1
EXHIBIT 10.04
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been made and entered
into as of the 8th day of September, 1999, by and between Old National Bancorp
(the "Company") and Randy Clouser (the "Executive").
WHEREAS, the Company and Heritage Financial Services, Inc (the
"Target") are entering into an Agreement of Affiliation and Merger on September
8th, 1999 (the "Merger Agreement"), whereby the Target will be merged with and
into the Company (the "Merger");
WHEREAS, the Company and the Executive are entering into this
Agreement on the date set forth above, but this Agreement is contingent on the
consummation of the Merger.
NOW, THEREFORE, in consideration of the premises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Executive and the Company agree as
follows:
Section 1. Operation of Agreement.
This Agreement shall be effective and operative from and after the
Effective Date (as defined in the Merger Agreement, the "Effective Date").
Section 2. Employment: Term of Employment.
A. The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to become employed by the Company, upon and subject to the terms
and conditions set forth herein.
B. The Company shall employ the Executive on a full-time basis during
his employment hereunder (which shall be deemed to have commenced on the
Effective Date and which shall end three (3) years from the Effective Date (the
"Term of Employment").
Section 3. Position, Duties; Responsibilities.
The Executive shall serve as Senior Vice President - Commercial Loans,
Old National Bank, Clarksville, Tennessee, and shall have such commensurate
responsibilities, duties and authority as may from time to time be reasonably
assigned to the Executive by the Chief Executive Officer or the Chief Operating
Officer of the Company. The Executive shall devote substantially all his
business efforts, time, energy and skill during reasonable business hours to the
service of the Company and shall not engage in any other related business. The
Executive's office shall be located at the Company's Clarksville office, which
shall be located in Clarksville, Tennessee. Without his consent, the Executive
will not be required to relocate outside of Clarksville, Tennessee.
2
Section 4. Compensation and Related Matters.
A. For all services rendered by the Executive in any capacity during
the Term of Employment, including, without limitation, services as an executive
officer, director, or member of any committee of the Company or of any other
subsidiary, division, or affiliate of the Company, the Executive shall be paid
as compensation:
(1.) Salary. During the Term of Employment, the Company shall
pay him an annual base salary at a rate of $90,000 (Ninety Thousand and
No/100 Dollars) per year, such salary to be paid in substantially equal
payments in accordance with the Company's practices for other executive
employees in effect from time to time. Such annual salary shall be no
less than the above rate of pay. Such annual salary may be subject to
increase annually (generally, effective the first pay period in
January) at the discretion of the Chief Executive Officer of the
Company, taking into account the Executive's performance of his duties
during the preceding year and other relevant factors.
(2.) Incentives. The Company shall grant to the Executive,
executive performance awards, stock options, stock appreciation rights,
bonuses, and other incentive grants ("Incentive Compensation Awards")
at least in equal amount, and of substantially the same kind and
subject to substantially the same terms and conditions, as those
awarded to each other executive of the Company during the Term of
Employment, under all executive compensation plans, programs, and
policies existing on the Effective Date and all such plans, programs,
and policies that may thereafter be adopted for the benefit of
executives of the Company or employees of the Company generally.
B. Other Benefits. During the Term of Employment, the Executive shall
be entitled to participate in or receive benefits under all employee benefit
plans, arrangements and perquisites made available by the Company now or in the
future to its executives and key management employees, subject to and on a basis
consistent with the terms conditions and overall administration of such plans,
arrangements and perquisites. The Company will include any years of service by
the Executive with the Target or its subsidiaries for purposes of determining
eligibility, vesting or other matters under the Company's employee benefit
plans.
C. Vacation. The Executive shall be entitled to the number of vacation
days in each calendar year determined in accordance with the Company's vacation
plan or policy in effect from time to time for their executives generally. The
Executive shall also be entitled to all paid holidays given by the Company to
their executives.
D. Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive reimbursement for all reasonable and
customary expenses incurred by him in performing services hereunder, including
all expense of travel and living expenses while away from home on business or at
the request of and in the service of the
2
3
Company; provided, that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
E. Country Club Membership. The Company shall pay all dues and
assessments for a membership in the Clarksville Country Club for the Executive.
The Executive shall be responsible for all other charges for amenities, except
for those having a documented business purpose.
F. Automobile. During the Term of Employment, the Company shall provide
the Executive with the use of an automobile in accordance with the terms and
conditions of the Company's Assigned Vehicle policy.
Section 5. Termination by the Company.
A. Subject to the respective continuing obligations of the parties,
including but not limited to those set forth in Sections 9, 10 and 11 hereof,
the Executive's employment under this Agreement may be terminated by the Company
immediately with Cause, or without Cause upon thirty (30) days prior written
notice to the Executive. Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for cause unless and until there shall have
been delivered to the Executive a Notice of Termination. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (a) indicates
the specific termination provision of this Agreement relied upon, (b) sets forth
the specific facts and circumstances (including specific acts and omissions by
the Executive) claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated and (c) specifies the Termination
Date (as defined below).
(i) For purposes of this Section 5(A), the term "Cause" shall
mean: (i) willful and continued failure by the Executive to substantially
perform his duties hereunder other than any such failure resulting from the
Executive's incapacity due to physical or mental illness which continues after
the Company has given Executive written notice of the same; (ii) willful
engaging by the Executive in an act of fraud, misappropriation, dishonesty,
embezzlement, or similar conduct involving the Company; (iii) conviction of a
felony or any crime involving moral turpitude or any event requiring the consent
of the Federal Deposit Insurance Company; (iv) engaging in other serious,
willful misconduct of such a nature that the continued employment of the
Executive may reasonably be expected to materially and adversely affect the
business or properties of the Company. For purposes of this Subsection, no act,
or failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board of Directors of the Company or upon the instructions of the
Chief Executive Officer of the Company or based on the advice of counsel for the
Company shall be presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
3
4
B. Termination Date. The effective date of the Executive's termination
from employment, with or without cause, shall be referred to as the "Termination
Date" (which date shall not be less than 30 days after receipt of such Notice of
Termination if Termination is without Cause, though, in the event of termination
of employment by the Executive, the Company may set an earlier date following
the date of receipt of the Notice of Termination as the Termination date).
Section 6. Termination by the Executive.
A. The Executive shall be required to give the Company a thirty (30)
day written notice of his intent to resign and to terminate this Agreement.
B. Death. The Executive's employment shall terminate upon his death.
Section 7. Severance Benefits.
A. In the event of the termination of Executive's employment by the
Company without Cause or by the Executive for Good Reason, the Company shall pay
the amounts and benefits described in this Section 7 to the Executive and these
payments shall constitute liquidated damages and shall constitute full
settlement of any claim under law or in equity that he might otherwise assert
against the Company with regard to breach of this Agreement.
(1.) Executive shall be entitled to severance pay in an amount
equal to the greater of (a) the payment of the Executive's base salary
for a period of eighteen months from the Termination Date, or (b) the
payment of any unpaid portion of the Executive's base salary from the
Termination Date through the Term of Employment as follows;
(2.) The Company shall pay the Executive in accordance with
the Company's normal payroll practices at the time of termination. The
Company shall withhold from this and all other benefits payable under
this Agreement all federal, state, city, county or other taxes as shall
be required pursuant to any law or governmental regulation or ruling;
and
(3.) The Company shall cause to be nonforfeitable and vested
in the Executive's name all Incentive Compensation Awards (including
without limitation those awarded but unvested shares which are held in
the Executive's account in the Old National Bancorp Restricted Stock
Plan, including the shares awarded to the Executive but not yet earned
in the year in which the Executive's employment is terminated). In the
event the Old National Bancorp Restricted Stock Plan does not allow the
Company to treat such Restricted Stock Awards as nonforfeitable and/or
vested, the Company shall pay the Executive an amount of cash
compensation which is equivalent to the value of the Restricted Stock
that otherwise would have been payable to the Executive without those
Plan restrictions.
4
5
(4.) The Company shall pay to the Executive in a lump sum
single cash payment of all the amounts the Executive is entitled to
receive under the Company's Short Term Incentive Plan ("STIP") that are
earned but unpaid for the Company's fiscal year preceding the year of
termination and also for the year in which the Executive's employment
is terminated. For purposes of determining the STIP amount to be paid
to the Executive for the year in which Executive's employment is
terminated, the Company will use the Executive's then current
annualized salary multiplied by the greater of the following
percentages:
(a) The Executive's STIP percentage paid for the
prior plan year; or
(b) The Executive's projected STIP percentage as
approved by the Company's Compensation Committee at the time
of the Executive's "Termination Date".
(5.) As used in this paragraph 7A, the term "Good Reason"
means termination of the Executive's employment by the Executive due to a
failure of the Company to fulfill its obligations under this Agreement in any
material respect including any reduction of the Executive's base salary at the
Effective Date other than reductions applicable to other similar executives of
the Company or failure to appoint or reappoint the Executive to the position
specified in Section 3 hereof, or other material change by the Company in the
functions, duties or responsibilities of the position which would reduce the
ranking, level or responsibility of the position, or a requirement by the
Company that the Executive relocate his permanent residence outside of
Clarksville, Tennessee (excluding a re-location made with Executive's consent).
The Executive will provide the Company a written notice which describes the
circumstances being relied on for the termination with respect to the Agreement
within ninety (90) days after the event giving rise to the notice. The Company
will have thirty (30) days to remedy the situation prior to the termination for
Good Reason.
B. Although the parties to this Agreement do not believe payments made
pursuant to Section 7, hereof would constitute "parachute payments" under
Section 280G of the Internal Revenue Code of 1986, as amended, in the event that
the Company receives a notice of deficiency or an opinion of counsel to the
contrary, no payment shall be made to the Executive hereunder to the extent such
payment would constitute a nondeductible "excess parachute payment" under
Section 280G of the Internal Revenue Code of 1986, as amended, or similar
provisions then in effect. In the event of any question as to whether any
payments otherwise due hereunder constitute excess parachute payments, the
matter shall be determined jointly by the firm of certified public accountants
regularly employed by the Company and the firm of certified public accountants
selected by the Executive, in each case upon the advice of actuaries to the
extent the certified public accountants consider necessary, and, in the event
such accountants are unable to agree upon a resolution of the question, such
matter shall be determined by an independent firm of certified public
accountants selected by both firms of accountants.
5
6
Section 8. Mitigation.
The Executive shall not be required to mitigate the amount of any
payments provided for in Section 7 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in Section 7 be reduced by any
compensation earned by the Executive as a result of employment by another
employer after the Date of Termination, or otherwise.
Section 9. Covenant Not to Solicit Company's Customers and Employees.
A. The Executive hereby understands and acknowledges that, by virtue of
his position with the Company, he will have advantageous familiarity and
personal contacts with the Company's customers, wherever located, and the
business, operations and affairs of the Company. Accordingly, while the
Executive is employed by the Company, and at all locations for a period of
eighteen months after termination of the Executive's employment with the Company
for any reason (whether with or without cause or whether by the Company or the
Executive) or the expiration of the Term, the Executive shall not, directly or
indirectly, or individually or jointly, (i) solicit in any manner, seek to
obtain or service the business of any party which is a customer of the Company
at the time of such termination or any party which was a former customer or a
prospective customer of the Company during the one (1) year period immediately
preceding such termination, (ii) request or advise any customers or suppliers of
the Company to terminate, reduce, limit or change their business or relationship
with the Company, or (iii) induce, request or attempt to influence any employee
of the Company to terminate his employment with the Company.
B. For purposes of this Agreement, the term "solicit" means any direct
or indirect communication of any kind whatsoever, regardless of by whom
initiated, inviting, advising, encouraging or requesting any person or equity,
in any manner, to take or refrain from taking any action.
Section 10. Covenant Not to Compete or be Employed by Competitors.
The Executive hereby understands and acknowledges that, by virtue of
his position with the Company, he will have advantageous familiarity and
personal contacts with the Company's customers, wherever located, and the
business, operations and affairs of the Company. Executive also acknowledges and
understands that prior to, during and after the Effective Date, Company and its
affiliates have a significant customer base in the following locations: (i)
Montgomery County, Tennessee and those counties contiguous to Montgomery County,
Tennessee; and (ii) counties in those states other than Tennessee in which the
Company or Company's affiliates are located or will be located or have offices.
Accordingly, while the Executive is employed by the Company and within
Montgomery County, Tennessee and those counties (whether in Tennessee or
Kentucky) contiguous to Montgomery
6
7
County, Tennessee for a period of eighteen months after termination of the
Executive's employment with the Company for any reason (whether with or without
cause, or whether by the Company or the Executive) or the expiration of the Term
of Employment, the Executive shall not, directly or indirectly, or individually
or jointly, as owner, shareholder, member, investor, partner, proprietor,
principal, director, officer, employee, agent, representative, consultant or
otherwise, engage in, assist another party in engaging in or provide services to
any party engaging in any business, operation or venture that competes with the
business of the Company as conducted at any time during the Executive's
employment by the Company. Notwithstanding the foregoing, in the event the
Executive is an employee of the Company (or its successor) at the conclusion of
his initial three-year Term of Employment then the provisions of this Sections 9
and 10 will not apply to him upon any subsequent termination of his employment.
Section 11. Confidentiality and Company Records.
A. The Executive agrees not directly or indirectly to disclose, to any
person, firm, company or corporation either while in the Company's employ or at
any time thereafter, to any person, firm, company or corporation not employed by
the Company, or not engaged to render service to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's policies, plans, procedures, customers
or trade secrets; provided, however, that this provision shall not preclude the
Executive from use or disclosure of information known generally to the public or
of information not considered confidential by persons engaged in the business
conducted by the Company or from disclosure required by law or Court order.
B. The Executive agrees that all records and copies of the records
pertaining to the financial affairs, operations, customers and business of the
Company and their affiliates, subsidiaries and division, including, but not
limited to, customer lists and trade secrets, that are made or received by the
Executive in the course of his employment by the Company shall be the property
of the Company, and agrees to keep such documents subject to the Company's
custody and control and to surrender to the Company such of those documents as
are still in his possession at the termination of his employment. The Executive
agrees not to disclose or give possession of such documents or records to anyone
except authorized representatives of the Company. The Executive further agrees
to return to the Company, at the Company's Clarksville office, any and all such
documents or records and other property of the Company promptly upon termination
of his employment.
Section 12. Effect and Modification.
This Agreement comprises the entire agreement between the parties with
respect to the subject matter hereof and supersedes all earlier agreements
relating to the subject matter hereof; provided that this Agreement is not
intended to and shall not be deemed to be in lieu of any rights, benefits, and
privileges to which the Executive may be entitled as an Executive of the Company
7
8
under any retirement, pension, profit sharing, stock ownership, stock option,
insurance, or hospital plan, or other plans, benefits, programs, and policies
which may now be in effect or which may hereafter be adopted. It is understood
that the Executive shall have the same rights and privileges to participate in
such plans, benefits, programs, and policies as any other executive during his
period of employment. No statement or promise, except as herein set forth, has
been made with respect to the subject matter of this Agreement. The headings of
the individual sections herein are for convenience only and shall not be deemed
to be a substantive part of this Agreement. No modification or amendment hereof
shall be effective unless in writing and signed by the Executive and the
Company.
Section 13. Non-Waiver.
The failure or refusal of either party to enforce all or any part of,
or the waiver by either party of any breach of this Agreement shall not be a
waiver of that party's continuing or subsequent rights under this Agreement, nor
shall such failure or refusal or waiver have any effect upon the subsequent
enforceability of this Agreement.
Section 14. Governing Law
This Agreement is being delivered in and shall be governed by the laws
of the State of Indiana without respect to its conflict of laws provisions.
Section 15. Notice
Any notice, request, instruction, or other document to be given
hereunder to any party shall be in writing and delivered by hand, telegram,
facsimile transmission, registered or certified United States mail, return
receipt requested, or other form of receipted delivery, with all expenses of
delivery prepaid, as follows:
If to Executive: If to Company:
Randy Clouser Old National Bancorp
299 Abby Lane Post Office Box 718
Clarksville, TN 37043 Evansville, Indiana 47705
ATTENTION: Chief Executive Officer
Section 16. Indemnification.
The Company shall indemnify Executive for acts and omissions occurring
while he is employed (and to any Company affiliate to which Executive has
provided services during the Term of the Agreement) hereunder to the fullest
extent permitted under the laws of the state of
8
9
incorporation in effect at that time, or the Articles of Incorporation and
By-Laws of the Company, whichever affords the greater protection to the
Executive.
Section 17. Survival of Severance Provisions.
The provisions of Sections 5(b), 7, 9, 10, 11 and 16 hereof shall
survive the termination or expiration of this Agreement. Moreover, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
agreement.
Section 18. Assignment.
This Agreement is personal in nature and neither party hereto shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder except as provided herein. Without limiting the foregoing,
Executive's right to receive compensation hereunder shall not be assignable or
transferable, whether by pledge, creation or a security interest or otherwise,
other than a transfer by his will or by the laws of dissent, and in the event of
any attempted assignment or transfer contrary to this Section, Company shall
have no liability to pay any amounts so attempted to be assigned or transferred.
This Agreement may be assigned to a subsidiary of the Company. The Company shall
guarantee obligations of such subsidiary hereunder.
Section 19. Severability. All provisions of this Agreement are
severable from one another, and the unenforceability or invalidity of any
provision of this Agreement shall not affect the validity or enforceability of
the remaining provisions of this Agreement; provided, however, that should any
judicial body interpreting this Agreement deem any provision to be unreasonably
broad in time, territory, scope or otherwise, the parties intend for the
judicial body, to the greatest extent possible, to reduce the breadth of the
provision to the maximum legally allowable parameters rather than deeming such
provision totally unenforceable or invalid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
EXECUTIVE
/s/ RANDY CLOUSER
- -------------------------------------
Randy Clouser
OLD NATIONAL BANCORP
/s/ JAMES A. RISINGER
- -------------------------------------
Chairman and Chief Executive Officer
9