**Exhibit10.6**

 

**EXECUTIVESEVERANCE AGREEMENT**

 

                THISEXECUTIVE SEVERANCE AGREEMENT ("Agreement") is entered into as of the16th day of January, 2001 by and between INDIANA UNITED BANCORP (the"Company"), an Indiana corporation, and JAMES M. ANDERSON("Executive").

 

**RECITALS:**

 

                A.            The Company considers theestablishment and maintenance of a sound and vital management to be essentialto protecting and enhancing the best interests of the Company and itsshareholders;

 

                B.            The Company recognizes that, as isthe case with many publicly held corporations, the possibility of a change incontrol may arise and that such possibility may result in the departure ordistraction of management personnel to the detriment of the Company and itsshareholders;

 

                C.            The Board of Directors of theCompany (the "Board") has determined that it is in the best interestsof the Company and its shareholders to secure Executive's continued servicesand to ensure Executive's continued and undivided dedication to his duties in theevent of any threat or occurrence of a Change in Control (as defined in Section1) of the Company; and 

 

                D.            The Board has authorized the Companyto enter into this Agreement.

 

NOW, THEREFORE, for and in consideration ofthe premises and the mutual covenants and agreements herein contained, andintending to be legally bound hereby, the Company and Executive hereby agree asfollows:

 

**AGREEMENT:**

 

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

 

                                (a)           "Bonus Amount" meansthe annual incentive bonus earned by Executive from the Company during the lastcompleted fiscal year of the Company immediately preceding Executive's Date ofTermination (annualized in the event Executive as not employed by the Companyfor the whole of any such fiscal year).

 

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                                (b)           "Cause" means (i)the willful and continued failure of Executive to perform substantially hisduties with the Company (other than any such failure resulting from Executive'sincapacity due to physical or mental illness or any such failure subsequent toExecutive being delivered a Notice of Termination without Cause by the Companyor delivering a demand for substantial performance is delivered to Executive bythe Board that specifically identifies the manner in which the Board believesthat Executive has not substantially performed Executive's duties, (ii) thewillful engaging by Executive in illegal conduct or gross misconduct that isdemonstrably and materially injurious to the Company, or (iii) the convictionof Executive of, or a plea by Executive of nolo contendre to, a felony. Forpurpose of this paragraph (b), no act or failure to act by Executive shall beconsidered "willful" unless done or omitted to be done by Executive inbad faith and without reasonable belief that Executive's action or omission waslegal, regulatory compliant, and in the best interests of the Company. Any act,or failure to act, based upon authority given pursuant to a resolution dulyadopted by the Board, based upon the advice of counsel for the Company or uponthe instructions of the Company's chief executive officer or another seniorofficer of the Company, shall be conclusively presumed to be done, or omittedto be done, by Executive in good faith and the best interests of the Company.Cause shall not exist unless and until the Company has delivered to Executive acopy 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 Boardcalled and held for such purpose (after reasonable notice to Executive and anopportunity for Executive, together with counsel, to be heard before theBoard), finding that in the good faith opinion of the Board an event set forthin clauses (i) or (ii) has occurred and specifying the particulars thereof indetail. The Company must notify Executive of any event constituting Causewithin ninety (90) days following the Company's knowledge of its existence orsuch event shall not constitute Cause under this Agreement.

 

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

 

                                                (i)  individualswho, on January 16, 2001, constitute the Board (the "IncumbentDirectors") cease for any reason to constitute at least a majority of theBoard, provided that any person becoming a director subsequent to January 16,2001, whose election or nomination for election was approved by a vote of atleast two-thirds of the Incumbent Directors then on the Board (either by aspecific vote or by approval of the proxy statement of the Company in whichsuch person is named as a

 

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nominee for director, without writtenobjection by such Incumbent Directors to such nomination) shall be deemed to bean Incumbent Director; provided, however, that no individual elected ornominated as a director of the Company initially as a result of an actual orthreatened election contest with respect to directors or any other actual orthreatened solicitation of proxies by or on behalf of any person other than theBoard shall be deemed to be an Incumbent Director;

 

                                                (ii)  any"person" (as such term defined in Section 3 (a) (9) of the SecuritiesExchange Act of 1934, as amended (the "Exchange Act"), and as used inSections 13 (d) (3) and 14 (d) (2) of the Exchange Act) is or becomes a"beneficial owner" (as defined in Rule 1 3d-3 under the ExchangeAct), directly or indirectly, of securities of the Company representing 25% or moreof the combined voting power of the Company's then outstanding securitieseligible to vote for the election of the Board (the "Company VotingSecurities"); provided, however, that the event described in thisparagraph (ii) shall not be deemed to be a Change in Control by virtue of anyof the following acquisitions: (A) by the Company or any Subsidiary, (B) by anyemployee 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 offeringof such securities, (D) pursuant to a Non-Qualifying Transaction (as defined inparagraph (iii)), (E) pursuant to any acquisition by Executive or any group ofpersons including Executive (or any entity controlled by Executive or any groupof persons including Executive); or (F) a transaction (other than one describedin (iii) below) in which Company Voting Securities are acquired from theCompany, if a majority of the Incumbent Directors approves a resolutionproviding expressly that the acquisition pursuant to this clause (F) does notconstitute a Change in Control under this paragraph (ii);

 

                                                (iii)  theconsummation of a merger, consolidation, share exchange or similar form ofcorporate transaction involving the Company or any of its Subsidiaries thatrequires the approval of the Company's shareholders, whether for suchtransaction or the issuance of securities in the transaction (a "BusinessCombination"), unless immediately following such Business Combination: (A)more than 40% of the total voting power of (x) the corporation resulting fromthe consummation of such Business Combination (the "SurvivingCorporation") or (y) if applicable, the ultimate parent corporation that directlyor indirectly has beneficial ownership of 100% of the voting securitieseligible to elect directors of the Surviving Corporation (the "ParentCorporation"), is represented by Company Voting Securities that wereoutstanding immediately prior to such Business Combination (or, if applicable,represented by share into which

 

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such Company Voting Securities were convertedpursuant to such Business Combination), and such voting power among the holdersthereof is in substantially the same proportion as the voting power of suchCompany Voting Securities among the holders thereof immediately prior to theBusiness Combination,  (B) no person(other than any employee benefit plan sponsored or maintained by the SurvivingCorporation or the Parent Corporation or any employee stock benefit trustcreated by the Surviving Corporation or the Parent Corporation) is or becomesthe beneficial owner, directly or indirectly, of 25% or more of the totalvoting power of the outstanding voting securities eligible to elect directorsof the Parent Corporation  (or, if thereis no Parent Corporation, the Surviving Corporation) and (C) at least one-halfof the members of the board of directors of the Parent Corporation (or, if thereis no Parent Corporation, the Surviving Corporation) were Incumbent Directorsat the time of the Board's approval of the execution of the initial agreementproviding for such Business Combination (any Business Combination whichsatisfies all of the criteria specified in (A), (B) and (C) above shall bedeemed to be a "Non-Qualifying Transaction"); or

 

                                                (iv)  the shareholdersof the Company approve a plan of complete liquidation or dissolution of theCompany or a sale of all or substantially all of the Company's assets.

 

Notwithstanding the foregoing, a Change inControl of the Company shall not be deemed to occur solely because any personacquires beneficial ownership of more than 25% of the Company Voting Securitiesas a result of the acquisition of Company Voting Securities by the Company thatreduces the number of Company Voting Securities outstanding; provided, that ifafter such acquisition by the Company such person becomes the beneficial ownerof additional Company Voting Securities that increases the percentage ofoutstanding Company Voting Securities beneficially owned by such person, aChange in Control of the Company shall then occur.

 

                                (d)           "Date of Termination"means (1) the effective date on which Executive's employment be the Companyterminates 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 (2) ifExecutive's employment by the Company terminates by reason of death, the dateof death of Executive.

 

                                (e)           "Disability" meanstermination of Executive's employment by the Company due to Executive's absencefrom Executive's duties with the company on a full-time basis for at least onehundred eighty (180) consecutive days as a result of Executive's incapacity dueto physical or mental illness.

 

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

 

                                                (i)  (A)any change in the duties or responsibilities (including reportingresponsibilities) of Executive that is inconsistent in any material and adverserespect with Executive's positions, duties, responsibilities or status with theCompany immediately prior to such Change in Control (including any material andadverse diminution of such duties or responsibilities);

 

                                                (ii)  (A)a reduction by the Company in Executive's rate of annual base salary as ineffect immediately prior to such Change in Control, or as the same may beincreased from time to time thereafter, or (B) the failure by the Company to payExecutive an annual bonus in respect of the year in which such Change in Controloccurs or any subsequent year in an amount greater than or equal to the annualbonus earned for the year prior to the year in which such Change in Controloccurs, provided that Executive has met any requisite performance criteriathreshold necessary to the payment of such annual bonus in respect of the yearin which such Change in Control occurs or such subsequent year.

 

                                                (iii)  anyrequirement of the Company that Executive (A) be based anywhere more thanthirty (30) miles from the office where Executive is located at the time of theChange in Control or (B) endure overnight travel on Company business to anextent substantially greater than the travel obligations of Executiveimmediately prior to such Changes in Control;

 

                                                (iv)  thefailure of the Company to (A) continue in effect any employee benefit plan,compensation plan, welfare benefit plan or material fringe benefit plan inwhich Executive is participating immediately prior to such Change in Control orthe taking of any action by the Company that would adversely affect Executive'sparticipation in or reduce Executive's benefits under any such plan, unlessExecutive is permitted to participate in other plans providing Executive withthe same benefits that the party effecting the Change in Control (or, ifapplicable, its Parent Corporation) provides to its most senior executiveofficers (or, in the case of a Parent Corporation, the most senior executiveofficers of its principal banking or financial services subsidiary) or (B)provide Executive with paid time-off in accordance with the most favorabletime-off policies of the Company and its affiliated companies as in effect forExecutive immediately prior to such Change in Control, including the creditingof all service for which Executive had 

 

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been credited under such vacation policiesprior to the Change in Control; or

 

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

 

Notwithstanding anything herein to the contrary,termination of employment by Executive for any reason during the 30-day periodcommencing one (1) year after the date of a Change in Control shall constituteGood Reason.

 

                Anisolated, insubstantial and inadvertent action taken in good faith and which isremedied by the Company within ten (10) days after receipt of notice thereofgiven by Executive shall not constitute Good Reason.  Executive's right to terminate employment forGood Reason shall not be affected by Executive' incapacities due to mental orphysical illness and Executive's continued employment shall not constituteconsent to, or a waiver of rights with respect to, any event or conditionconstituting Good Reason; provided, however, that Executive must provide noticeof termination of employment within one-hundred twenty (120) days followingExecutive's knowledge of an event constituting Good Reason or such event shallnot constitute Good Reason under this Agreement.

 

                                (g)           "Qualifying Termination" means atermination of Executive's employment (i) by the Company other than for Causeor (ii) by Executive for Good Reason. Termination of Executive's employment onaccount of death, Disability or Retirement shall not be treated as a QualifyingTermination.

 

                                (h)           "Retirement" means the termination ofExecutive's employment on or after the first of the month coincident with orfollowing Executive's attainment of age 65, or such later date as may beprovided in a written agreement between the Company and the Executive.

 

                                (i)            "Subsidiary" means any corporation orother entity in which the Company has a direct or indirect ownership interestof 50% or more of the total combined voting power of the then outstandingsecurities or interests of such corporation or other entity entitled to votegenerally in the election of directors or in which the Company has the right toreceive 50% or more of the distribution of profits or 50% of the assets uponliquidation or dissolution.

 

                                (j)            "Termination Period" means the period oftime beginning with a 

 

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Change in Control and ending eighteen (18)months following the end of the month in which such Change in Control occurs.Notwithstanding anything in this Agreement to the contrary, if (i) Executive'semployment is terminated prior to a Change in Control for reasons that wouldhave constituted a Qualifying Termination if they had occurred following aChange in Control; (ii) Executive reasonably demonstrates that such termination(or Good Reason event) was at the request of a third party who had indicated anintention or taken steps reasonably calculated to effect a Change in Control;and (iii) a Change in Control involving such third party (or a party competingwith such third party to effectuate a Change in Control) does occur, then forpurposes of this Agreement, the date immediately prior to the date of suchtermination of employment or event constituting Good Reason shall be treated asa Change in Control. For purposes of determining the timing of payments andbenefits to Executive under Section 4, the date of the actual Change in Controlshall be treated as Executives Date of Termination under Section 1(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, wouldconstitute a Change in Control, Executive agrees not to voluntarily leave theemploy of the Company that may employ Executive, other than as a result ofDisability, Retirement or an event that would constitute Good Reason if aChange in Control had occurred, until the Change in Control occurs or, ifearlier, such tender or exchange offer, proxy contest, or agreement isterminated or abandoned.

 

**3. Termof Agreement.** This Agreement shall be effective on the datehereof and shall continue in effect until the Company shall have given eighteen(18) months' written notice of cancellation; provided, that, notwithstandingthe delivery of any such notice, this Agreement shall continue in effect for aperiod of eighteen (18) months following the end of the month in which a Changein Control occurs, if such Change in Control shall have occurred during theterm of this Agreement. Notwithstanding anything in this Section to thecontrary, this Agreement shall terminate if Executive or the Company terminatesExecutive's employment prior to a Change in Control except as provided inSection 1(j).

 

**4.Payments Upon Termination of Employment.**

 

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

 

 

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                (i)  within twenty (20) days following theDate of Termination a lump-sum cash amount equal to the sum of (A) Executive'sbase salary through the Date of Termination and any bonus amounts that havebecome payable, to the extent not theretofore paid or deferred, (B) a pro rataportion of Executive's annual bonus for the fiscal year in which Executive'sDate of Termination occurs in an amount at least equal to (x) Executive's BonusAmount, multiplied by (y) a fraction, the numerator of which is the number ofdays in the fiscal year in which the Date of Termination occurs through theDate of Termination and the denominator of which is three hundred sixty-five(365), and reduced by (z) any amounts paid from the Company's annual incentiveplan 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 twenty (20) days following theDate of Termination, a lump-sum cash amount equal to the sum of (i) Executive'shighest annual rate of base salary during the 12-month period immediately priorto Executive's Date of Termination, plus (ii) Executive's Bonus Amount;provided, however, that if Executive's Date of Termination is within twelve(12) months of the earliest date on which termination by the Executive couldotherwise be considered a Retirement ("Retirement Date"), such sumshall be multiplied by a fraction ("Adjustment Fraction"), thenumerator of which is equal to the number of full months from the Date ofTermination to the Retirement Date, and the denominator of which is equal to12.

 

                (b)           QualifyingTermination — Continued Coverage. If during the Termination period theemployment of Executive shall terminate pursuant to a Qualifying Termination,the Company shall continue to provide, for a period of one (1) year followingExecutive's Date of Termination, Executive (and Executive's dependents, ifapplicable) with the same level of medical, dental, accident, disability andlife insurance benefits upon substantially the same terms and conditions(including contributions required by Executive for such benefits) as existedimmediately prior to Executive's Date of Termination (or, if more favorable toExecutive, as such benefits and terms and conditions existed immediately priorto the Change in Control); provided, however, that if Executive's Date ofTermination is within one (1) year of Executive's Retirement Date, the numberof years 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 Companyplans providing such benefits, the Company shall otherwise provide suchbenefits on the same after-tax basis as if continued participation had beenpermitted. Notwithstanding the foregoing,

 

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in the event Executive becomes reemployedwith another employer and becomes eligible to receive welfare benefits fromsuch employer, the welfare benefits described herein shall be secondary to suchbenefits during the period of Executive's eligibility, but only to the extentthat the Company reimburses Executive for any increased cost and provides anyadditional benefits necessary to give Executive the benefits provided hereunder.The Executive's accrued benefits as of the Date of Termination under thecompany's employee benefit plans shall be paid to Executive in accordance withthe terms of such plans.

 

                (c)           QualifyingTermination — SERP Accrual. If during the Termination Period the employmentof Executive shall terminate pursuant to a Qualifying Termination, the Companyshall provide Executive with one (1) additional year of service credit underall non-qualified retirement plans and excess benefit plans in which theExecutive participated as of his Date of Termination; provided, however, thatif Executive's Date of Termination is within one (1) year of Executive'sRetirement Date, the number of months of additional service credit (asdescribed in this Section 4(c)) shall be equal to the product of (x) one, and(y) the Adjustment Fraction.

 

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

 

                (e)           Otherthan Qualifying Termination. If during the Termination Period theemployment of Executive shall terminate other than by reason of a QualifyingTermination, then the Company shall pay to Executive within thirty (30) daysfollowing 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 bonusamounts that have become payable, to the extent not theretofore paid ordeferred, and (2) any accrued vacation pay, to the extent not theretofore paid.The Company may make such additional payments, and provide such additionalbenefits, to Executive as the Company and Executive may agree in writing. TheExecutive's accrued benefits as of the Date of Termination under the Company'semployee benefit plans shall be paid to Executive in accordance with the termsof such plans.

 

**5.Certain Additional Payments by the Company.** (a) Anything in thisAgreement to the contrary notwithstanding, in the event it shall be

 

 

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determined that any payment, award, benefitor distribution (or any acceleration of any payment, award, benefit ordistribution) by the Company (or any affiliated entity) or any entity thateffectuates a Change in Control (or any of its affiliated entities) to or forthe benefit of Executive (whether pursuant to the terms of this Agreement orotherwise, but determined without regard to any additional payments requiredunder this Section 5) (the "Payments") would be subject to the excisetax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended(the "Code"), or any interest or penalties are incurred by Executivewith respect to such excise tax (such excise tax, together with any suchinterest and penalties, are hereinafter collectively referred to as the"Excise Tax"), then the Company shall pay to Executive an additionalpayment (a "Gross-Up Payment") in an amount such that after paymentby Executive of all taxes (including any Excise Tax) imposed upon the Gross-UpPayment, Executive retains an amount of the Gross-Up Payment equal to the sumof (x) the Excise Tax imposed upon the Payments and (y) the product of anydeductions disallowed because of the inclusion of the Gross-Up Payment inExecutive's adjusted gross income and the highest applicable marginal rate offederal income taxation for the calendar year in which the Gross-up Payment isto be made. For purposes of determining the amount of the Gross-up Payment, theExecutive shall be deemed to (i) pay federal income taxes at the highestmarginal rates of federal income taxation for the calendar year in which theGross-up Payment is to be made, (ii) pay applicable state and local incometaxes at the highest marginal rate of taxation for the calendar year in whichthe Gross-up Payment is to be made, net of the maximum reduction in federalincome taxes which could be obtained from deduction of such state and localtaxes and (iii) have otherwise allowable deductions for federal income taxpurposes at least equal to the Gross-up Payment.

 

Notwithstanding the foregoing provisions ofthis Section 5(a), if it shall be determined that Executive is entitled to aGross-Up Payment, but that the Payments would not be subject to the Excise Taxif the Payments were reduced by an amount that is less than 5% of the portionof the Payments that would be treated as "parachute payments" underSection 280G of the Code, then the amounts payable to Executive under thisAgreement shall be reduced (but not below zero) to the maximum amount thatcould be paid to Executive without giving rise to the Excise Tax (the"Safe Harbor Cap"), and no Gross-Up Payment shall be made toExecutive. The reduction of the amounts payable hereunder, if applicable, shallbe made by reducing first the payments under Section 4(a) (ii), unless an alternativemethod of reduction is elected by Executive. For purposes of reducing thePayments to the Safe Harbor Cap, only amounts payable under this Agreement (andno other Payments) shall be reduced. If the reduction of the amounts payable

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hereunder would not result in a reduction ofthe Payments to the Safe Harbor Cap, no amounts payable under this Agreementshall be reduced pursuant to this provision.

 

                                (b)           Subject to the provisions of Section5(a), all determinations required to be made under this Section 5, includingwhether and when a Gross-Up Payment is required, the amount of such Gross-UpPayment, the reduction of the Payments to the Safe Harbor Cap and theassumptions to be utilized in arriving at such determinations, shall be made bythe public accounting firm that is retained by the Company as of the dateimmediately prior to the Change in Control (the “Accounting Firm”), which shallprovide detailed supporting calculations both to the Company and Executivewithin fifteen (15) business days of the receipt of notice from the Company orthe Executive that there has been a Payment, or such earlier time as is requestedby the Company (collectively, the "Determination").  In the event that the Accounting Firm isserving as accountant or auditor for the individual, entity or group effectingthe Change in Control, Executive may appoint another regionally or nationallyrecognized public accounting firm to make the determinations required hereunder(which accounting firm shall then be referred to as the Accounting Firmhereunder).  All fees and expenses of theAccounting Firm shall be borne solely by the Company and the Company shallenter into any agreement requested by the Accounting Firm in connection withthe performance of the services hereunder. The Gross-up Payment under this Section 5 with respect to any Paymentsshall be made no later than thirty (30) days following such Payment.  If the Accounting Firm determines that noExcise Tax is payable by Executive, it shall furnish Executive with a writtenopinion to such effect, and to the effect that failure to report the ExciseTax, if any, on Executive's applicable federal income tax return will notresult in the imposition of a negligence or similar penalty.  In the event the Accounting Firm determinesthat the Payments shall be reduced to the Safe Harbor Cap, it shall furnishExecutive with a written opinion to such effect.  The Determination by the Accounting Firmshall be binding upon the Company and Executive.  As a result of the uncertainty in theapplication of Section 4999 of the Code at the time of the Determination, it ispossible that Gross-Up Payments which will not have been made by the Companyshould have been made ("Underpayment") or Gross-up Payments are madeby 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 isrequired to make payment of any Excise Tax or additional Excise Tax, theAccounting Firm shall determine the amount of the Underpayment that hasoccurred and any such Underpayment (together with interest at the rate providedin Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company toor for the benefit of

 

 

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Executive. In the event the amount of the Gross-up Payment exceeds the amountnecessary to reimburse the Executive for his Excise Tax, the Accounting Firmshall determine the amount of the Overpayment that has been made and any suchOverpayment (together with interest at the rate provided in Section 1274(b)(2)of the Code) shall be promptly paid by Executive (to the extent he has receiveda refund if the applicable Excise Tax has been paid to the Internal RevenueService) to or for the benefit of the Company. Executive shall cooperate, to the extent his expenses are reimbursed bythe Company, with any reasonable requests by the Company in connection with anycontests or disputes with the Internal Revenue Service in connection with theExcise Tax.

 

                **6. Withholding Taxes.** The Company may withhold from all payments due to Executive (or hisbeneficiary 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 underthis Agreement involving termination of Executive's employment with the Companyor involving the failure or refusal of the Company to perform fully inaccordance with the terms hereof, the Company shall reimburse Executive, on acurrent basis, for all reasonable legal fees and expenses, if any, incurred byExecutive in connection with such contest or dispute (regardless of the resultthereof), together with interest in an amount equal to the prime rate aspublished in the *The Wall Street Journal* from timeto time in effect, but in no event higher than the maximum legal ratepermissible under applicable law, such interest to accrue from the date theCompany receives Executive's statement for such fees and expenses through thedate of payment thereof, regardless of whether or not Executive's claim isupheld by an arbitration panel.

 

**                8.Scope of Agreement.**  Nothing inthis Agreement shall be deemed to entitle Executive to continued employmentwith the Company or its Subsidiaries, and if Executive's employment with theCompany shall terminate prior to a Change in Control, Executive shall have nofurther rights under this Agreement (except as otherwise provided hereunder);provided, however, that any termination of Executive's employment during theTermination 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 BusinessCombination.  In the event of anyBusiness Combination, the provisions of

 

 

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this Agreement shall be binding upon theSurviving Corporation, and such Surviving Corporation shall be treated as theCompany hereunder.

 

                                (b)           The Company agrees that in connection with any BusinessCombination, it will cause any successor entity to the Company unconditionallyto 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 suchassumption and guarantee prior to the effectiveness of any such BusinessCombination that constitute a Change in Control shall be a breach of thisAgreement and shall constitute Good Reason hereunder and shall entitleExecutive to compensation and other benefits from the Company in the sameamount and on the same terms as Executive would be entitled hereunder ifExecutive's employment were terminated following a Change in Control by reasonof a Qualifying Termination.  Forpurposes of implementing the foregoing, the date on which any such BusinessCombination becomes effective shall be deemed the date Good Reason occurs, andshall be the Date of Termination if requested by Executive.

 

                                (c)           This Agreement shall inure to the benefit of and beenforceable by Executive's personal or legal representatives, executors,administrators, successors, heirs, distributees, devisees and legatees.  If Executive shall die while any amountswould be payable to Executive hereunder had Executive continued to live, allsuch amounts, unless otherwise provided herein, shall be paid in accordancewith the terms of this Agreement to such person or persons appointed in writingby Executive to receive such amounts or, if no person is so appointed, toExecutive's estate.

 

**                10.Notice.**

** **

                                (a)           For purposes of this Agreement, all notices and othercommunications required or permitted hereunder shall be in writing and shall bedeemed to have been dully given when delivered or five (5) days after depositin the United States mail, certified and return receipt requested, postageprepaid, addressed as follows:

 
| If to Executive:    |   | At  the address set forth below the signatory |
|---------------------|--------|-----------------------------------------------|
|                |   |                                          |
| If  to the Company: |   | Indiana  United Bancorp                       |
|                |   | 201  North Broadway                           |

 

 

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Greensburg,Indiana 47240

Attn:Chairman of the Board

 

or the such other address as wither party mayhave furnished to the other in writing in accordance herewith, except thatnotices of change of address shall be effective only upon receipt.

 

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

 

                **11.          Full Settlement;Resolution of Disputes.** The Company’s obligation to make anypayments provided for in this Agreement and otherwise to perform itsobligations hereunder shall be in lieu of and in full settlement of all otherseverance payments to Executive under any other severance or employmentagreement between Executive and the Company, and any severance plan of theCompany. The Company’s obligations hereunder shall not be affected by anyset-off, counterclaim, recoupment, defense or other claim, right or action thatthe Company may have against Executive or others. In no event shall Executivebe obligated to seek other employment or take other action by way of mitigationof the amounts payable to Executive under any of the provisions of thisAgreement and, except as provided in Section 4(b), such amounts shall not bereduced whether or not Executive obtains other employment. Any dispute orcontroversy arising under or in connection with this Agreement shall be settledexclusively by arbitration in Indianapolis, Indiana by three arbitrators inaccordance with the rules of the American Arbitration Association then ineffect. Judgment may be entered on the arbitrators’ award in any court havingjurisdiction. The Company shall bear all costs and expenses arising inconnection with any arbitration proceeding pursuant to this Section.

 

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                **12.          Employment withSubsidiaries.** Employment with the Company for purposes of thisAgreement shall include employment with any Subsidiary.

 

                **13.          Survival.**The respective obligations and benefits afforded to the Company and Executiveas provided in Sections 4 (to the extent that payments or benefits are owed asa result of a termination of employment that occurs during the term of thisAgreement), 5 (to the extent that Payments are made to Executive as a result ofa 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 Agreementshall be governed by and construed and enforced in accordance with the internallaws of the State of Indiana without regard to the principle of conflicts oflaws. The invalidity or unenforceability of any provision of this Agreementshall not affect the validity or enforceability of any other provision of thisAgreement, which other provisions shall remain in full force and effect.

 

                **15.          Counterparts.**This Agreement may be executed in counterparts, each of which shall be deemedto be an original and all of which together shall constitute one and the sameinstrument.

 

                **16.          Miscellaneous.**No provision of this Agreement may be modified or waived unless suchmodification or waiver is agreed to in writing and signed by Executive and by aduly authorized officer of the Company. No waiver by either party hereto at anytime of any breach by the other party hereto of, or compliance with, anycondition or provision of this Agreement to be performed by such other partyshall be deemed a waiver of similar or dissimilar provisions or conditions atthe same or at any prior or subsequent time. Except as set forth in Sections1(b) and 1(f), the failure by Executive or the Company to insist upon strictcompliance with any provision of this Agreement or to assert any rightExecutive or the Company may have hereunder shall not be deemed to be a waiverof such provision or right or any other provision or right of this Agreement.Except as otherwise specifically provided herein, the rights of, and benefitspayable to, Executive, his estate or his beneficiaries pursuant to thisAgreement are in addition to any rights of, or benefits payable to, Executive,his estate or his beneficiaries under any other employee benefit plan orcompensation program of the Company.

 

IN WITNESS WHEREOF, the Company has causedthis Agreement to be executed by a duly authorized officer of the Company andExecutive has

 

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executed this Agreement, in each case as ofthe day and year first set forth above.

 

 
|   | INDIANA UNITED BANCORP |
|--------|------------------------|
|   |                   |   |
|   | By:                    | /s/ James L. Saner |   |
|   |                   | James L. Saner, Sr.,  President and Chief Executive Officer |
|   |                   |   |
|   |                   | (the “Company”) |
|   |                   |   |
|   |                   | /s/ James M. Anderson |   |
|   |                   | James M. Anderson |
|   |                   | 312 Columbus Ave. |
|   |                   | Batesville, IN 47006 |
|   |                   |   |
|   |                   | (“Executive”) |

 

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