Exhibit 10.3


 


CHANGE
IN CONTROL AGREEMENT


 


THIS CHANGE IN
CONTROL AGREEMENT (“Agreement”) is entered into as of the 4th day of August,
2008 by and between MAINSOURCE FINANCIAL
GROUP, INC. (the “Company”), an Indiana corporation, and ARCHIE M. BROWN, JR. (“Executive”).


 


RECITALS:


 


WHEREAS, the Company considers
the establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company and its
shareholders; and


 


WHEREAS, the
Company recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control may arise and that such possibility may
result in the departure or distraction of management personnel to the detriment
of the Company and its shareholders; and


 


WHEREAS, the
Board of Directors of the Company (the “Board”) has determined that it is in
the best interests of the Company and its shareholders to secure Executive’s
services and to ensure Executive’s undivided dedication to his duties in the
event of any threat or occurrence of a Change in Control (as defined in Section 1)
of the Company; and


 


WHEREAS, the
Board has authorized the Company to enter into this Agreement;


 


                                                NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and Executive hereby agree as follows:


 


AGREEMENT:


 


1.                                       Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:


 


(a)          “Bonus Amount”
means the annual incentive bonus earned by Executive from the Company during
the last completed fiscal year of the Company immediately preceding Executive’s
Date of Termination (annualized in the event Executive was not employed by the
Company for the whole of any such fiscal year).


 


(b)          “Cause” means (i) the
willful and continued failure of Executive to perform substantially his duties
with the Company (other than any such failure resulting from Executive’s
incapacity due to physical or mental illness or any such failure subsequent to
Executive being delivered a Notice of Termination without Cause by the Company
or delivering a Notice of Termination for Good Reason to the Company) after a
written demand for substantial performance is delivered to Executive by the
Board that specifically identifies the manner in which the Board believes that
Executive has not substantially performed Executive’s duties, (ii) the
willful engaging by Executive in illegal conduct or gross misconduct that is demonstrably
and materially injurious to the Company, or (iii) the conviction of
Executive of, or a plea by Executive of nolo contendre to, a


 

















 


felony.  For purpose of this paragraph (b), no act or
failure to act by Executive shall be considered “willful” unless done or
omitted to be done by Executive in bad faith and without reasonable belief that
Executive’s action or omission was legal, regulatory compliant, and 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, based upon the advice of counsel for the Company or upon
the instructions of the Company’s chief executive officer or another senior
officer of the Company, shall be conclusively presumed to be done, or omitted
to be done, by Executive in good faith and in the best interests of the
Company.  Cause shall not exist unless
and until the Company has delivered to Executive a copy of a resolution duly
adopted by three-fourths (3/4) of the entire Board (excluding Executive if
Executive is a Board member) at a meeting of the Board called and held for such
purpose (after reasonable notice to Executive and an opportunity for Executive,
together with counsel, to be heard before the Board), finding that in the good faith
opinion of the Board an event set forth in clauses (i) or (ii) has
occurred and specifying the particulars thereof in detail. The Company must
notify Executive of any event constituting Cause within 90 days following the
Company’s knowledge of its existence or such event shall not constitute Cause
under this Agreement.


 


(c)                “Change in
Control” means the occurrence of any one of the following events:


 


(i)                  individuals who,
on January 1, 2008, constitute the Board (the “Incumbent Directors”) cease
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to January 1, 2008, whose
election or nomination for election was approved by a vote of at least
two-thirds (2/3) of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection by
such Incumbent Directors to such nomination) shall be deemed to be an Incumbent
Director; provided, however, that no individual elected or nominated as a
director of the Company initially as a result of an actual or threatened
election contest with respect to directors or any other actual or threatened
solicitation of proxies by or on behalf of any person other than the Board
shall be deemed to be an Incumbent Director;


 


(ii)               any “person” (as
such term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25 percent or more of the combined
voting power of the Company’s then outstanding securities eligible to vote for
the election of the Board (the “Company Voting Securities”); provided, however,
that the event described in this paragraph (ii) shall not be deemed to be
a Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any Subsidiary, (B) by any employee benefit plan sponsored
or maintained by the Company or any Subsidiary, or by any employee stock
benefit trust created by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii)), (E) pursuant to any acquisition by Executive or any
group of persons including Executive (or any entity controlled by Executive or
any group of persons including Executive); or (F) a transaction (other
than one described in (iii) below) in which Company Voting Securities are
acquired from the Company, if a majority of the Incumbent Directors approves a
resolution


 


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providing
expressly that the acquisition pursuant to this clause (F) does not
constitute a Change in Control under this paragraph (ii);


 


(iii)            the consummation of a
merger, consolidation, share exchange or similar form of corporate transaction
involving the Company or any of its Subsidiaries that requires the approval of
the Company’s shareholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless immediately
following such Business Combination: (A) more than 40 percent of the total
voting power of (x) the corporation resulting from the consummation of
such Business Combination (the “Surviving Corporation”), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100 percent of the voting securities eligible to elect
directors of the Surviving Corporation (the “Parent Corporation”), is
represented by Company Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, represented by shares
into which such Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan sponsored
or maintained by the Surviving Corporation or the Parent Corporation or any
employee stock benefit trust created by the Surviving Corporation or the Parent
Corporation) is or becomes the beneficial owner, directly or indirectly, of 25
percent or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) and (C) at least one-half
of the members of the board of directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation) were Incumbent
Directors at the time of the Board’s approval of the execution of the initial
agreement providing for such Business Combination (any Business Combination
which satisfies all of the criteria specified in (A), (B) and (C) above
shall be deemed to be a “Non-Qualifying Transaction”); or


 


(iv)           the shareholders of the
Company approve a plan of complete liquidation or dissolution of the Company or
a sale of all or substantially all of the Company’s assets.


 


Notwithstanding the foregoing,
a Change in Control of the Company shall not be deemed to occur solely because
any person acquires beneficial ownership of more than 25 percent of the Company
Voting Securities as a result of the acquisition of Company Voting Securities
by the Company that reduces the number of Company Voting Securities
outstanding; provided, that if after such acquisition by the Company such
person becomes the beneficial owner of additional Company Voting Securities
that increases the percentage of outstanding Company Voting Securities
beneficially owned by such person, a Change in Control of the Company shall
then occur.


 


(d)          “Date of Termination”
means (i) the effective date on which Executive’s employment by the
Company terminates as specified in a prior written notice by the Company or
Executive, as the case may be, to the other, delivered pursuant to Section 10,
or (ii) if Executive’s employment by the Company terminates by reason of
death, the date of Executive’s death.


 


(e)           “Disability”
means termination of Executive’s employment by the Company due to Executive’s
absence from Executive’s duties with the Company on a full-time basis for at
least 180 consecutive days as a result of Executive’s incapacity due to
physical or mental illness.  The


 


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determination
of Disability shall be made by a physician mutually agreed upon by both the
Executive and the Company.


 


(f)             “Good Reason”
means, without Executive’s express written consent, the occurrence of any of
the following events after a Change in Control:


 


(i)            any
change in the duties or responsibilities of Executive that is inconsistent in
any material respect with Executive’s positions, duties, responsibilities or
status with the Company immediately prior to such Change in Control (including
any material diminution of such duties or responsibilities);


 


(ii)         (A) a
material reduction by the Company in Executive’s rate of annual base salary as
in effect immediately prior to such Change in Control, or as the same may be
increased from time to time thereafter, or (B) the failure by the Company
to pay Executive an annual bonus in respect of the year in which such Change in
Control occurs in an amount greater than or equal to the annual bonus earned
for the year prior to the year in which such Change in Control occurs, provided
that Executive has met any requisite performance criteria threshold necessary
to the payment of such annual bonus in respect of the year in which such Change
in Control occurs.


 


(iii)      any
requirement of the Company that Executive (A) be based anywhere more than
30 miles from the office where Executive is located at the time of the Change
in Control, or (B) endure overnight travel on Company business to an
extent substantially greater than the overnight travel obligations of Executive
immediately prior to such Change in Control;


 


(iv)     the
failure of the Company to (A) continue in effect any employee benefit
plan, compensation plan, welfare benefit plan or material fringe benefit plan
(individually or collectively, “Plan”) 
in which Executive is participating immediately prior to such Change in
Control or the taking of any action by the Company that would adversely affect
Executive’s participation in or reduce Executive’s benefits under any such
Plan, unless Executive is permitted to participate in other plans providing
Executive with the same benefits that the party effecting the Change in Control
(or, if applicable, its Parent Corporation) provides to an executive in a
comparable position (or, in the case of a Parent Corporation, the executive of
its principal banking or financial services subsidiary in a comparable
position), or (B) provide Executive with paid time-off in accordance with
the most favorable time-off policies of the Company and its affiliated
companies as in effect for Executive immediately prior to such Change in
Control, including the crediting of all service for which Executive had been
credited under such vacation policies prior to the Change in Control; or


 


(v)        the
failure of the Company to obtain the assumption (and, if applicable, guarantee)
agreement from any successor (and Parent Corporation) as contemplated in Section 9(b).


 


The Executive
must notify the Company within 90 days after existence of the initial condition
giving rise to a termination for Good Reason. 
The Company will then have a 30-day period after the Company receives
notice from Executive to cure the condition and not be required to pay an
amount under Section 4. Executive’s right to terminate employment for Good
Reason shall not be affected by Executive’s incapacities due to mental or
physical illness and Executive’s continued employment


 


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shall not constitute consent
to, or a waiver of rights with respect to, any event or condition constituting
Good Reason.


 


(g)          “Qualifying
Termination” means a termination of Executive’s employment (i) by the
Company other than for Cause, or (ii) by Executive for Good Reason.  Termination of Executive’s employment on
account of death, Disability or Retirement shall not be treated as a Qualifying
Termination.


 


(h)          “Retirement”
means the termination of Executive’s employment on or after the first of the
month coincident with or following Executive’s attainment of age 65, or such
later date as may be provided in a written agreement between the Company and
the Executive.


 


(i)              “Subsidiary”
means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50 percent or more of the total combined voting
power of the then outstanding securities or interests of such corporation or
other entity entitled to vote generally in the election of directors or in
which the Company has the right to receive 50 percent or more of the
distribution of profits or 50 percent of the assets upon liquidation or
dissolution.


 


(j)              “Termination
Period” means the period of time beginning with a Change in Control and
ending 12 months following such Change in Control.  Notwithstanding anything in this Agreement to
the contrary, if (i) Executive’s employment is terminated prior to a
Change in Control for reasons that would have constituted a Qualifying
Termination if they had occurred following a Change in Control; (ii) Executive
reasonably demonstrates that such termination (or Good Reason event) was at the
request of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control; and (iii) a Change in
Control involving such third party (or a party competing with such third party
to effectuate a Change in Control) does occur, then for purposes of this
Agreement, the date immediately prior to the date of such termination of
employment or event constituting Good Reason shall be treated as a Change in
Control.  For purposes of determining the
timing of payments and benefits to Executive under Section 4, the date of
the actual Change in Control shall be treated as Executive’s Date of
Termination under Section l(d).


 


2.                                       Obligation
of Executive.  In the event of a
tender or exchange offer, proxy contest, or the execution of any agreement
that, if consummated, would constitute a Change in Control, Executive agrees
not to voluntarily leave the employ of the Company that may employ Executive,
other than as a result of Disability, Retirement or an event that would
constitute Good Reason if a Change in Control had occurred, until the Change in
Control occurs or, if earlier, such tender or exchange offer, proxy contest or
agreement is terminated or abandoned.


 


3.                                       Term
of Agreement.  This Agreement shall
be effective on the date hereof and shall continue in effect until the Company
shall have given 12 months written notice of cancellation; provided, that,
notwithstanding the delivery of any such notice, this Agreement shall continue in
effect for a 12-month period after a Change in Control, if such Change in
Control shall have occurred during the term of this Agreement.  Notwithstanding anything in this Section to
the contrary, this


 


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Agreement shall terminate if
Executive or the Company terminates Executive’s employment prior to a Change in
Control except as provided in Section 1(j).


 


4.                                       Payments
Upon Termination of Employment.


 


(a)           Qualifying
Termination — Cash Payment.  If
during the Termination Period the employment of Executive shall terminate
pursuant to a Qualifying Termination, then the Company shall provide to
Executive, subject to the provisions of Section 11 hereunder:


 


(i)            within
20 days following the Date of Termination a lump-sum cash amount equal to the
sum of (A) Executive’s base salary through the Date of Termination and any
bonus amounts that have become payable, to the extent not theretofore paid or
deferred, (B) a pro rata portion of Executive’s annual bonus for the fiscal
year in which Executive’s Date of Termination occurs in an amount at least
equal to (x) Executive’s Bonus Amount, multiplied by (y) a fraction,
the numerator of which is the number of days in the fiscal year in which the
Date of Termination occurs through the Date of Termination and the denominator
of which is 365, and reduced by (z) any amounts paid from the Company’s
annual incentive plan for the fiscal year in which Executive’s Date of
Termination occurs and (C) any accrued vacation pay, to the extent not
theretofore paid; plus


 


(ii)         within
20 days following the Date of Termination, a lump-sum cash amount equal to the
sum of (A) 2.99 times Executive’s highest annual rate of base salary
during the 12-month period immediately prior to Executive’s Date of
Termination, plus (B) 2.99 times Executive’s Bonus Amount; provided,
however, that if Executive’s Date of Termination is within 12 months of the
earliest date on which termination by the Executive could otherwise be
considered a Retirement (“Retirement Date”), such sum shall be multiplied by a
fraction (“Adjustment Fraction”), the numerator of which is equal to the number
of full months from the Date of Termination to the Retirement Date, and the
denominator of which is equal to 12.


 


(b)          Qualifying Termination
— Continued Coverage.  If during the
Termination Period the employment of Executive shall terminate pursuant to a
Qualifying Termination, the Company shall continue to provide, for a 12-month
period following Executive’s Date of Termination, Executive (and Executive’s
dependents, if applicable) with the same level of medical, dental, accident,
disability and life insurance benefits upon substantially the same terms and
conditions (including contributions required by Executive for such benefits) as
existed immediately prior to Executive’s Date of Termination (or, if more
favorable to Executive, as such benefits and terms and conditions existed
immediately prior to the Change in Control); provided, however, that if
Executive’s Date of Termination is within 12 months of Executive’s Retirement
Date, the period of time of continued benefits coverage (as described in this Section 4(b))
shall be equal to the product of (x) one, and (y) the Adjustment
Fraction; provided, further, if Executive cannot continue to participate in the
Company plans providing such benefits, the Company shall otherwise provide such
benefits on the same after-tax basis as if continued participation had been
permitted.  Notwithstanding the foregoing,
in the event Executive becomes reemployed with another employer and becomes
eligible to receive welfare benefits from such employer, the welfare benefits
described herein shall be secondary to such benefits during the period of
Executive’s eligibility, but only to the extent that the Company reimburses
Executive for any increased cost and provides any additional


 


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benefits
necessary to give Executive the benefits provided hereunder.  The Executive’s accrued benefits as of the
Date of Termination under the Company’s employee benefit plans shall be paid to
Executive in accordance with the terms of such plans.


 


(c)           Qualifying
Termination — SERP Accrual. If during the Termination Period the employment
of Executive shall terminate pursuant to a Qualifying Termination, the Company
shall provide Executive with one (1) additional year of service credit
under all non-qualified retirement plans and excess benefit plans in which the
Executive participated as of his Date of Termination; provided, however, that
if Executive’s Date of Termination is within 18  months of Executive’s Retirement Date, the number of years of
additional service credit (as described in this Section 4(c)) shall be
equal to the product of (x) one and one-half (1.5), and (y) the
Adjustment Fraction.


 


(d)          Qualifying
Termination — Voluntary Reduction of Payments. If during the Termination
Period the employment of Executive shall terminate pursuant to a Qualifying
Termination, Executive shall have the right to direct that the Company reduce the
amounts which it is otherwise required to pay to Executive under this Section 4
to the Safe Harbor Cap (as defined in Section 5(a)).


 


(e)           Other than
Qualifying Termination. If during the Termination Period the employment of
Executive shall terminate other than by reason of a Qualifying Termination,
then the Company shall pay to Executive within 30 days following the Date of
Termination, a lump-sum cash amount equal to the sum of (1) Executive’s
base salary through the Date of Termination and any bonus amounts that have
become payable, to the extent not theretofore paid or deferred, and (2) any
accrued vacation pay, to the extent not theretofore paid. The Company may make
such additional payments, and provide such additional benefits, to Executive as
the Company and Executive may agree in writing. The Executive’s accrued
benefits as of the Date of Termination under the Company’s employee benefit
plans shall be paid to Executive in accordance with the terms of such plans.


 


(f)             Suspension of
Payments to Specified Employees.  To
the extent such suspension is required by Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) or Treasury Regulations issued
pursuant to Code Section 409A, if an amount is payable to the Executive
due to a Qualifying Termination, and if at the time of the Qualifying
Termination the Executive is a “Specified Employee,” payment of all amounts of
deferred compensation for purposes of Code Section 409A pursuant to Section 4
will be suspended for six months following the date of the Qualifying
Termination.  The Executive will receive
payment of such amounts on the first day following the six-month suspension
period with interest on any delayed payment at the 30-year Treasury Bond rate
as published in the Wall Street Journal.


 


(i)            A
“Specified Employee” means an individual who is a “Key Employee” of the Company
at a time when the Company’s stock is publicly traded on an established
securities market.  The Executive will be
a Specified Employee on the first day of the fourth month following any “Identification
Date” on which the Executive is a Key Employee.


 


(ii)         The
Executive is a “Key Employee” if at any time during the 12-month period ending
on an Identification Date the Executive is: (A) an officer of the Company
having


 


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annual
compensation greater than $150,000 (as adjusted in the same manner as under Section 415(d) of
the Code except that the base period will be the calendar quarter beginning July 1,
2001, and any increase under this sentence which is not a multiple of $5,000
will be rounded to the next lower multiple of $5,000); (B) a five-percent
owner of the Company; or (C) a one-percent owner of the Company having an
annual compensation greater than $150,000. 
For purposes of determining whether an Executive is an officer under
clause (A), nor more than 50 employees (or, if lesser, the greater of three or
ten percent of the employees) will be treated as officers, and those categories
of employees listed in Code Section 414(q)(5).


 


(iii)      The
“Identification Date” for purposes of this Agreement is December 31 of
each calendar year.


 


5.                                       Certain
Additional Payments by the Company.


 


(a)          Anything in this
Agreement to the contrary notwithstanding, in the event any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any affiliated entity) or any entity that
effectuates a Change in Control (or any of its affiliated entities) to or for
the benefit of Executive (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (the “Payments”) would be subject to the excise tax
imposed by Code Section 4999, or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Company shall pay to Executive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by Executive of all taxes
(including any Excise Tax) imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the sum of (i) the Excise Tax
imposed upon the Payments, and (ii) the product of any deductions
disallowed because of the inclusion of the Gross-up Payment in Executive’s
adjusted gross income and the highest applicable marginal rate of federal
income taxation for the calendar year in which the Gross-up Payment is to be
made. Such Gross-Up Payment will be made at the same time payment is made to
the Executive pursuant to Section 4(a)(ii).  For purposes of determining the amount of the
Gross-up Payment, the Executive shall be deemed to (A) pay federal income
taxes at the highest marginal rates of federal income taxation for the calendar
year in which the Gross-up Payment is to be made, (B) pay applicable state
and local income taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes and (C) have otherwise allowable deductions for
federal income tax purposes at least equal to the Gross-up Payment.


 


Notwithstanding the foregoing
provisions of this Section 5(a), if Executive is entitled to a Gross-Up
Payment, but that the Payments would not be subject to the Excise Tax if the
Payments were reduced by an amount that is less than five percent of the
portion of the Payments that would be treated as “parachute payments” under
Code Section 28OG, then the amounts payable to Executive under this
Agreement shall be reduced (but not below zero) to the maximum amount that
could be paid to Executive without giving rise to the Excise Tax (the “Safe
Harbor Cap”), and no Gross-Up Payment shall be made to Executive.  The reduction of the amounts payable
hereunder, if applicable, shall be made by reducing first the payments under Section 4(a)(ii).
 For purposes of reducing the Payments 


 


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to the Safe Harbor Cap, only
amounts payable under this Agreement (and no other Payments) shall be
reduced.  If the reduction of the amounts
payable hereunder would not result in a reduction of the Payments to the Safe
Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant
to this provision.


 


(b)         Subject to the provisions
of Section 5(a), all determinations required to be made under this Section 5,
including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment, the reduction of the Payments to the Safe Harbor Cap and the
assumptions to be utilized in arriving at such determinations, shall be made by
the public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the “Accounting Firm”), which shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the receipt of notice from the Company or the
Executive that there has been a Payment, or such earlier time as is requested
by the Company (collectively, the “Determination”).  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, Executive may appoint another regionally or nationally
recognized public accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder).  All fees and expenses of the
Accounting Firm shall be borne solely by the Company and the Company shall
enter into any agreement requested by the Accounting Firm in connection with
the performance of the services hereunder. 
The Gross-up Payment under this Section 5 with respect to any
Payments shall be made no later than 30 days following such Payment. If the
Accounting Firm determines that no Excise Tax is payable by Executive, it shall
furnish Executive with a written opinion to such effect, and to the effect that
failure to report the Excise Tax, if any, on Executive’s applicable federal
income tax return will not result in the imposition of a negligence or similar
penalty. In the event the Accounting Firm determines that the Payments shall be
reduced to the Safe Harbor Cap, it shall furnish Executive with a written
opinion to such effect. The Determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the
application of Code Section 4999 at the time of the Determination, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (“Underpayment”) or Gross-up Payments are made by the
Company which should not have been made (“Overpayment”), consistent with the
calculations required to be made hereunder. In the event that the Executive
thereafter is required to make payment of any Excise Tax or additional Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment (together with interest at the rate provided
in Code Section 1274(b)(2)(B)) shall be promptly paid by the Company to or
for the benefit of Executive. In the event the amount of the Gross-up Payment
exceeds the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been
made and any such Overpayment (together with interest at the rate provided in
Code Section 1274(b)(2)) shall be promptly paid by Executive (to the
extent he has received a refund if the applicable Excise Tax has been paid to
the Internal Revenue Service) to or for the benefit of the Company.  Executive shall cooperate, to the extent his expenses
are reimbursed by the Company, with any reasonable requests by the Company in
connection with any contests or disputes with the Internal Revenue Service in
connection with the Excise Tax.


 


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6.                                       Withholding
Taxes.  The Company may withhold from
all payments due to Executive (or his beneficiary or estate) hereunder all
taxes that, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.


 


7.                                       Reimbursement
of Expenses.  If any contest or
dispute shall arise under this Agreement involving termination of Executive’s
employment with the Company or involving the failure or refusal of the Company
to perform fully in accordance with the terms hereof, the Company shall
reimburse Executive, on a current basis, for all reasonable legal fees and
expenses, if any, incurred by Executive in connection with such contest or
dispute (regardless of the result thereof), together with interest in an amount
equal to the prime rate as published in the Wall
Street Journal  from time to time in effect, but in no event
higher than the maximum legal rate permissible under applicable law, such
interest to accrue from the date the Company receives Executive’s statement for
such fees and expenses through the date of payment thereof, regardless of
whether or not Executive’s claim is upheld by an arbitration panel.


 


8.                                       Scope
of Agreement.  Nothing in this
Agreement shall be deemed to entitle Executive to continued employment with the
Company or its Subsidiaries, and if Executive’s employment with the Company
shall terminate prior to a Change in Control, Executive shall have no further
rights under this Agreement (except as otherwise provided hereunder); provided,
however, that any termination of Executive’s employment during the Termination
Period shall be subject to all of the provisions of this Agreement.


 


9.                                       Successors;
Binding Agreement.


 


(a)          This Agreement shall not
be terminated by any Business Combination. In the event of any Business
Combination, the provisions of this Agreement shall be binding upon the
Surviving Corporation, and such Surviving Corporation shall be treated as the
Company hereunder.


 


(b)         The Company agrees that
in connection with any Business Combination, it will cause any successor entity
to the Company unconditionally to assume (and for any Parent Corporation in
such Business Combination to guarantee), by written instrument delivered to
Executive (or his beneficiary or estate), all of the obligations of the Company
hereunder.  Failure of the Company to
obtain such assumption and guarantee prior to the effectiveness of any such
Business Combination that constitutes a Change in Control shall be a breach of
this Agreement and shall constitute Good Reason hereunder and shall entitle
Executive to compensation and other benefits from the Company in the same
amount and on the same terms as Executive would be entitled hereunder if
Executive’s employment were terminated following a Change in Control by reason
of a Qualifying Termination.  For
purposes of implementing the foregoing, the date on which any such Business
Combination becomes effective shall be deemed the date Good Reason occurs, and
shall be the Date of Termination if requested by Executive.


 


(c)          This Agreement shall
inure to the benefit of and be enforceable by Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If Executive dies
while any amounts are payable to Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this 


 


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Agreement to
such person or persons appointed in writing by Executive to receive such
amounts or, if no person is so appointed, to Executive’s estate.


 


10.                                Notice.


 


(a)          For purposes of this
Agreement, all notices and other communications required or permitted hereunder
shall be in writing and shall be deemed to have been dully given when delivered
or 5 days after deposit in the United States mail, certified and return receipt
requested, postage prepaid, addressed as follows:


 


	
  If to Executive:

  	
  At the address set forth below the
  signatory

  
	
   

  	
   

  
	
  If to the Company:

  	
  MainSource Financial Group, Inc.

  
	
   

  	
  2205 N. State Road 3 Bypass

  
	
   

  	
  Greensburg, Indiana 47240

  
	
   

  	
  Attn: Chairman of the Board

  



 


or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.


 


(b)         A written notice of
Executive’s date of termination by the Company or Executive, as the case may
be, to the other, shall (i) indicate the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated and (iii) specify
the Date of Termination (which date shall not be less than 15 days (30, if
termination is by the Company for Disability) nor more than 60 days after the
giving of such notice).  The failure by
Executive or the Company to set forth in such notice any fact or circumstance
that contributes to a showing of Good Reason or Cause shall not waive any right
of Executive or the Company hereunder or preclude Executive or the Company from
asserting such fact or circumstance in enforcing Executive’s or the Company’s
rights hereunder.


 


11.                                Full
Settlement; Resolution of Disputes. 
The Company’s obligation to make any payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall be in lieu
of and in full settlement of all other severance payments to Executive under
any other severance or employment agreement between Executive and the Company,
and any severance plan of the Company. 
The Company’s obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against Executive or others.  In no event shall Executive be obligated to
seek other employment or take other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and, except
as provided in Section 4(b), such amounts shall not be reduced whether or
not Executive obtains other employment. 
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Indianapolis, Indiana
by three arbitrators in accordance with the rules of the American
Arbitration Association then in effect. 
The results of the arbitration will be binding on both parties and may
not be appealed.  Judgment may be entered
on the arbitrators’ award in any court having jurisdiction.  The Company shall bear all costs and expenses
arising in connection with any arbitration proceeding pursuant to this Section.


 


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12.                                Employment
with Subsidiaries.  Employment with
the Company for purposes of this Agreement shall include employment with any
Subsidiary.


 


13.                                Survival.  The respective obligations and benefits
afforded to the Company and Executive as provided in Sections 4 (to the extent
that payments or benefits are owed as a result of a termination of employment
that occurs during the term of this Agreement), 5 (to the extent that Payments
are made to Executive as a result of a Change in Control that occurs during the
term of this Agreement), 6, 7, 9(c) and 11 shall survive the termination
of this Agreement.


 


14.                                Governing
Law; Validity.  The interpretation,
construction and performance of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Indiana without regard to the principle of conflicts of laws.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.


 


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


 


16.                                Miscellaneous.  No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by Executive and by a duly authorized officer of the Company.  No waiver by either 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. 
Except as set forth in Sections l(b) and l(f), the failure by
Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right Executive or the Company may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. 
Except as otherwise specifically provided herein, the rights of, and
benefits payable to, Executive, his estate or his beneficiaries pursuant to
this Agreement are in addition to any rights of, or benefits payable to,
Executive, his estate or his beneficiaries under any other employee benefit
plan or compensation program of the Company.


 


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IN
WITNESS WHEREOF, the Company has caused this Agreement
to be executed by a duly authorized officer of the Company and Executive has
executed this Agreement, in each case as of the day and year first set forth
above.


 


	
   

  	
  MAINSOURCE FINANCIAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Robert E. Hoptry, Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Archie M. Brown, Jr.

  
	
   

  	
  [Insert Address]

  



 


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