Exhibit 10.1
 
 
Amended and Restated
Employment Agreement
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of this 27 day of February, 2008 (the “Commencement Date”), by
and between LSB Financial Corp. (the "Company") and Randolph F. Williams (the
"Employee"), but effective as of January 1, 2005 (the “Effective Date”).
 
This Agreement amends and restates the prior Employment Agreement between the
Company and the Executive dated February 9, 2006 (the “Prior Agreement”).  It
has been amended and restated for compliance with the final regulations under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
effective as of January 1, 2005.
 
WHEREAS, the Employee currently serves as the President and Chief Executive
Officer of the Company and of the Company's wholly-owned subsidiary, Lafayette
Savings Bank, FSB (the "Bank");
 
WHEREAS, the board of directors of the Company (the "Board of Directors" or the
"Board") believes it is in the best interests of the Company and its
subsidiaries for the Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and its subsidiaries;
and
 
WHEREAS, the Board of Directors has approved and authorized the execution of
this Agreement with the Employee to take effect on the Commencement Date;
 
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
 
1.           Definitions.
 
(a)           The term “Change in Control” means any of the following:
 
(i)           a change in the ownership of the Bank or the Company which shall
occur on the date that any one person, or more than one person acting as a
group, acquires ownership of stock of the Bank or the Company that, together
with stock held by such person or group, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of the stock of the
Bank or the Company.  However, if any one person, or more than one person acting
as a group, is considered to own more than fifty percent (50%) of the total fair
market value or total voting power of the stock of the Bank or the Company, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in the ownership of the Bank or the Company (or to cause a
change in the effective control of the Bank or the Company (within the meaning
of subsection (ii)).  An increase in the percentage of stock owned by any one
person, or persons acting as a group, as a result of a transaction in which the
Bank or the Company acquires its stock in exchange for property will be treated
as an acquisition of stock for purposes of this subsection.  This subsection
applies only when there is a transfer of stock of the Bank or the Company (or
issuance of stock of the Bank or the Company) and stock in the Bank or the
Company remains outstanding after the transaction.
 

 

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(ii)           a change in the effective control of the Bank or the Company,
which shall occur only on either of the following dates:
 
 
(1)
the date any one person, or more than one person acting as a group, acquires (or
has acquired during the 12 month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Bank or the
Company possessing thirty percent (30%) or more of the total voting power of the
stock of the Bank or the Company.

 
 
(2)
the date a majority of members of the Company’s board of directors is replaced
during any 12 month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s board of directors before
the date of the appointment or election; provided, however, that this provision
shall not apply if another corporation is a majority shareholder of the Company.

 
If any one person, or more than one person acting as a group, is considered to
effectively control the Bank or the Company, the acquisition of additional
control of the Bank or the Company by the same person or persons is not
considered to cause a change in the effective control of the Bank or the Company
(or to cause a change in the ownership of the Bank or the Company within the
meaning of subsection (i) of this section).
 
(iii)           a change in the ownership of a substantial portion of the Bank’s
assets, which shall occur on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the 12 month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Bank that have a total gross fair market value equal to or more
than forty percent (40%) of the total gross fair market value of all of the
assets of the Bank immediately before such acquisition or acquisitions.  For
this purpose, gross fair market value means the value of the assets of the Bank,
or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.  No change in control occurs under this
subsection (iii) when there is a transfer to an entity that is controlled by the
shareholders of the Bank immediately after the transfer.  A transfer of assets
by the Bank is not treated as a change in the ownership of such assets if the
assets are transferred to –
 
 
(1)
a shareholder of the Bank (immediately before the asset transfer) in exchange
for or with respect to its stock;

 
 
(2)
an entity, 50 percent or more of the total value or voting power of which is
owned, directly or indirectly, by the Bank.

 
 
(3)
a person, or more than one person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Bank; or

 
 
(4)
an entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in paragraph (3).

 
For purposes of this subsection (iii) and except as otherwise provided in
paragraph 1)
 

 
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above, a person’s status is determined immediately after the transfer of the
assets.
 
(iv)           For purposes of this section, persons will not be considered to
be acting as a group solely because they purchase or own stock of the same
corporation at the same time, or as a result of the same public
offering.  Persons will be considered to be acting as a group if they are owners
of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with the Bank or the
Company; provided, however, that they will not be considered to be acting as a
group if they are owners of an entity that merges into the Bank or the Company
where the Bank or the Company is the surviving corporation.
 
(b)           The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.
 
(c)           The term "Date of Termination" means the date upon which the
Employee's employment with the Company or the Bank or both ceases, as specified
in a notice of termination pursuant to Section 8 of this Agreement.
 
(d)           The term "Involuntary Termination" means the termination of the
employment of the Employee (i) by either the Company or the Bank or both without
his express written consent; or (ii) by the Employee within 120 days following
the earlier of the date the Employee becomes aware of or the date the Employee
reasonably should have become aware of a material diminution of or interference
with his duties, responsibilities or benefits, including (without limitation)
any of the following actions unless consented to in writing by the Employee that
remains uncontested for at least 30 days after the Employee provides the Company
notice of such occurrence (which notice must be provided not less than 90 days
after such occurrence): (1) a requirement that the Employee be based at any
place other than Lafayette, Indiana, or within 35 miles thereof, except for
reasonable travel on Company or Bank business; (2) a material demotion of the
Employee; (3) a material reduction in the number or seniority of personnel
reporting to the Employee or a material reduction in the frequency with which,
or in the nature of the matters with respect to which such personnel are to
report to the Employee, other than as part of a Bank- or Company-wide reduction
in staff; (4) a reduction in the Employee's salary or a material adverse change
in the Employee's perquisites, benefits, contingent benefits or vacation, other
than prior to a Change in Control as part of an overall program applied
uniformly and with equitable effect to all members of the senior management of
the Bank or the Company; (5) a material permanent increase in the required hours
of work or the workload of the Employee; or (6) the failure of the Board of
Directors ( or a board of directors of a successor of the Company) to elect him
as President and Chief Executive Officer of the Company ( or a successor of the
Company) or any action by the Board of Directors ( or a board of directors of a
successor of the Company) removing him from any of such offices, or the failure
of the board of directors of the Bank (or any successor of the Bank) to elect
him as President and Chief Executive Officer of the Bank (or any successor of
the Bank) or any action by such board ( or board of a successor of the Bank)
removing him from any of such offices. The term "Involuntary Termination" does
not include Termination for Cause or termination of employment due to
retirement, death, disability or suspension or temporary or permanent
prohibition from participation in the conduct of the Bank's affairs under
Section 8 of the Federal Deposit Insurance Act ("FDIA ").
 
(e)           The terms "Termination for Cause" and "Terminated for Cause" mean
termination of the employment of the Employee with either the Company or the
Bank, as the case may be, because of the Employee's dishonesty, incompetence,
willful misconduct, breach of a fiduciary
 

 
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duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (excluding traffic violations
or similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. No act or failure to act by the Employee shall be
considered willful unless the Employee acted or failed to act with an absence of
good faith and without a reasonable belief that his action or failure to act was
in the best interest of the Company. The Employee shall not be deemed to have
been Terminated for Cause unless and until there shall have been delivered to
the Employee a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors at a
meeting of the Board duly called and held for such purpose (after reasonable
notice to the Employee and an opportunity for the Employee, together with the
Employee's counsel, to be heard before the Board), stating that in the good
faith opinion of the Board of Directors the Employee has engaged in conduct
described in the preceding sentence and specifying the particulars thereof in
detail. The opportunity of the Employee to be heard before the Board shall not
affect the right of the Employee to arbitration as set forth in paragraph 19.
 
2.           Term.  The initial term of this Agreement shall commence on the
Effective Date and end on December 31, 2008, subject to earlier termination as
provided herein. Beginning on December 31, 2008, and on each anniversary
thereafter, the term of this Agreement shall be extended for a period of one
year, provided that the Company has not given notice to the Employee in writing
at least 90 days prior to such anniversary that the term of this Agreement shall
not be extended further, and provided further that the Employee has not received
an unsatisfactory performance review by either the Board of Directors or the
board of directors of the Bank.
 
3.           Employment. The Employee is employed as the President and Chief
Executive Officer of the Company and the Bank effective as of the Commencement
Date. As such, the Employee shall render administrative and management services
as are customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties as the Board of
Directors or the board of directors of the Bank may prescribe from time to time.
The Employee shall also render services to any subsidiary or subsidiaries of the
Company or the Bank as requested by the Company or the Bank from time to time
consistent with his executive position. The Employee shall devote his best
efforts and full time and attention to the business and affairs of the Company
and the Bank to the extent necessary to discharge his responsibilities
hereunder. The Employee may (i) serve on corporate or charitable boards or
committees, and (ii) manage personal investments, so long as such activities do
not interfere materially with performance of his responsibilities hereunder.
 
4.           Compensation.
 
(a)           Salary. The Company agrees to pay the Employee during the term of
this Agreement the annual salary established by the Board of Directors, which
during 2008 shall be $204,366 per year (the "Company Salary"); provided that any
amounts of salary actually paid to the Employee by any Consolidated Subsidiaries
shall reduce the amount to be paid by the Company to the Employee. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Employee's Company Salary shall be
increased (but shall not be decreased) from time to time in accordance with the
amounts of salary approved by the Board of Directors or the board of directors
of any of the Consolidated Subsidiaries after December 31, 2007. Adjustments in
salary or other compensation shall not limit or reduce any other obligation of
the Company under this Agreement.
 

 
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(b)           Discretionary: Bonuses. The Employee shall be entitled to
participate in an equitable manner with all other executive officers of the
Company and the Bank in such performance-based and discretionary bonuses, if
any, as are authorized and declared by the Board of Directors for executive
officers of the Company and by the board of directors of the Bank for executive
officers of the Bank.
 
(c)           Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.
 
(d)           Deferral of Non-Deductible Compensation. In the event that the
Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code'.')) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not
later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.
 
5.           Benefits.
 
(a)           Participation in Benefit Plans. The Employee shall be entitled to
participate, to the same extent as executive officers of the Company and the
Bank generally, in all plans of the Company and the Bank relating to pension,
retirement, thrift, profit-sharing, savings, group or other life insurance,
hospitalization, medical and dental coverage, travel and accident insurance,
education, cash bonuses, and other retirement or employee benefits or
combinations thereof. In addition, the Employee shall be entitled to be
considered for benefits under all of the stock and stock option  related plans
in which the Company's or the Bank's executive officers are eligible or become
eligible to participate.
 
(b)           Fringe Benefits. The Employee shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including but not limited to supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
 
(c)           Automobile. The Company shall lease an automobile of the Company's
choosing for the sole use of the Employee, at no cost to the Employee for lease
terms of no more than four years.
 

 
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(d)           Country Club Dues.  The Company shall pay for the Employee any
initiation fees, monthly dues and assessments for a membership interest which
shall include golf privileges, and any other business related charges at a local
country club.
 
(e)           Salary and Benefits Provided by the Bank. To the extent that the
Bank pays salary and pays or provides other compensation and benefits of any
kind provided for in this Agreement, the Company's obligation do so under this
Agreement shall be excused.
 
6.           Vacations; Leave. The Employee shall be entitled to annual paid
vacation, in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than 23 days per year, and to voluntary leaves of absence, with or without pay,
from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.
 
7.           Termination of Employment. The Board of Directors may terminate the
Employee's employment at any time and such termination of employment, except in
the case of Termination for Cause, shall not prejudice the Employee's right to
compensation or other benefits under this Agreement.
 
(a)           Termination for Cause.   In the event of Termination for Cause,
the Company shall pay the Employee the Employee's salary through the Date of
Termination, and the Company shall have no further obligation to the Employee
under this Agreement.
 
(b)           Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon 90 days' written notice
to the Company or such shorter period as may be agreed upon between the Employee
and the Board of Directors, for reasons other than reasons that constitute
Involuntary Termination. In the event of such voluntary termination, the Bank
shall be obligated to continue to pay to the Employee the Employee's salary and
benefits only through the Date of Termination, at the time such payments are
due, and the Company shall have no further obligation to the Employee under this
Agreement.
 
(c)           Involuntary Termination Not Related to a Change in Control. In the
event the Employee experiences an Involuntary Termination not related to a
Change in Control, (1) the Company shall pay to the Employee during the
remaining term of this Agreement the Employee's salary at the rate in effect
immediately prior to the Date of Termination, payable in such manner and at such
times as such salary would have been payable to the Employee under Section 4(a)
if the Employee had continued to be employed by the Company, and (2) the Company
shall provide to the Employee during the remaining term of this Agreement health
insurance benefits as maintained for the benefit of its Senior Executives from
time to time during the remaining term of the Agreement on substantially the
same terms as would apply if he had continued to be employed.
 
(d)           Involuntary Termination Related to a Change in Control. In the
event the Employee experiences an Involuntary Termination at the time of, or
within 12 months following a Change in Control, the Company shall (1) pay to the
Employee in a lump sum in cash within 25 business days after the Date of
Termination an amount equal to 299% of the Employee's "base amount" as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code");
and (2) provide to the Employee during the remaining term of this Agreement, at
no cost to Employee, health benefits as are maintained for Senior Executives
from time to time during the remaining term of this Agreement on substantially
the same terms as would apply if he had continued to be employed.  Anything in
this Agreement to the contrary notwithstanding,
 

 
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in the event that the Company's independent public accountants determine that
any payment by the Company to or for the benefit of the Employee, whether paid
or payable pursuant to the terms of this Agreement, would be non-deductible by
the Company or the Bank for federal income tax purposes because of Section 280G
of the Code, then the amount payable to or for the benefit of the Employee
pursuant to this Agreement shall be reduced (but not below zero) to the Reduced
Amount.  For purposes of this Section 7(d), the “Reduced Amount” shall be the
amount which maximizes the amount payable without causing the payment to be
non-deductible by the Company or the Bank because of Section 280G of the
Code.  Any payments made to Employee pursuant to this Agreement or otherwise,
are subject to and conditional upon their compliance with 12 U.S.C. §1828(k) and
FDIC regulation 12 C.F.R. Part 359 (Golden Parachute and Indemnification
Payments) and any other regulations promulgated thereunder, to the extent
applicable to such parties.
 
(e)           Death; Disability.  In the event of the death of the Employee
while employed under this Agreement and prior to any termination of employment,
the Employee's estate, or such person as the Employee may have previously
designated in writing, shall be entitled to receive from the Company the salary
of the Employee through the last day of the calendar month in which the Employee
died. If the Employee becomes "permanently disabled" while employed under this
Agreement, the Board of Directors shall be entitled to terminate this Agreement
and the employment of the Employee at any time at its discretion. For purposes
of this Agreement, the term "permanently disabled" means any medically
determinable physical or mental impairment which can be expected to result in
death or to last for a continuous period of not less than 12 months and which
(i) renders Executive unable to engage in any substantial gainful activity or
(ii) entitles Executive to income replacement benefits for a period of not less
than three months under an accident and benefit plan covering employees of the
Company, as reasonably determined by a duly licensed physician selected in good
faith by the Company.
 
(f)           Temporary Suspension or Prohibition. If the Employee is suspended
and/or temporarily prohibited from participating in the conduct of the Bank's
affairs by a notice served under Section 8(e)(3) or (g)(l) of the FDIA, 12
U.S.C. § 1818(e)(3) and (g)(l), the Company's obligations under this Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Company may in its
discretion (i) pay the Employee all or part of the compensation withheld while
its obligations under this Agreement were suspended and (ii) reinstate in whole
or in part any of its obligations which were suspended.
 
(g)           Permanent Suspension or Prohibition. If the Employee is removed
and/or permanently prohibited from participating in the conduct of the Bank's
affairs by an order issued under Section 8(e)(4) or (g)(l) of the FDIA, 12
U.S.C. § 1818(e)(4) and (g)(l), all obligations of the Company under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
 
(h)           Default of the Bank. If the Bank is in default (as defined in
Section 3(x)(1) of the FDIA), all obligations of the Company under this
Agreement shall terminate as of the date of default, but this provision shall
not affect any vested rights of the contracting parties.
 
(i)           Termination by Regulators. All obligations of the Company under
this Agreement shall be terminated, except to the extent determined that
continuation of this Agreement is necessary for the continued operation of the
Bank: (i) by the Director of the Office of Thrift Supervision (the "Director")
or his or her designee, at the time the Federal Deposit Insurance
 

 
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Corporation enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of the FDIA; or (ii) by
the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to operation
of the Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by any such action.
 
8.           Limits on Payments to Specified Executives.  To the extent the
Employee is a “specified employee” (as defined below), payments due to the
Employee under this Agreement that represent payment of deferred compensation
that is subject to Section 409A of the Code shall begin no sooner than six
months after the Employee’s separation from service; provided, however, that any
payments not made during the six month period described in this Section 9 shall
be made in a single lump sum as soon as administratively practicable after the
expiration of such six month period; provided, further, that, to the extent this
Agreement provides for payment of deferred compensation only upon an involuntary
separation from service or pursuant to a window program, the six month delay
required under this Section 9 shall not apply to the portion of any payment
resulting from the Employee’s “involuntary separation from service” (as defined
in Treasury Reg. Section 1.409A-1(n) and including a “separation from service
for good reason,” as defined in Treasury Reg. Section 1.409A 1(n)(2)) that (i)
is payable no later than the last day of the second year following the year in
which the separation from service occurs, and (ii) does not exceed two times the
lesser of (1) the Employee’s annualized compensation for the year prior to the
year in which the separation from service occurs, or (2) the dollar limit
described in Section 401(a)(17) of the Code.  It is expressly intended and
understood that payments made under Section 7(d) do not represent payments of
deferred compensation subject to Section 409A of the Code and are not subject to
the six month delay required by this Section 8.  Further, it is expected that
payments made under Section 7(c)(1) will satisfy the requirements set forth in
(i) and (ii) above and will, therefore, not be subject to the six month delay
required by this Section 8.
 
To the extent any life, health, disability or other welfare benefit coverage
provided to the Employee under this Agreement would be taxable to the Employee,
the taxable amount of such coverage shall not exceed the applicable dollar
amount under Section 402(g)(1)(B) of the Code determined as of the year in which
the Employee’s separation from service occurs.  The intent of the foregoing
sentence is to permit the Company and the Bank to treat the provision of such
benefits as a limited payment under Treasury Reg. Section 1.409A-1(a)(9)(v)(D)
so as to avoid application of the six month delay rule for specified
employees.  For purposes of this Agreement, any reference to severance of
employment or termination of employment shall mean a “separation from service”
as defined in Treasury Reg. Section 1.409A-1(h).
 
For purposes of this Agreement, the term “specified employee” shall have the
meaning set forth in Treasury Reg. Section 1.409A-1(i) and shall include,
without limitation, (1) an officer of the Bank or the Company having annual
compensation greater than $130,000 (as adjusted for inflation under the Code),
(2) a five percent owner of the Bank or the Company, or (3) a one percent owner
of the Bank or the Company having annual compensation of more than
$150,000.  The determination of whether the Employee is a “specified employee”
shall be made by the Company in good faith applying the applicable Treasury
regulations.
 
9.           Notice of Termination. In the event that the Company or the Bank,
or both, desire to terminate the employment of the Employee during the term of
this Agreement, the Company or the Bank, or both, shall deliver to the Employee
a written notice of termination, stating
 

 
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whether such termination constitutes Termination for Cause or Involuntary
Termination, setting forth in reasonable detail the facts and circumstances that
are the basis for the termination, and specifying the date upon which employment
shall terminate, which date shall be at least 30 days after the date upon which
the notice is delivered, except in the case of Termination for Cause. In the
event that the Employee determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such involuntary termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Employee desires to effect a voluntary
termination as described in Section 7(b) above, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 90 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.
 
10.           No Mitigation. The Employee shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
the Employee as the result of employment by another employer, by retirement
benefits after the Date of Termination or otherwise.
 
11.           Attorneys Fees. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as. a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.
 
12.           Non-Disclosure and Non-Solicitation.
 
(a)           Non-Disclosure. The Employee acknowledges that he has acquired,
and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary, special knowledge of the business, affairs, strategies
and plans of the Company and the consolidated Subsidiaries which has not been
disclosed to the public and which constitutes confidential and proprietary
business information owned by the Company and the Consolidated Subsidiaries,
including but not limited to, information about the customers, customer lists,
software, data, formulae, processes, inventions, trade secrets, marketing
information and plans, and business strategies of the Company and the
Consolidated Subsidiaries, and other information about the products and services
offered or developed or planned to be offered or developed by the Company and/or
the Consolidated Subsidiaries ("Confidential Information"). The Employee agrees
that, without the prior written consent of the Company, he shall not, during the
term of his employment or at any time thereafter, in any manner directly or
indirectly disclose any Confidential Information to any person or entity other
than the Company and the Consolidated Subsidiaries. Notwithstanding the
foregoing, if the Employee is requested or required (including but not limited
to by oral questions, interrogatories, requests for information or documents in
legal proceeding, subpoena, civil investigative demand or other similar process)
to disclose any Confidential Information the Employee shall provide the Company
with prompt written notice of any such request or requirement so that the
Company and/or a Consolidated Subsidiary may seek
 

 
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a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 12(a). If, in the absence of a protective order or
other remedy or the receipt of a waiver from the Company, the Employee is
nonetheless legally compelled to disclose Confidential Information to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
the Employee may, without liability hereunder, disclose to such tribunal only
that portion of the Confidential Information which is legally required to be
disclosed, provided that the Employee exercise his best efforts to preserve the
confidentiality of the Confidential Information, including without limitation by
cooperating with the Company and/or a Consolidated Subsidiary to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information by such tribunal. On the
Date of Termination, the Employee shall promptly deliver to the Company all
copies of documents or other records (including without limitation electronic
records) containing any Confidential Information that is in his possession or
under his control, and shall retain no written or electronic record of any
Confidential Information.
 
(b)           Non-Solicitation. During the three year period next following the
Date of Termination, the Employee shall not directly or indirectly solicit,
encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.
 
The provisions of this Section 12 shall survive any termination of the
Employee's employment and any termination of this Agreement.
 
13.           No Assignments.
 
(a)           This Agreement is personal to each of the parties hereto, and
neither party may assign or delegate any of its rights or obligations hereunder
without first obtaining the written consent of the other party; provided,
however, that the Company shall require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) by an assumption
agreement in form and substance satisfactory to the Employee, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or
assignment had taken place. Failure of the Company to obtain such an assumption
agreement prior to the effectiveness of any such succession or assignment shall
be a breach of this Agreement and shall entitle the Employee to compensation and
benefits from the Company in the same amount and on the same terms as provided
for an Involuntary Termination under Section 7 hereof. For purposes of
implementing the provisions of this Section 13(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
 
(b)           This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
 
14.           Prior Agreements/Amendments.  Upon the Effective Date of this
Agreement, all prior employment agreements, still in effect, between the parties
related to the employment of the Employee shall be deemed null and void and
without effect, including, without limitation, the Employment Agreement dated
February 9, 2006, between the parties.
 
15.           Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given
 

 
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when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, to the Company at its home office, to the attention of the
Board of Directors with a copy to the Secretary of the Company, or, if to the
Employee, to such home or other address as the Employee has most recently
provided in writing to the Company.
 
16.           Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
 
17.           Headings. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
 
18.           Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
 
19.           Governing Law. This Agreement shall be governed by the laws of the
State of Indiana.
 
20.           Arbitration. Any dispute or controversy arising under or in
connection with this Agreement (other than relating to the enforcement of the
provisions of Section 12) shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
 
21.           Equitable and Other Judicial Relief. In the event of an actual or
threatened breach by the Employee of any of the provisions of Section 12, the
Company shall be entitled to equitable relief in the form of an injunction from
a court of competent jurisdiction and such other equitable and legal relief as
such court deems appropriate under the circumstances. The parties agree that the
Company shall not be required to post any bond in connection with the grant or
issuance of an injunction (preliminary, temporary and/or permanent) by a court
of competent jurisdiction, and if a bond is nevertheless required, the parties
agree that it shall be in a nominal amount. The parties further agree that in
the event of a breach by the Employee of any of the provisions of Section 12,
the Company will suffer irreparable damage and its remedy at law against the
Employee is inadequate to compensate it for such damage.
 

 
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IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Employment Agreement as of the day and year first above written.
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 
Attest:
 
LSB FINANCIAL CORP.
 
         
By:
/s/ Mary Jo David  
By:
/s/ Mariellen M. Neudeck  
Mary Jo David
   
Mariellen M. Neudeck
     
Its:
Chairman of the Board
                       
EMPLOYEE
                /s/ Randolph F. Williams      
Randolph F. Williams

 
 
 
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