EXHIBIT 10(a)(4)

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, dated as of June 1, 2011, by and between STEVEN J. WESSELL,
hereinafter referred to as “Executive”, and lst SOURCE CORPORATION, an Indiana
corporation, hereinafter referred to as “Employer.”

 

WHEREAS, Executive is currently employed as the Executive Vice President of
Employer’s subsidiary, lst Source Bank, hereinafter referred to as “Bank,”
pursuant to the terms of that certain Employment Agreement dated as of May 1,
2003; 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 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 for Bank with the same title referenced
above.  Executive shall devote his full time during business hours to the
performance of his duties hereunder and shall at all times use his best efforts
to promote the best interests of Employer.  Executive shall report to the Chief
Executive Officer of Bank or such other senior executive officer of Bank as the
Chairman of the Board or the Board of Directors (“Board”) shall direct.

 

2.                                       Term.  The term of this Agreement shall
be from the date hereof until May 31, 2012, 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 June 1, 2012 and on
June 1 of each year thereafter, unless either party hereto gives written notice
of an intention not to extend this Agreement (a “Non-Renewal Notice”) on or
before the prior November 30 in which case no further automatic extension shall
occur and the term of this Agreement shall end on the ensuing May 31.

 

3.                                       Compensation and Benefits.

 

(a)                                  Base Salary.  Executive shall be paid a
base salary of Two Hundred Thirty Thousand Dollars ($230,000.00) per annum, with
such increases thereafter as may be determined by Employer (the “Base Salary”).

 

(b)                                 Incentive Compensation.  In addition to
amounts paid to Executive as salary and for other benefits, Executive will
participate in Employer’s Executive Incentive Plan at a “partnership” rate of
20% of Base Salary.  All amounts awarded are subject to the terms and conditions
of the Plan.

 

43

--------------------------------------------------------------------------------

 

(c)                                  Benefit Plans.  During the term of this
Agreement, Executive shall 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) directors
and officers liability insurance, pension, profit sharing, stock option or any
group life or health insurance, hospitalization or other similar plans, any
eligibility or waiting periods to be waived to the extent feasible.

 

(d)                                 Life Insurance.  Employer will purchase term
life insurance coverage for the benefit of Executive, his family or estate, as
he may direct for amounts and under similar terms offered to all officers of
Employer pursuant to the group policy covering all such officers.

 

4.                                       Disability.  In the event that this
Agreement is terminated by reason of Executive’s Disability, Executive will
participate in the Employer’s disability compensation programs, including any
salary continuance plan in effect at that time for officers or executives of
Employer.  In addition, Executive will receive the following separation
payments:  (a) a lump-sum payment, payable within thirty (30) days following his
termination, equal to six times his then monthly Base Salary amount; and (b) six
(6) monthly installment payments, each installment payment equal to his then
monthly Base Salary amount, commencing on the first day of the seventh month
following the month in which Executive’s last day of employment occurs and
continuing on the first day of the immediately succeeding five (5) months.  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.

 

(a)                                  With Cause.  In the event the Board
determines that Executive is 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 the Executive’s employment, 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
Executive’s employment. 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.

 

(b)                                 Without Cause.  If Employer shall discharge
Executive from his 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, the
Executive’s employment shall end as of the date of such discharge by Employer,
provided however, that Executive shall receive the following separation
payments:  (i) a lump sum payment, payable within thirty (30) days following the
date of such discharge, equal to six (6) times his then monthly Base Salary
amount; and (ii) six (6) monthly installment payments, each installment payment
equal to such monthly Base Salary amount, commencing on the first day of the
seventh month following the month in which Executive’s

 

44

--------------------------------------------------------------------------------

 

last day of employment occurs, and continuing on the first day of each
immediately succeeding month for the next five (5) months.

 

(c)                                  Death.  This Agreement shall terminate in
the event of the death of Executive.  In such event, Executive’s estate or his
designee shall be entitled to the death benefits provided in Section 3(d) of
this Agreement.

 

6.                                       Termination By Executive.  Executive
may, at any time upon written notice to Employer, immediately terminate his
employment for Good Reason.  For purposes of this Agreement, “Good Reason” shall
mean (i) breach of this Agreement by Employer in any material respect, (ii) any
material adverse change in Executive’s status or position as the Executive Vice
President of Bank, including, without limitation, as a result of a material
diminution of his duties or responsibilities, (iii) any removal of Executive
from, or any failure to reappoint or re-elect him to, any such position (except
in connection with the termination of his employment pursuant to Section 4 or
Section 5(a), or Section 5(c), or by him for other than Good Reason); or
(iv) any material change in the geographic location at which Executive must
perform his duties under this Agreement.

 

(a)                                  If such termination does not follow a
Change in Control of Employer or Bank, Executive shall receive the following
separation payments:  (i) a lump sum payment, payable within thirty (30) days
following his termination, equal to six (6) times his then monthly Base Salary
amount, and (ii) six (6) monthly installment payments, each installment payment
equal to such monthly Base Salary amount, commencing on the first day of the
seventh month following the month in which Executive’s last day of employment
occurs and continuing on the first day of each immediately succeeding month for
the next five (5) months.  This provision shall survive and remain operative so
long as Executive remains employed by Employer, notwithstanding any expiration
of the term or after delivery of a Non-Renewal Notice as provided in Section 2
of this Agreement.

 

(b)                                 If such termination occurs within one
(1) year after a Change in Control of Employer or Bank, then as severance pay
and in lieu of any further compensation for periods subsequent to the effective
date of such termination, Executive shall receive, within thirty (30) days
following such termination, an amount in cash equal to 2.99 times his
“annualized includable compensation for the base period” (as defined in
Section 280G(d)(1) of the Internal Revenue Code of 1986, as amended (the
“Code”)).

 

(c)                                  Coincident with the original employment
agreement, Executive was awarded an option grant under the Employer’s 2001
Option Plan.  If Executive is terminated following a change in control or
chooses to terminate his employment for “Good Reason,” the 20,000 options
previously awarded will all vest and become immediately exercisable.

 

(d)                                 Each of the events specified in the
following clauses (i) through (iii) of this Section 6(d) shall be deemed a
“Change in Control”:

 

(i)                                     any third person, including a “group”
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
shall become the beneficial owner of 50% or

 

45

--------------------------------------------------------------------------------

 

more of the combined voting power of the then outstanding voting securities of
Employer entitled to vote for the election of the Board of Directors of
Employer;

 

(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 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.

 

Despite any other provision in this Section 6(c) to the contrary, an event shall
not constitute a Change in Control if it does not constitute a change in the
ownership or effective control, or in the ownership of a substantial portion of
the assets of Employer within the meaning of Section 409A(a)(2)(A)(v) of the
Code and its interpretive regulations.

 

(e)                                  If as of the date his employment
terminates, Executive is a “key employee” within the meaning of
Section 416(i) of the Code, without regard to paragraph 416(i)(5) thereof, and
Employer has stock that is publicly traded on an established securities market
or otherwise, then any payments that would constitute deferred compensation
payments otherwise payable because of employment termination will be suspended
until, and will be paid to Executive on, the first day of the seventh month
following the month in which Executive’s last day of employment occurs.  For
purposes of this subsection 6(d), “deferred compensation” means compensation
provided under a nonqualified deferred compensation plan as defined in, and
subject to, Section 409A of the Code.

 

7.                                       Assignment.  This Agreement is a
personal contract, and the 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 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 in accordance with the laws of the State of Indiana.

 

10.                                 Fees and Expenses.  If a dispute arises
regarding the 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.

 

46

--------------------------------------------------------------------------------

 

11.                                 Miscellaneous.  No provision of this
Agreement may be modified, 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.  This Agreement
supersedes the prior agreement between the parties.

 

12.                                 Restrictive Covenants.  In order to induce
Employer to enter into this Agreement, Executive hereby agrees as follows:

 

(a)                      Executive shall not divulge or furnish any trade
secrets (as defined in IND. CODE §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,
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 twenty-four (24) months after the
effective date of termination of Executive’s employment hereunder for reasons
other than those set forth in Sections 5(b) and 6(a) 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
Executive served either alone or with others while employed by Employer within
the geographic region or regions in which retail, full-service branches of Bank
or any affiliate of Bank are located, 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 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.

 

47

--------------------------------------------------------------------------------

 

If Executive’s employment is terminated during the term for reasons set forth in
Sections 5(b) or 6(a) of this Agreement, Executive shall have no obligations to
Employer with respect to non-solicitation and non-competition under this
Section 12.  Executive’s obligations with respect to trade secrets and
confidential information as described in Section 12(a) shall survive any
termination of the employment of Executive regardless of the reason(s) for such
termination.

 

13.                                 Certain Additional Payments by Employer.

 

(a)                                  In the event that Section 280G 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 any
excise tax (“Excise Tax”) that may be imposed by Section 4999 of the Code
becomes payable by Executive because of any of the payments made to Executive
under this Agreement or otherwise, 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 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.

 

48

--------------------------------------------------------------------------------

 

(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.

 

14.                                 No Duty to Mitigate.  Executive is not
required to mitigate the 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 to be paid by Employer pursuant to this
Agreement upon termination of Executive’s employment be reduced by any
compensation earned by Executive 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 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.  This Agreement shall be interpreted and
applied in a manner consistent with the applicable standards for nonqualified
deferred compensation plans established by Section 409A of the Code and its
interpretive regulations and other regulatory guidance.  To the extent that any
terms of this Agreement would subject Executive to gross income inclusion,
interest, or additional tax pursuant to Section 409A of the Code, those terms
are to that extent superseded by, and shall be adjusted to the minimum extent
necessary to satisfy, the applicable requirements of Section 409A of the Code.

 

16.                                 Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.

 

17.                                 Resolution of Disputes.  Employer agrees to
pay promptly as incurred 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 of, 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).

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.

 

 

 

/s/ Steven J. Wessell

 

Steven J. Wessell

 

 

 

 

 

lst SOURCE CORPORATION,

 

an Indiana corporation

 

 

 

By:

/s/ Christopher J. Murphy, III

 

 

Christopher J. Murphy, III

 

 

Chairman of the Board, President and

 

 

Chief Executive Officer

 

49

--------------------------------------------------------------------------------