material
competition with the business of 1ST Source or any of its
subsidiaries;
(b) Solicit, assist others in soliciting, or engage
in any other effort to obtain for any entity other than 1ST
Source the business of any customer with whom 1ST Source did
business at any time during the one (1) year period
immediately preceding the termination of Raclin's consulting
relationship; or
(c) Hire away, attempt to hire away, or assist in the
departure from employment from 1ST Source of any person who
was an employee of 1ST Source at the time of the termination
of Raclin's consulting arrangement with 1ST Source.
These covenants supplement, and do not supersede, the provisions of the Indiana
Uniform Trade Secrets Act and the duties Raclin owes to 1ST Source under common
law.
8. Enforcement of Restrictive Covenants. Raclin agrees
that any violation by Raclin of any provision of Paragraph 7 of this Agreement
will cause 1ST Source to suffer irreparable harm, that damages for such harm
will be incapable of precise measurement, and that 1ST Source will therefore not
have an adequate remedy at
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law to redress the violation. Therefore, if Raclin violates or threatens to
violate any provision of that Paragraph, 1ST Source shall be entitled, in
addition to its other remedies, to temporary restraining orders and preliminary
and permanent injunctions to restrain and enjoin any violation or threatened
violation of this Agreement. Raclin waives any right to raise questions of
personal jurisdiction or venue in any action 1ST Source may bring against Raclin
in any state or federal court in the county where a violation occurs or is
threatened to occur. In addition to the other relief to which it shall be
entitled, 1ST Source shall be entitled to recover from Raclin its costs and
reasonable attorneys' fees incurred by 1ST Source in seeking enforcement of this
Agreement.
9. Separability. Should any clause, portion or paragraph of
this Agreement be unenforceable or invalid for any reason, that shall not affect
the enforceability or validity of the remainder of this Agreement. Should any
particular provision or restriction including, but not limited to, the covenants
and restrictions of Paragraph 7, be held to be unreasonable or unenforceable for
any reason, including the time period, geographical area or scope of activity
covered by the covenant or restriction, then that covenant or restriction shall
be given effect and enforced to whatever extent would be reasonable and
enforceable.
10. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been properly given if delivered by hand, sent by telecopy, or mailed, certified
or registered mail with postage and fees prepaid:
If to 1ST Source, to: Xxxxxxx X. Xxxxxxx, Secretary
1st Source Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxx Xxxx, Xxxxxxx 00000
If to Raclin, to: Xxxxxxxxx X. Xxxxxx
000 X. Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxx 00000
or to such other person or address as the party to whom such notice or
communication is to be given shall have notified the other party in accordance
with this Paragraph. Any mailed communication shall be deemed to have been given
on the third "business day" (such term excluding, for purposes of this
Agreement, Saturdays, Sundays, and legal holidays) after the day of mailing. Any
communication sent by telecopy shall be deemed
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to have been given on the date receipt of the telecopy transmission is confirmed
by telecopy; provided, that if any communication sent by telecopy is also mailed
by certified mail, return receipt requested, in accordance with this Paragraph,
such communication shall be deemed to have been given on the date receipt of the
telecopy transmission is confirmed by telecopy or the third business day after
the day of mailing, whichever is earlier.
11. Successors and Assigns. 1ST Source shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of 1ST Source,
by agreement in form and substance satisfactory to Raclin, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that 1ST Source would be required to perform it if no such succession had taken
place. Failure of 1ST Source to obtain such agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle
Raclin to consulting fees from 1ST Source under Paragraph 4 and its
subparagraphs for the remaining Term. As used in this Paragraph, "1ST Source"
shall mean 1ST Source Corporation and any successor to its business or assets.
12. Oral Modifications Not Binding. This Agreement may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing signed by the party against whom it is sought
to be enforced.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
14. Entire Agreement. With respect to the subject matter
hereof, this Agreement sets forth the entire agreement of the parties and
supersedes all prior agreements, representations or communications between them,
whether written or oral.
15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument.
The parties have executed this Agreement on the date and year
first written above.
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XXXXXXXXX X. XXXXXX
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1ST SOURCE CORPORATION
By:_______________________________________
Xxxxxxxxxxx X. Xxxxxx III, President
By:_______________________________________
Xxxxxx X. Xxxxxxxx, Chairman
Executive Compensation Committee of the
Board of Directors
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