PREFERRED SECURITIES GUARANTEE AGREEMENT

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BY AND BETWEEN

INDIANA UNITED BANCORP

AND

STATE STREET BANK AND TRUST COMPANY

_______________, 1997

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TABLE OF CONTENTS
Page No.
ARTICLE I. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . . . . .1
SECTION 1.1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . .1

ARTICLE II. TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . .4
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. . . . . . . . . . . . . .4
SECTION 2.2. THE LIST OF HOLDERS OF THE SECURITIES.. . . . . . . . . . .5
SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. . . . . . . . .5
SECTION 2.4. PERIODIC REPORTS TO THE PREFERRED GUARANTEE TRUSTEE.. . . .5
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. . . . . .5
SECTION 2.6. EVENTS OF DEFAULT; WAIVER.. . . . . . . . . . . . . . . . .5
SECTION 2.7. EVENT OF DEFAULT; NOTICE. . . . . . . . . . . . . . . . . .6
SECTION 2.8. CONFLICTING INTERESTS.. . . . . . . . . . . . . . . . . . .6

ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE. .6
SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE. . . .6
SECTION 3.2. CERTAIN RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.. . . . .8
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE . . .9

ARTICLE IV. THE PREFERRED GUARANTEE TRUSTEE. . . . . . . . . . . . . . . . 10
SECTION 4.1. THE PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY. . . . . . . 10
SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF THE PREFERRED
GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . 10

ARTICLE V. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.1. GUARANTEE.. . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2. WAIVER OF NOTICE AND DEMAND.. . . . . . . . . . . . . . . 11
SECTION 5.3. OBLIGATIONS NOT AFFECTED. . . . . . . . . . . . . . . . . 11
SECTION 5.4. RIGHTS OF THE HOLDERS.. . . . . . . . . . . . . . . . . . 12
SECTION 5.5. GUARANTEE OF PAYMENT. . . . . . . . . . . . . . . . . . . 13
SECTION 5.6. SUBROGATION.. . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.7. INDEPENDENT OBLIGATIONS.. . . . . . . . . . . . . . . . . 13

ARTICLE VI. LIMITATION OF TRANSACTIONS; SUBORDINATION. . . . . . . . . . . 13
SECTION 6.1. LIMITATION ON TRANSACTIONS. . . . . . . . . . . . . . . . 13
SECTION 6.2 RANKING . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.1. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VIII. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.1. EXCULPATION.. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.2. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . 15

ARTICLE IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.1. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 15
SECTION 9.2. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.3. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.4. BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.5. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 16

CROSS-REFERENCE TABLE

Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
------------------- ----------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(c), 2.8
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5,3.2
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1, 3.2
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1, 2.6, 5.4
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)

Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.

iii

PREFERRED SECURITIES GUARANTEE AGREEMENT

THIS PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred Securities
Guarantee"), dated as of ___________, 1997, is executed and delivered by
INDIANA UNITED BANCORP, an Indiana corporation (the "Guarantor"), and STATE
STREET BANK AND TRUST COMPANY, a trust company organized and existing under
the laws of the Commonwealth of Massachusetts, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of IUB CAPITAL
TRUST, a Delaware statutory business trust (the "Trust").

RECITALS

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ___________, 1997, among the trustees of the Trust
named therein, the Guarantor, as depositor, and the holders from time to time
of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 1,850,000 preferred securities, having an
aggregate liquidation amount of $18,500,000, designated the ________%
Cumulative Trust Preferred Securities (the "Preferred Securities");

WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.

ARTICLE I.
DEFINITIONS AND INTERPRETATION

SECTION 1.1. DEFINITIONS AND INTERPRETATION.

In this Preferred Securities Guarantee, unless the context otherwise
requires:

(a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;

(b) terms defined in the Trust Agreement as at the date of execution of
this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee;

(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;

(e) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities Guarantee,
unless otherwise specified;

(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and

(g) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.

"Business Day" means any day other than a Saturday or a Sunday or a day on
which federal or state banking institutions in the Borough of Manhattan, the
City of New York are authorized or required by law, executive order or
regulation to close or a day on which the Corporate Trust Office of the
Preferred Guarantee Trustee is closed for business.

"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Preferred Securities Guarantee is
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department.

"Covered Person" means any Holder or beneficial owner of Preferred
Securities.

"Debentures" means the ____% Subordinated Debentures due December 30,
2027, of the Debenture Issuer held by the Property Trustee of the Trust.

"Debenture Issuer" means the Guarantor.

"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.

"Guarantor" means Indiana United Bancorp, an Indiana corporation.

"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Trust: (i) any accrued and unpaid Distributions that
are required to be paid on such Preferred Securities, to the extent the Trust
shall have funds available therefor, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Trust has funds available therefor, with respect
to any Preferred Securities called for redemption by the Trust, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Trust (other than in connection with the distribution of the Debentures to the

Holders in exchange for the Preferred Securities as provided in the Trust
Agreement), the lesser of (a) the aggregate of the Liquidation Amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor (the
"Liquidation Distribution"), and (b) the amount of assets of the Trust
remaining available for distribution to Holders in liquidation of the Trust.

"Holder" means a Person in whose name a Preferred Security is or Preferred
Securities are registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act;
provided, however, that, in determining whether the holders of the requisite
percentage of the Preferred Securities have given any request, notice,
consent or waiver hereunder, "Holder" shall not include the Guarantor or any
Affiliate of the Guarantor.

"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents
of the Preferred Guarantee Trustee.

"Indenture" means the Indenture dated as of _____________, 1997, among the
Debenture Issuer and State Street Bank and Trust Company, as trustee, and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued to the Property Trustee of the Trust.

"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.

"Majority in Liquidation Amount of the Preferred Securities" means the
holders of more than 50% of the Liquidation Amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all of the Preferred Securities.

"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided
for in this Preferred Securities Guarantee shall include:

(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;

(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.

"Preferred Guarantee Trustee" means State Street Bank and Trust Company,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee
Trustee.

"Redemption Price" has the meaning provided therefor in the definition of
Guarantee Payments.

"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Corporate Trust Office of the Preferred
Guarantee Trustee customarily performing functions similar to those performed
by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
as in force at the date of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939, as amended, is
amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939, as so amended.

ARTICLE II.
TRUST INDENTURE ACT

SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.

(a) This Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.

(b) If and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Section
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

SECTION 2.2. THE LIST OF HOLDERS OF THE SECURITIES.

(a) In the event the Preferred Guarantee Trustee is not also the
Securities Registrar, the Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the
Preferred Securities (the "List of Holders") as of such date, (i) within 1
Business Day after January 1 and June 30 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 15 days before such List of Holders
is given to the Preferred Guarantee Trustee; provided, that the Guarantor
shall not be obligated to provide such List of Holders at any time the List
of Holders does not differ from the most recent List of Holders given to the
Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new
List of Holders.

(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.

On or before July 15 of each year, the Preferred Guarantee Trustee shall
provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The
Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

SECTION 2.4. PERIODIC REPORTS TO THE PREFERRED GUARANTEE TRUSTEE.

The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.

SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.

SECTION 2.6. EVENTS OF DEFAULT; WAIVER.

The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this

Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent thereon.

SECTION 2.7. EVENT OF DEFAULT; NOTICE.

(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice; provided, that the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.

(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall have
received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Trust Agreement
shall have obtained actual knowledge of such Event of Default.

SECTION 2.8. CONFLICTING INTERESTS.

The Trust Agreement shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE

SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.

(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred
Securities Guarantee to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.

(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.

(d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

(i) prior to the occurrence of any Event of Default and after the curing
or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred Securities
Guarantee; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Preferred Securities Guarantee;

(ii) the Preferred Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Preferred Guarantee
Trustee, unless it shall be proved that the Preferred Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the Preferred Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and

(iv) no provision of this Preferred Securities Guarantee shall require the
Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Preferred Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Preferred
Securities Guarantee or indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against such risk or liability is not reasonably assured to
it.

SECTION 3.2. CERTAIN RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.

(a) Subject to the provisions of Section 3.1:

(i) the Preferred Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;

(ii) any direction or act of the Guarantor contemplated by this Preferred
Securities Guarantee shall be sufficiently evidenced by an Officers'
Certificate;

(iii) whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor;

(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof);

(v) the Preferred Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of
competent jurisdiction;

(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be

requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested
in it by this Preferred Securities Guarantee;

(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit;

(viii) the Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Preferred Guarantee
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;

(ix) no third party shall be required to inquire as to the authority of the
Preferred Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's
taking such action;

(x) whenever in the administration of this Preferred Securities Guarantee
the Preferred Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request instructions from the
Holders of a Majority in Liquidation Amount of the Preferred Securities, (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.

(b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.

SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

The Recitals contained in this Guarantee shall be taken as the statements of
the Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.

ARTICLE IV.
THE PREFERRED GUARANTEE TRUSTEE

SECTION 4.1. THE PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.

(a) There shall at all times be a Preferred Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of the
United States or any state or territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities and Exchange Commission
to act as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, and subject to supervision or examination
by federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.

(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and the Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF THE PREFERRED GUARANTEE
TRUSTEE.

(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in

writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee
Trustee.

(d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Preferred Guarantee Trustee.

(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.

(f) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guarantee Trustee all fees and expenses
accrued to the date of such termination, removal or resignation.

ARTICLE V.
GUARANTEE

SECTION 5.1. GUARANTEE.

The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Trust to pay such
amounts to the Holders.

SECTION 5.2. WAIVER OF NOTICE AND DEMAND.

The Guarantor hereby waives notice of acceptance of this Preferred Securities
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

SECTION 5.3. OBLIGATIONS NOT AFFECTED.

The obligations, covenants, agreements and duties of the Guarantor under this
Preferred Securities Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;

(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;

(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;

(f) any failure or omission to receive any regulatory approval or consent
required in connection with the Preferred Securities (or the common equity
securities issued by the Trust), including the failure to receive any approval
of the Board of Governors of the Federal Reserve System required for the
redemption of the Preferred Securities;

(g) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

(h) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 5.4. RIGHTS OF THE HOLDERS.

(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.

(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other Person.

SECTION 5.5. GUARANTEE OF PAYMENT.

This Preferred Securities Guarantee creates a guarantee of payment and not
of collection.

SECTION 5.6. SUBROGATION.

The Guarantor shall be subrogated to all (if any) rights of the Holders of
the Preferred Securities against the Trust in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

SECTION 5.7. INDEPENDENT OBLIGATIONS.

The Guarantor acknowledges that its obligations hereunder are independent of
the obligations of the Trust with respect to the Preferred Securities, and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (h), inclusive, of Section 5.3 hereof.

ARTICLE VI.
LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1. LIMITATION ON TRANSACTIONS.

So long as any of the Preferred Securities remain outstanding, if any of the
circumstances described in Section 5.6 of the Indenture shall have occurred,
then (a) the Guarantor shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock and (b) the
Guarantor shall not make any payment of principal or interest on or repay,
repurchase or redeem any debt securities issued by the Guarantor which rank pari
passu with or junior to the Debentures other than payments under this Preferred
Securities Guarantee and (c) the Guarantor shall not redeem, purchase or acquire
less than all of the outstanding Debentures or any of the Preferred Securities.

SECTION 6.2 RANKING.

This Preferred Securities Guarantee will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations (as defined
in the Indenture) of the Guarantor, (ii) pari passu with the most senior
preferred securities or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred securities or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.

ARTICLE VII.
TERMINATION

SECTION 7.1. TERMINATION.

This Preferred Securities Guarantee shall terminate upon (i) full payment of
the Redemption Price of all the Preferred Securities, (ii) full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of the
Trust, or (iii) distribution of the Debentures to the Holders of the Preferred
Securities. Notwithstanding the foregoing, this Preferred Securities Guarantee
shall continue to be effective or shall be reinstated, as the case may be, if at
any time any Holder of Preferred Securities must restore payment of any sums
paid under the Preferred Securities or under this Preferred Securities
Guarantee.

ARTICLE VIII.
INDEMNIFICATION

SECTION 8.1. EXCULPATION.

(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Preferred Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.

(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to the Holders of the Preferred Securities might properly be
paid.

SECTION 8.2. INDEMNIFICATION.

The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.

ARTICLE IX.
MISCELLANEOUS

SECTION 9.1. SUCCESSORS AND ASSIGNS.

All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

SECTION 9.2. AMENDMENTS.

Except with respect to any changes that do not materially adversely affect
the rights of the Holders (in which case no consent of the Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
with respect to meetings of the Holders of the Preferred Securities apply to the
giving of such approval.

SECTION 9.3. NOTICES.

All notices provided for in this Preferred Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):

State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department

(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):

Indiana United Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman and President

All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.

SECTION 9.4. BENEFIT.

This Preferred Securities Guarantee is solely for the benefit of the Holders
of the Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.

SECTION 9.5. GOVERNING LAW.

THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF [INDIANA].

This Preferred Securities Guarantee is executed as of the day and year
first above written.

INDIANA UNITED BANCORP,
as Guarantor

By
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and President

STATE STREET BANK AND TRUST COMPANY,
as Preferred Guarantee Trustee

By
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Name:
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Title:
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PREFERRED SECURITIES GUARANTEE AGREEMENT

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