Employment Agreement

EMPLOYMENT AGREEMENT Amended as of 2/1/97
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THIS AGREEMENT, dated as of January 1, 1992, by and between CHRISTOPHER J. MURPHY 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
------------------- 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.


2
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
---- 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.


3
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
---------- 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
----------
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) ...