Exhibit 10.1


 


CONFIDENTIAL
SEPARATION AGREEMENT AND RELEASE


 


This CONFIDENTIAL SEPARATION AGREEMENT AND
RELEASE (“Agreement”) is entered into on the 21st day of February, 2008 by and between
MainSource Financial Group, Inc. and its related affiliates (“MainSource” or
“Employer”) and James L. Saner, Sr. (“Employee”).


 


RECITALS


 


WHEREAS, Employee’s last day of active
employment with MainSource was February 8, 2008 (“Separation Date”);


 


WHEREAS, the parties wish to amicably
terminate the employment and other corporate relationships between them; and


 


WHEREAS, MainSource will pay separation compensation
to Employee in accordance with the terms and conditions described below.


 


NOW, THEREFORE, in consideration of the above
recitals, the payment by MainSource of the separation compensation described
below, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, MainSource and Employee hereby agree as
follows:


 


Section 1.                                            Termination.
Employee’s positions as an employee, officer, and director of MainSource terminated
as of February 8, 2008.


 


Section 2.                                            Separation
Compensation. As consideration for Employee granting the release of claims contemplated
by Section 5 below and Employee’s agreement to abide by the terms of this
Agreement, Employee shall be entitled to the following separation compensation:


 


(a)                                  Employee
shall receive separation pay in the total amount of $487,500.00, less all
required taxes and withholdings, to be paid in equal installments beginning on
the first regular bi-weekly payroll period occurring after the “Effective Date”,
through December 31, 2008 and no later. Employee shall be responsible for
and pay all applicable taxes relating to such payments, and MainSource shall be
authorized to deduct and withhold all taxes and other appropriate amounts
required by law. Employee acknowledges and agrees that the separation pay set
forth in this subsection is equal to eighteen (18) months of his current base
salary. As further defined below in Section 4, the term “Effective Date”
is the day immediately after the expiration of the seven-day revocation period
calculated from the date Employee executes this Agreement.


 


(b)                                 Employee
also shall be eligible to participate in MainSource’s group health plans in
accordance with the provisions of the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”) or other applicable laws. MainSource shall pay all
employer and employee portions of the premiums for Employee and


 


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Employee’s spouse for an eighteen (18) month
period; provided, however, that if Employee obtains employment with comparable
insurance coverage, then MainSource’s obligations to pay for the COBRA premiums
shall cease on the date Employee becomes covered by another entity.


 


(c)                                  Within
thirty (30) days of the Effective Date, Employee also shall receive title, free
and clear, to the company automobile currently assigned to Employee. The fair
market value of the automobile shall be taxable income to Employee. Employee
shall be responsible for and pay all applicable taxes, fees, and other expenses
relating to such transfer to title and property.


 


(d)                                 Within
thirty (30) days of the Effective Date, Mainsource also shall pay in full
Employee’s personal country club membership for 2008. Employee shall be solely
responsible for all other expenses, fees, and other assessments arising from
his use of the country club membership.


 


(e)                                  Within
thirty (30) days of the Effective Date, and if otherwise permitted under policy
terms, MainSource shall assist Employee in converting the current Basic Life
Insurance Policy maintained for Employee’s benefit to a personal life insurance
policy for Employee; provided, however, that after the conversion of the
policy, Employee shall be solely responsible for the payment of all insurance
premiums, fees, and other expenses associated with the policy which thereafter
become due. Employee also acknowledges and agrees that MainSource shall retain
its status as the owner and the sole beneficiary of the bank owned life
insurance policy (“BOLI”) currently in effect and Employee waives any right,
title, and interest he has, if any,  relating
to or arising under the BOLI.


 


(f)                                    Within
thirty (30) days of the Effective Date, MainSource and Employee shall take
action to provide for the full vesting of any currently unvested stock options
to which Employee may be entitled by amending all existing Option Agreements to
state that Employee may exercise fully-vested options until the expiration of
the option term stated in the Option Agreements; provided, however, that if Employee
does not exercise such vested stock options within three (3) months after
the Effective Date, then the options shall automatically become Non-Qualified
Options, instead of Incentive Stock Options, and shall be taxed at ordinary
income tax rates at the time of exercise.


 


(g)                                 Notwithstanding
anything herein to the contrary, the parties agree that in the event Employee
violates the terms of Sections 3, 5, or 7 of this Agreement, (i) Employee
shall not be entitled to any further separation compensation and benefits
provided by Section 2 of this Agreement or otherwise, (ii) MainSource’s
obligations with respect to such payments or any other obligation to Employee
shall terminate, shall be deemed fully and finally discharged and shall be of
no further force or effect, and (iii) in addition to any other damages or
claims which


 


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MainSource may have against Employee,
Employee shall repay to MainSource all amounts paid to or on behalf of Employee
under Section 2, including, but not limited to the fair market value for
property or rights Employee received under Section 2,  hereof, unless otherwise prohibited by law.


 


(h)                                 All
sums paid under this Agreement shall be paid on or before March 15, 2009.


 


(i)                                     Employee
acknowledges and agrees that he has received all other wages and compensation
due to him through the Separation Date including, but not limited to, salary,
accrued but unused PTO time, and payment of the value of eighteen (18) months
of the Employer’s contribution towards Employee’s HSA account in the amount of
$1,620.00. Further, Employer acknowledges it is responsible to and agrees to
deposit into Employee’s account in the MainSource Financial Group, Inc.
401(k) and Employee Stock Ownership Plan (“Plan”) (i) all
non-discretionary employer matching contributions through the Separation Date;
and (ii) the amount of the Employer’s discretionary contribution for the
2007 and 2008 tax years attributable to Employee according to the terms of the Plan
as applied to all plan participants.


 


Section 3.                                            Certain
Agreements by the Employee. Employee understands and agrees as follows:


 


(a)                                  Employee
is not entitled to, nor is MainSource obligated to pay, any separation or
severance payment other than in accordance with this Agreement and that the
amounts payable to Employee in Section 2 are above and beyond any sum or
value to which Employee is otherwise entitled;


 


(b)                                 Employee
shall keep the terms of this Agreement confidential except that he may share
the financial information with his spouse, tax advisors, and attorneys, if any;
and


 


(c)                                  Employee
shall take no action that interferes with or that damages or may tend to damage
any of MainSource’s property or operations, MainSource’s customers or accounts,
or MainSource’s reputation in the general community.


 


Section 4.                                            Notice
of Rights under the Age Discrimination in Employment Act. Employee
understands and agrees that he is covered by the provisions of the Age
Discrimination in Employment Act (“ADEA”) and the Older Workers Benefit
Protection Act (“OWBPA”). Employee acknowledges that he has been advised to
seek legal counsel before signing this Agreement. Employee further acknowledges
that he has been advised that he has a period of twenty-one (21) days from
receipt of this Agreement in which to review and execute this Agreement (“Review
Period”). Employee also acknowledges that he was advised that, after executing
this Agreement, he has an additional seven (7) days within which to revoke
this Agreement (“Revocation Period”). Employee’s signature below shall
constitute and be considered a waiver of any days remaining in the Review
Period. The terms of this Agreement (including, but not limited to, Section 2
of this Agreement relating to the Separation


 


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Compensation and Section 5 of this Agreement relating to the
release of claims) shall become binding and effective upon the execution of
this Agreement by MainSource and Employee and upon the expiration of the
Revocation Period (“Effective Date”). Employee understands and agrees that if
he revokes this Agreement as provided above, the Separation Compensation
described in Section 2 of this Agreement shall be forfeited by Employee
and shall not be paid by MainSource, and this Agreement shall thereafter not be
enforceable or binding upon either MainSource or Employee.


 


Section 5.                                            Complete
Release by Employee. Employee hereby forever releases and discharges, and
covenants not to sue or make any claim against, MainSource, each of the
present, former and future parent companies, subsidiaries, affiliates,
predecessors, successors, assigns of MainSource, and each of the present,
former or future shareholders, owners, directors, officers, partners, employees,
agents and representatives of MainSource, and each of its parent companies,
subsidiaries, affiliates, predecessors, successors, and assigns (collectively,
the “Released Parties”), in their representative as well as their individual
capacities, from any and all claims, demands, damages, liabilities,
obligations, costs, expenses, actions, and causes of action of any kind or
nature, whether known or unknown, matured or unmatured or otherwise (including,
but not limited to, any claims for attorneys fees) that could have been filed,
brought or asserted by the Employee prior to the Effective Date against any of
the Released Parties. The foregoing release of claims, discharge and covenant
not to sue includes, but is not limited to, the following: (a) any and all
claims of age discrimination under the ADEA (including, but not limited to, the
OWBPA), (b) any and all claims under any state statutory or decisional law
pertaining to termination of employment, wrongful discharge, wage and hour, discrimination,
retaliation, infliction of emotional distress, breach of contract, breach of
public policy, misrepresentation or defamation, (c) any and all claims
under the Indiana Civil Rights Act, the Indiana Wage Payment Statute, the
Indiana Wage Claims Statute, the Civil Rights Act of 1866, Title VII of the
Civil Rights Act of 1964, the Federal Rehabilitation Act of 1973, the Family
and Medical Leave Act, the Employee Retirement Income Security Act of 1974, the
Fair Labor Standards Act, the Americans With Disabilities Act and any other
federal, state or local statute, law, rule, regulation, ordinance, common law
or other legal requirement, (d) any and all claims that the Employee has
or may have relating to (i) Employee’s employment by MainSource, (ii) the
termination of Employee’s employment with MainSource, (iii) Employee’s
service as an officer of MainSource, and (iv) any and all matters,
transactions and things occurring prior to the Effective Date, and (e) any
and all other tort or contract claims and other theories of recovery. The
foregoing release of claims, discharge and covenant not to sue by Employee do not
apply to Employee’s right to enforce this Agreement against MainSource.


 


Notwithstanding the foregoing, nothing in
this Section 5 shall prohibit Employee from filing a charge of
discrimination with the Equal Employment Opportunity Commission or similar
state or local administrative agency. Employee acknowledges, however, that in
the event he files such a charge, he shall not be entitled to any monetary or
other recovery as a result of filing such charge.


 


Section 6.                                            Disclaimer
of Liability. This Agreement does not constitute an admission by MainSource
that it has (a) violated any statute, law, rule, regulation, ordinance, or
other legal requirement, or (b) committed any unlawful act.


 


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Section 7.                                            Confidentiality,
MainSource Property, and Restrictive Covenants. At all times on and after Employee’s
Separation Date, Employee covenants and agrees that he shall abide by the
confidentiality and restrictive covenants set forth below:


 


(a)                                  Confidentiality: While Employee is employed by MainSource
or any of its affiliates and after termination of such employment for any
reason, Employee shall not divulge or furnish any trade secrets (as defined in
IND. CODE § 24-2-3-2) of MainSource or any of its affiliates or any
confidential information acquired by him while employed by MainSource or any of
its affiliates concerning the policies, plans, procedures or customers of
employer to any person, firm or corporation, other than MainSource or any of
its affiliates or upon its written request, or use any such trade secret or
confidential information directly or indirectly for Employee’s own benefit or
for the benefit of any person, firm or corporation other than MainSource or any
of its affiliates, since such trade secrets and confidential information are
confidential and shall at all times remain the property of MainSource or any of
its affiliates.


 


(b)                                 MainSource
Property: In addition, Employee covenants and agrees that he has returned
or, as of the date of this Agreement shall return, to MainSource any
Confidential Information that is still in Employee’s possession or control, or
the location of which Employee knows (including, but not limited to, any
Confidential Information contained on Employee’s business, personal or home
computer or personnel data assistant), and that Employee shall return to
MainSource all equipment, computers, credit cards, keys, access cards,
passwords and other property of MainSource that are still in the Employee’s
possession or control, or the location of which Employee knows, and shall cease
using any of the foregoing. The term “Confidential Information” includes:


 


(i)                                    any
and all materials, records, data, documents, lists and information (whether in
writing, printed, verbal, electronic, computerized, on disk, CD, DVD or
otherwise) (A) relating or referring in any manner to the business,
operations, affairs, financial condition, results of operation, assets,
liabilities, revenues, income, profits, estimates, projections, budgets,
policies, strategies, techniques, methods, products, pricing, relationships
and/or customers of MainSource that are confidential, proprietary or not otherwise
publicly available (other than through a breach of this Agreement by the
Employee or any other impermissible disclosure), or (B) that MainSource
has deemed confidential, proprietary or nonpublic;


 


(ii)                                  any and all customer
account information;


 


(iii)                               any
and all trade secrets of MainSource; and


 


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(iv)                              any
and all copies, summaries, analyses and extracts which relate or refer to or
reflect any of the items identified above, whether or not prepared or made by
Employee.


 


(c)                                  Non-Competition: 
For a period of eighteen (18) months after termination of Employee’s
employment by Employer and within a twenty-five (25) mile radius of any branch
of MainSource or any of its banking affiliates, Employee shall not, directly or
indirectly, engage in, control, advise, manage, serve as a director, officer or
employee of, act as a consultant to, any bank holding company, savings
association holding company, financial services holding company, bank, savings
bank, thrift or any other financial institution or other organization that is
primarily engaged in the financial services industry, in competition with
MainSource or any of its affiliates. This prohibition shall not prohibit
Employee or any of his affiliates, associates, agents or representatives from
owning less than 1% of the publicly traded securities of any corporation or
other entity engaged in such business.


 


(d)                                 Non-Solicitation: For a period of eighteen (18) months
after termination of Employee’s employment by Employer, Employee shall not
directly or indirectly:


 


(i)                                   solicit, divert or attempt to solicit or
divert any “past customers”, “present customers”, or “prospective customers” of
MainSource or any of its affiliates, as those terms are defined below, for the purpose
of competing with MainSource or any of its affiliates in providing financial
services; or


 


(ii)                                employ, solicit for employment or
encourage to leave his employment, any person who was, during the one-year
period prior to such employment, solicitation or encouragement, or is, an
officer or employee of MainSource or any of its affiliates.


 


For purposes of this Section 7,
the term “directly or indirectly” shall include acts or omissions as
proprietor, partner, joint venture, employer, salesman, agent, employee,
officer, director, lender or consultant of, to or for, or owner of any interest
in, any person or entity. In addition, the term “past customers” means any
customer who was acquired during Employee’s last year of employment, but who
was not still a customer during Employee’s employment and who remained a
customer at the time of Employee’s departure. The term “prospective customer”
means entities to which MainSource made specific and direct overtures during
the last year of Employee’s employment.


 


(d)                                 Tolling of Restrictive Periods:  The
running of the eighteen (18) month restrictive periods set forth above in
subsections 7(c) and 7(d) shall be tolled during any period of time
which a court of competent jurisdiction finds that Employee violated such restrictive
periods, the intent of the parties being to provide MainSource with a full eighteen
(18) month-period of non-competition and non-solicitation as defined herein above.


 


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(e)                                  Scope:  To the
extent the restrictive covenants and related obligations set forth above in Section 7
exceed or increase the scope of any restrictive covenants and related
obligations to which Employee is already bound under any agreement, including
but not limited to any Incentive Stock Option Agreement, executed by and
between Employee and MainSource imposing restrictive covenants and related
obligations, the terms of this Agreement shall control.


 


Section 8.                                            Breach
of Agreement. In the event that Employee breaches any of the provisions of
this Agreement, Employee shall immediately return to MainSource all components
of the Separation Compensation received under Section 2 of this Agreement.
As provided by the ADEA and OWBPA, and notwithstanding any other provision of
this Agreement, Employee acknowledges that he has the right to file a charge
alleging a violation of the ADEA and/or the OWBPA with any administrative
agency and/or to challenge the validity of the waiver and release of any claim
that Employee may have under the ADEA without repaying the Separation Compensation
to MainSource. If there is a breach of this Agreement by a party, the breaching
party shall reimburse the non-breaching party for its costs and expenses
(including, but not limited to, reasonable attorneys fees) incurred in
enforcing the terms of this Agreement, as permitted by law.


 


Section 9.                                            Miscellaneous.


 


(a)                                  This Agreement
constitutes the entire understanding and agreement between MainSource and
Employee and supersedes any prior understandings, commitments, negotiations or
agreements, whether oral or in writing, between MainSource and Employee
relating to the subject matter hereof. This Agreement shall not amend or affect
any written employee benefit plan of MainSource, and Employee’s benefits, if
any, under each such plan shall be governed by each plan in which Employee may
participate. This Agreement shall not be terminated, amended or modified
without the prior written consent of MainSource and Employee, except that
Employee may revoke this Agreement as provided in Section 4 of this
Agreement. No failure or delay by MainSource in exercising any right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy.


 


(b)                                 This Agreement shall
be governed by and construed in accordance with the laws of the State of
Indiana, without giving effect to any choice or conflict of law provisions,
principles or rules (whether of the State of Indiana or any other
jurisdiction) that would cause the application of any laws of any jurisdiction
other than the State of Indiana. Any claim, demand or action relating to this
Agreement shall be brought and litigated only in a state or federal court of
competent jurisdiction located in the State of Indiana. In connection with the
foregoing, MainSource and Employee irrevocably consent to the jurisdiction and
venue of such courts and expressly waive any claims or defenses of lack of
jurisdiction of or proper venue by such courts.


 


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(c)                                  This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute one and the same
agreement. The headings in this Agreement have been inserted solely for ease of
reference and shall not be considered in the interpretation or construction of
this Agreement. This Agreement shall be construed in accordance with the fair meaning
of its provisions and its language shall not be strictly construed against, nor
shall ambiguities be resolved against, any party.


 


(d)                                 The
provisions this Agreement shall extend to, be binding upon and inure to the
benefit of the heirs, executors, administrators, representatives, successors
and assigns of MainSource and Employee; provided, however, that the Employee
shall not assign this Agreement without the prior written consent of MainSource;
and MainSource may assign this Agreement without the prior written consent of
Employee. If any provision of this Agreement is applied to either party or to
any circumstance that is adjudged to be illegal, invalid or inoperable, then
such illegality, invalidity or inoperability shall not affect the remainder of
the Agreement, or its validity, or enforceability.


 


(e)                                  The
defined terms contained in the first paragraph, and the recitals contained in this
Agreement are expressly incorporated into and made a part of this Agreement.


 


(f)                                    Employee shall not
publicly disparage or make or publish any negative statements or comments about
any of the Released Parties.


 


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


 


	
   

  	
  MAINSOURCE FINANCIAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  Richard Veach, Director of Human Resources

  
	
   

  	
  (Printed Name and Title)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JAMES L. SANER, SR.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Printed Name)

  



 


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