Exhibit 10.6
EXECUTIVE SEVERANCE
AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is entered into as
of the 16th 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 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;
B.
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;
C.
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 continued services and to ensure
Executive's continued and 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
D.
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 as not employed by the Company
for 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 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 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 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 ninety (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 16, 2001, 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 16, 2001, whose
election or nomination for election was approved by a vote of at
least two-thirds 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
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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 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 1 3d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% 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 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% 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% 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 share into which
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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% 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% 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 (1) the effective date on which
Executive's employment be 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 (2) if
Executive's employment by the Company terminates by reason of
death, the date of death of Executive.
(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 one hundred eighty
(180) consecutive days as a result of Executive's incapacity due to
physical or mental illness.
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(f)
" Good Reason " means, without Executive's express written
consent, the occurrence of any of the following events after a
Change in Control:
(i) (A) any change in the duties or responsibilities
(including reporting responsibilities) of Executive that is
inconsistent in any material and adverse respect with Executive's
positions, duties, responsibilities or status with the Company
immediately prior to such Change in Control (including any material
and adverse diminution of such duties or
responsibilities);
(ii) (A) a 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 or any subsequent year 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 or such subsequent year.
(iii) any requirement of the Company that Executive (A)
be based anywhere more than thirty (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 travel obligations of Executive
immediately prior to such Changes 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 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 its most senior executive officers
(or, in the case of a Parent Corporation, the most senior executive
officers of its principal banking or financial services subsidiary)
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
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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).
Notwithstanding anything herein to the contrary,
termination of employment by Executive for any reason during the
30-day period commencing one (1) year after the date of a Change in
Control shall constitute Good Reason.
An isolated, insubstantial and inadvertent action taken in good
faith and which is remedied by the Company within ten (10) days
after receipt of notice thereof given by Executive shall not
constitute Good Reason. Executive's right to terminate
employment for Good Reason shall not be affected by Executive'
incapacities due to mental or physical illness and Executive's
continued employment shall not constitute consent to, or a waiver
of rights with respect to, any event or condition constituting Good
Reason; provided, however, that Executive must provide notice of
termination of employment within one-hundred twenty (120) days
following Executive's knowledge of an event constituting Good
Reason or such event shall not constitute Good Reason under this
Agreement.
(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% 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% or more of the
distribution of profits or 50% of the assets upon liquidation or
dissolution.
(j)
" Termination Period " means the period of time 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'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,
t
