Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made effective as of January 8,
2010 (the “Effective Date”), by and between Versailles Savings and Loan Company,
an Ohio chartered stock savings and loan company (the “Bank”) and Douglas P.
Ahlers (“Executive”). The Bank and Executive are sometimes collectively referred
to herein as the “parties.” Any reference to the “Company” shall mean Versailles
Financial Corporation, the holding company of the Bank. The Company is a
signatory to this Agreement for the purpose of guaranteeing the Bank’s
performance hereunder.

WITNESSETH

WHEREAS, Executive is currently employed as President and Chief Executive
Officer of the Bank;

WHEREAS, the Bank has adopted a Plan of Conversion pursuant to which the Bank
will convert to an Ohio chartered stock savings and loan company and become a
wholly owned subsidiary of the Company;

WHEREAS, the Bank desires to assure itself of the continued availability of the
Executive’s services as provided in this Agreement; and

WHEREAS, the Executive is willing to serve the Bank on the terms and conditions
hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the terms and conditions hereinafter provided, the parties hereby agree as
follows:

 

1. POSITION AND RESPONSIBILITIES.

During the term of this Agreement, Executive shall serve as a member of the
board of directors of the Bank (the “Board”), President and Chief Executive
Officer of the Bank. Executive shall be responsible for the overall management
of the Bank, and shall be responsible for establishing the business objectives,
policies and strategic plan of the Bank, in conjunction with the Board.
Executive also shall be responsible for providing leadership and direction to
all departments or divisions of the Bank, and shall be the primary contact
between the Board and the staff. As Chief Executive Officer, Executive shall
directly report to the Board. Executive also shall be nominated as a member of
the Board, subject to election by members or shareholders of the Bank, as the
case may be. Executive also agrees to serve, if elected, as an officer and
director of any affiliate of the Bank.

 

2. TERM AND DUTIES.

(a) Three Year Contract; Annual Renewal. The term of this Agreement will begin
as of the Effective Date and shall continue thereafter for a period of three
(3) years. Beginning on the first annual anniversary date of this Agreement, and
on each annual anniversary date thereafter, the term of this Agreement shall be
extended for a period of one year in addition to

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the then-remaining term; provided that (1) the Bank has not given notice to the
Executive in writing at least ninety (90) days prior to such renewal date that
the term of this Agreement shall not be extended further; and (2) prior to such
renewal date, the disinterested members of the Board of Directors of the Bank
(the “Board”) have explicitly reviewed and approved the extension and the
results thereof shall be included in the minutes of the Board’s meeting. On an
annual basis prior to the deadline for the notice period referenced above, the
Board shall conduct a performance review of the Executive for purposes of
determining whether to provide notice of non-renewal. Reference herein to the
term of this Agreement shall refer to both such initial term and such extended
terms.

(b) Termination of Agreement. Notwithstanding anything contained in this
Agreement to the contrary, either Executive or the Bank may terminate
Executive’s employment with the Bank at any time during the term of this
Agreement, subject to the terms and conditions of this Agreement.

(c) Continued Employment Following Expiration of Term. Nothing in this Agreement
shall mandate or prohibit a continuation of Executive’s employment following the
expiration of the term of this Agreement, upon such terms and conditions as the
Bank and Executive may mutually agree.

(d) Duties; Membership on Other Boards. During the term of this Agreement,
except for periods of absence occasioned by illness, reasonable vacation
periods, and reasonable leaves of absence approved by the Board, Executive shall
devote substantially all of his business time, attention, skill, and efforts to
the faithful performance of his duties hereunder, including activities and
services related to the organization, operation and management of the Bank;
provided, however, that, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, business
companies or business or civic organizations, which, in the Board’s judgment,
will not present any conflict of interest with the Bank, or materially affect
the performance of Executive’s duties pursuant to this Agreement. Executive
shall provide the Board of Directors annually for its approval a list of
organizations for which the Executive acts as a director or officer.

 

3. COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a) Base Salary. In consideration of Executive’s performance of the duties set
forth in Section 2, the Bank shall provide Executive the compensation specified
in this Agreement. The Bank shall pay Executive a salary of $100,000 per year
(“Base Salary”). The Base Salary shall be payable in the same frequency as other
officers of the Bank are generally paid. During the term of this Agreement, the
Base Salary shall be reviewed at least annually by the Board or by a committee
designated by the Board, and the Bank may increase, but not decrease (except for
a decrease that is generally applicable to all employees) Executive’s Base
Salary. Any increase in Base Salary shall become “Base Salary” for purposes of
this Agreement.

(b) Bonus and Incentive Compensation. Executive shall be entitled to equitable
participation in incentive compensation and bonuses in any plan or arrangement
of the Bank or the Company in which Executive is eligible to participate.
Nothing paid to Executive under any such plan or arrangement will be deemed to
be in lieu of other compensation to which Executive is entitled under this
Agreement.

 

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(c) Employee Benefits. The Bank shall provide Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or from which he was deriving benefit immediately
prior to the commencement of the term of this Agreement, and the Bank shall not,
without Executive’s prior written consent, make any changes in such plans,
arrangements or perquisites that would adversely affect Executive’s rights or
benefits thereunder, except as to any changes that are applicable to all
participating employees. Without limiting the generality of the foregoing
provisions of this Section 3(c), Executive will be entitled to participate in
and receive benefits under any employee benefit plans including, but not limited
to, retirement plans, supplemental retirement plans, pension plans,
profit-sharing plans, health-and-accident insurance plans, medical coverage or
any other employee benefit plan or arrangement made available by the Bank and/or
the Company in the future to its senior executives, including any stock benefit
plans, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements.

(d) Paid Time Off. Executive shall be entitled to paid vacation time each year
during the term of this Agreement (measured on a fiscal or calendar year basis,
in accordance with the Bank’s usual practices), as well as sick leave, holidays
and other paid absences in accordance with the Bank’s policies and procedures
for senior executives. Any unused paid time off during an annual period shall be
treated in accordance with the Bank’s personnel policies as in effect from time
to time.

(e) Expense Reimbursements. The Bank shall also pay or reimburse Executive for
all reasonable travel, entertainment and other reasonable expenses incurred by
Executive during the course of performing his obligations under this Agreement,
including, without limitation, fees for memberships in such clubs and
organizations as Executive and the Board shall mutually agree are necessary and
appropriate in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require, provided that such payment or
reimbursement shall be made as soon as practicable but in no event later than
March 15 of the year following the year in which such right to such payment or
reimbursement occurred.

 

4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a) Upon the occurrence of an Event of Termination (as herein defined) during
the term of this Agreement, the provisions of this Section 4 shall apply;
provided, however, that in the event such Event of Termination occurs within
eighteen (18) months following a Change in Control (as defined in Section 5
hereof), Section 5 shall apply instead. As used in this Agreement, an “Event of
Termination” shall mean and include any one or more of the following:

(i) the involuntary termination of Executive’s employment hereunder by the Bank
for any reason other than termination governed by Section 5 (in connection with
or following a Change in Control), Section 6 (due to Disability or death),
Section 7 (due to Retirement), or Section 8 (for Cause), provided that such
termination constitutes a “Separation from Service” within the meaning of
Section 409A of the Internal Revenue Code (“Code”); or

 

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(ii) Executive’s resignation from the Bank’s employ upon any of the following,
unless consented to by Executive:

(A) failure to appoint Executive to the position set forth in Section 1, or a
material change in Executive’s function, duties, or responsibilities, which
change would cause Executive’s position to become one of lesser responsibility,
importance, or scope from the position and responsibilities described in
Section 1, to which Executive has not agreed in writing (and any such material
change shall be deemed a continuing breach of this Agreement by the Bank);

(B) a relocation of Executive’s principal place of employment to a location that
is more than 20 miles from the location of the Bank’s principal executive
offices as of the date of this Agreement;

(C) a material reduction in the benefits and perquisites, including Base Salary,
to Executive from those being provided as of the Effective Date (except for any
reduction that is part of a reduction in pay or benefits that is generally
applicable to officers or employees of the Bank);

(D) a liquidation or dissolution of the Bank; or

(E) a material breach of this Agreement by the Bank.

Upon the occurrence of any event described in clause (ii) above, Executive shall
have the right to elect to terminate his employment under this Agreement by
resignation for “Good Reason” upon not less than thirty (30) days prior written
notice given within a reasonable period of time (not to exceed ninety (90) days)
after the event giving rise to the right to elect, which termination by
Executive shall be an Event of Termination. The Bank shall have thirty (30) days
to cure the condition giving rise to the Event of Termination, provided that the
Bank may elect to waive said thirty (30) day period.

(b) Upon the occurrence of an Event of Termination, the Bank shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay, the Base
Salary and bonuses that Executive would be entitled to for the remaining
unexpired term of the Agreement. For purposes of determining the bonus(es)
payable hereunder, the bonus(es) will be deemed to be (i) equal to the highest
bonus paid at any time during the prior three years, and (ii) otherwise paid at
such time as such bonus would have been paid absent an Event of Termination.
Such payments shall be paid in a lump sum within ten (10) days of the
Executive’s Separation from Service (within the meaning of Section 409A of the
Code) and shall not be reduced in the event Executive obtains other employment
following the Event of Termination. Notwithstanding the foregoing, Executive
shall not be entitled to any payments or benefits under this Section 4 unless
and until Executive executes a release of his claims against the Bank, the
Company and any affiliate, and their officers, directors, successors and
assigns, releasing said persons from any and all claims, rights, demands, causes
of action,

 

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suits, arbitrations or grievances relating to the employment relationship,
including claims under the Age Discrimination in Employment Act, but not
including claims for benefits under tax-qualified plans or other benefit plans
in which Executive is vested, claims for benefits required by applicable law or
claims with respect to obligations set forth in this Agreement that survive the
termination of this Agreement.

(c) Upon the occurrence of an Event of Termination, the Bank shall pay
Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, a lump sum cash payment
reasonably estimated to be equal to the present value of the contributions that
would have been made on the Executive’s behalf under the Bank’s defined
contribution plans (e.g., 401(k) Plan, ESOP, and any other defined contribution
plan maintained by the Bank), as if Executive had continued working for the Bank
for the remaining unexpired term of the Agreement following such Event of
Termination, earning the salary that would have been achieved during such
period. Such payments shall be paid in a lump sum within ten (10) days of the
Executive’s Separation from Service and shall not be reduced in the event
Executive obtains other employment following the Event of Termination.

(d) Upon the occurrence of an Event of Termination, the Bank shall provide, at
the Bank’s expense, for the remaining unexpired term of the Agreement,
nontaxable medical and dental coverage and life insurance coverage substantially
comparable, as reasonably available, to the coverage maintained by the Bank for
Executive prior to the Event of Termination, except to the extent such coverage
may be changed in its application to all Bank employees.

(e) For purposes of this Agreement, a “Separation from Service” shall have
occurred if the Bank and Executive reasonably anticipate that either no further
services will be performed by the Executive after the date of the Event of
Termination (whether as an employee or as an independent contractor) or the
level of further services performed will not exceed 49% of the average level of
bona fide services in the 12 months immediately preceding the Event of
Termination. For all purposes hereunder, the definition of Separation from
Service shall be interpreted consistent with Treasury Regulation
Section 1.409A-1(h)(ii). If Executive is a Specified Employee, as defined in
Code Section 409A and any payment to be made under sub-paragraph (b) or (c) of
this Section 4 shall be determined to be subject to Code Section 409A, then if
required by Code Section 409A, such payment or a portion of such payment (to the
minimum extent possible) shall be delayed and shall be paid on the first day of
the seventh month following Executive’s Separation from Service.

 

5. CHANGE IN CONTROL.

(a) Any payments made to Executive pursuant to this Section 5 are in lieu of any
payments that may otherwise be owed to Executive pursuant to this Agreement
under Section 4, such that Executive shall either receive payments pursuant to
Section 4 or pursuant to Section 5, but not pursuant to both Sections.

(b) For purposes of this Agreement, the term “Change in Control” shall mean:

(i) a change in control of a nature that would be required to be reported in
response to Item 5.01(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”); or

 

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(ii) a change in control of the Bank within the meaning of the Home Owner’s Loan
Act, as amended (“HOLA”), and applicable rules and regulations promulgated
thereunder, as in effect at the time of the Change in Control; or

(iii) any of the following events, upon which a Change in Control shall be
deemed to have occurred:

(A) any “person” (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Bank or
the Company representing 25% or more of the combined voting power of such
outstanding securities, except for any securities purchased by any employee
stock ownership plan or trust established by the Bank or the Company; or

(B) individuals who constitute the Board on the Effective Date (the “Incumbent
Board”) cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the Effective Date whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by stockholders
of the Bank or the Company was approved by the same Nominating Committee serving
under an Incumbent Board, shall be, for purposes of this subsection (B),
considered as though they were members of the Incumbent Board; or

(C) a sale of all or substantially all the assets of the Bank or the Company, or
a plan of reorganization, merger, consolidation, or similar transaction occurs
in which the security holders of the Bank or the Company immediately prior to
the consummation of the transaction do not own at least 50.1% of the securities
of the surviving entity to be outstanding upon consummation of the transaction;
or

(D) a proxy statement is issued soliciting proxies from stockholders of the Bank
or the Company by someone other than the current management of the Bank or the
Company of the Bank, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Bank or the Company, or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to the plan are to be exchanged for or
converted into cash or property or securities not issued by the Bank or the
Company; or

(E) a tender offer is made for 25% or more of the voting securities of the Bank
or the Company, and stockholders owning beneficially or of record 25% or more of
the outstanding securities of the Bank or the Company have tendered or offered
to sell their shares pursuant to such tender offer and such tendered shares have
been accepted by the tender offeror.

 

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(F) Notwithstanding anything herein to the contrary, a Change in Control shall
not be deemed to have occurred in connection with the conversion of the Bank to
a stock Bank as a subsidiary of the Company.

(c) Upon the occurrence of a Change in Control followed within eighteen
(18) months by an Event of Termination (as defined in Section 4 hereof),
Executive, shall receive as severance pay, a lump sum cash payment equal to
three times the sum of (i) Executive’s highest annual rate of Base Salary paid
to Executive at any time under this Agreement, plus (ii) the highest bonus paid
to Executive with respect to the three completed fiscal years prior to the
Change in Control. Such payment shall be paid in a lump sum within ten (10) days
of the Executive’s Separation from Service (within the meaning of Section 409A
of the Code) and shall not be reduced in the event Executive obtains other
employment following the Event of Termination.

(d) Upon the occurrence of a Change in Control followed within eighteen
(18) months by an Event of Termination (as defined in Section 4 hereof), the
Bank shall pay Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, a lump sum cash
payment reasonably estimated to be equal to the present value of the
contributions that would have been made on Executive’s behalf under the Bank’s
defined contribution plans (e.g., 401(k) Plan, ESOP, and any other defined
contribution plan maintained by the Bank), as if Executive had continued working
for the Bank for thirty-six (36) months after the effective date of such
termination of employment, earning the salary that would have been achieved
during such period. Such payments shall be paid in a lump sum within ten
(10) days of the Executive’s Separation from Service and shall not be reduced in
the event Executive obtains other employment following the Event of Termination.
If Executive is a Specified Employee, as defined in Code Section 409A and any
payment to be made under this sub-paragraph (c) or (d) of this Section 5 shall
be determined to be subject to Code Section 409A, then if required by Code
Section 409A, such payment or a portion of such payment (to the minimum extent
possible) shall be delayed and shall be paid on the first day of the seventh
month following Executive’s Separation from Service.

(e) Upon the occurrence of a Change in Control followed within eighteen
(18) months by an Event of Termination (as defined in Section 4 hereof), the
Bank (or its successor) shall provide at the Bank’s (or its successor’s)
expense, nontaxable medical and dental coverage and life insurance coverage
substantially comparable, as reasonably available, to the coverage maintained by
the Bank for Executive prior to his termination, except to the extent such
coverage may be changed in its application to all Bank employees and then the
coverage provided to Executive shall be commensurate with such changed coverage.
Such coverage shall cease thirty-six (36) months following the termination of
Executive’s employment.

(f) Notwithstanding the preceding paragraphs of this Section 5, in the event
that the aggregate payments or benefits to be made or afforded to Executive in
the event of a Change in Control would be deemed to include an “excess parachute
payment” under Section 280G of the

 

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Internal Revenue Code or any successor thereto, then such payments or benefits
shall be reduced to an amount, the value of which is one dollar ($1.00) less
than an amount equal to three (3) times Executive’s “base amount,” as determined
in accordance with Section 280G of the Code. In the event a reduction is
necessary, then the cash severance payable by the Bank pursuant to Section 5
shall be reduced by the minimum amount necessary to result in no portion of the
payments and benefits payable by the Bank under Section 5 being non-deductible
to the Bank pursuant to Section 280G of the Code and subject to excise tax
imposed under Section 4999 of the Code.

 

6. TERMINATION FOR DISABILITY OR DEATH.

(a) Termination of Executive’s employment based on “Disability” shall be
construed to comply with Section 409A of the Internal Revenue Code and shall be
deemed to have occurred if: (i) Executive is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death, or last for a continuous
period of not less than 12 months; (ii) by reason of any medically determinable
physical or mental impairment that can be expected to result in death, or last
for a continuous period of not less than 12 months, Executive is receiving
income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Bank or the Company; or
(iii) Executive is determined to be totally disabled by the Social Security
Administration. The provisions of Sections 6(b) and (c) shall apply upon the
termination of the Executive’s employment based on Disability. Upon the
determination that Executive has suffered a Disability, disability payments
hereunder shall commence within thirty (30) days.

(b) Executive shall be entitled to receive benefits under any short-term or
long-term disability plan maintained by the Bank. To the extent such benefits
are less than Executive’s Base Salary, the Bank shall pay Executive an amount
equal to the difference between such disability plan benefits and the amount of
Executive’s Base Salary for the longer of one (1) year following the termination
of his employment due to Disability or the remaining term of this Agreement,
which shall be payable in accordance with the regular payroll practices of the
Bank.

(c) The Bank shall cause to be continued life insurance coverage and non-taxable
medical and dental coverage substantially comparable, as reasonably available,
to the coverage maintained by the Bank for Executive prior to the termination of
his employment based on Disability, except to the extent such coverage may be
changed in its application to all Bank employees or not available on an
individual basis to an employee terminated based on Disability. This coverage
shall cease upon the earlier of (i) the date Executive returns to the full-time
employment of the Bank; (ii) Executive’s full-time employment by another
employer; (iii) expiration of the remaining term of this Agreement; or
(iv) Executive’s death.

(d) In the event of Executive’s death during the term of this Agreement, his
estate, legal representatives or named beneficiaries (as directed by Executive
in writing) shall be paid Executive’s Base Salary at the rate in effect at the
time of Executive’s death in accordance with the regular payroll practices of
the Bank for a period of one (1) year from the date of Executive’s death, and
the Bank shall continue to provide non-taxable medical, dental and other
insurance benefits normally provided for Executive’s family (in accordance with
its customary co-pay

 

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percentages) for twelve (12) months after Executive’s death. Such payments are
in addition to any other life insurance benefits that Executive’s beneficiaries
may be entitled to receive under any employee benefit plan maintained by the
Bank for the benefit of Executive, including, but not limited to, the Bank’s
tax-qualified retirement plans.

 

7. TERMINATION UPON RETIREMENT.

Termination of Executive’s employment based on “Retirement” shall mean
termination of Executive’s employment at any time after Executive reaches age 67
or in accordance with any retirement policy established by the Board with
Executive’s consent with respect to him. Upon termination of Executive based on
Retirement, no amounts or benefits shall be due Executive under this Agreement,
and Executive shall be entitled to all benefits under any retirement plan of the
Bank and other plans to which Executive is a party.

 

8. TERMINATION FOR CAUSE.

(a) The Bank may terminate Executive’s employment at any time, but any
termination other than termination for “Cause,” as defined herein, shall not
prejudice Executive’s right to compensation or other benefits under this
Agreement. Executive shall have no right to receive compensation or other
benefits for any period after termination for “Cause.”

(b) The term termination for “Cause” shall mean termination because of
Executive’s: (i) personal dishonesty; (ii) incompetence; (iii) willful
misconduct; (iv) breach of fiduciary duty involving personal profit;
(v) intentional failure to perform stated duties; (vi) willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order; or (vii) material breach of any provision of this
Agreement. Notwithstanding the foregoing, Cause shall not be deemed to exist
unless there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to the Executive and an opportunity for the
Executive to be heard before the Board), finding that in the good faith opinion
of the Board the Executive was guilty of conduct described above and specifying
the particulars thereof. Prior to holding a meeting at which the Board is to
make a final determination whether Cause exists, if the Board determines in good
faith at a meeting of the Board, by not less than a majority of its entire
membership, that there is probable cause for it to find that the Executive was
guilty of conduct constituting Cause as described above, the Board may suspend
the Executive from his duties hereunder for a reasonable period of time not to
exceed fourteen (14) days pending a further meeting at which the Executive shall
be given the opportunity to be heard before the Board. Upon a finding of Cause,
the Board shall deliver to the Executive a Notice of Termination, as more fully
described in Section 10 below.

 

9. RESIGNATION FROM BOARDS OF DIRECTORS

In the event of Executive’s termination of employment due to an Event of
Termination, Executive’s service as a director of the Bank, the Company, and any
affiliate of the Bank or the Company shall immediately terminate. This Section 9
shall constitute a resignation notice for such purposes.

 

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10. NOTICE.

(a) Any purported termination by the Bank for Cause shall be communicated by
Notice of Termination to Executive. If, within thirty (30) days after any Notice
of Termination for Cause is given, Executive notifies the Bank that a dispute
exists concerning the termination, the parties shall promptly proceed to
arbitration, as provided in Section 20. Notwithstanding the pendency of any such
dispute, the Bank shall discontinue paying Executive’s compensation until the
dispute is finally resolved in accordance with this Agreement. If it is
determined that Executive is entitled to compensation and benefits under
Section 4 or 5, the payment of such compensation and benefits by the Bank shall
commence immediately following the date of resolution by arbitration, with
interest due Executive on the cash amount that would have been paid pending
arbitration (at the prime rate as published in The Wall Street Journal from time
to time).

(b) Any other purported termination by the Bank or by Executive shall be
communicated by a “Notice of Termination” (as defined in Section 10(c)) to the
other party. If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the parties shall promptly
proceed to arbitration as provided in Section 20. Notwithstanding the pendency
of any such dispute, the Bank shall continue to pay Executive his Base Salary,
and other compensation and benefits in effect when the notice giving rise to the
dispute was given (except as to termination of Executive for Cause); provided,
however, that such payments and benefits shall not continue beyond the date that
is 36 months from the date the Notice of Termination is given. In the event the
voluntary termination by Executive of his employment is disputed by the Bank,
and if it is determined in arbitration that Executive is not entitled to
termination benefits pursuant to this Agreement, he shall return all cash
payments made to him pending resolution by arbitration, with interest thereon at
the prime rate as published in The Wall Street Journal from time to time, if it
is determined in arbitration that Executive’s voluntary termination of
employment was not taken in good faith and not in the reasonable belief that
grounds existed for his voluntary termination. If it is determined that
Executive is entitled to receive severance benefits under this Agreement, then
any continuation of Base Salary and other compensation and benefits made to
Executive under this Section 10 shall offset the amount of any severance
benefits that are due to Executive under this Agreement.

(c) For purposes of this Agreement, a “Notice of Termination” shall mean a
written notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated.

 

11. POST-TERMINATION OBLIGATIONS.

(a) Executive hereby covenants and agrees that, for a period of one year
following his termination of employment with the Bank, he shall not, without the
written consent of the Bank, either directly or indirectly:

(i) solicit, offer employment to, or take any other action intended (or that a
reasonable person acting in like circumstances would expect) to have the effect
of

 

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causing any officer or employee of the Bank or the Company, or any of their
respective subsidiaries or affiliates, to terminate his or her employment and
accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any business whatsoever that
competes with the business of the Bank or the Company, or any of their direct or
indirect subsidiaries or affiliates or has headquarters or offices within 20
miles of the locations in which the Bank or the Company has business operations
or has filed an application for regulatory approval to establish an office;

(ii) become an officer, employee, consultant, director, independent contractor,
agent, sole proprietor, joint venturer, greater than 5% equity owner or
stockholder, partner or trustee of any savings bank, savings and loan
association, savings and loan holding company, credit union, bank or bank
holding company, insurance company or agency, any mortgage or loan broker or any
other financial services entity or business that competes with the business of
the Bank or its affiliates or has headquarters or offices within twenty-five
(25) miles of Versailles, Ohio; provided, however, that this restriction shall
not apply if Executive’s employment is terminated following a Change in Control
or if Executive does not have any right to or waives (or returns to the Bank)
any payments under Section 4 hereof; or

(b) As used in this Agreement, “Confidential Information” means information
belonging to the Bank which is of value to the Bank in the course of conducting
its business and the disclosure of which could result in a competitive or other
disadvantage to the Bank. Confidential Information includes, without limitation,
financial information, reports, and forecasts; inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Bank. Confidential Information includes
information developed by the Executive in the course of the Executive’s
employment by the Bank, as well as other information to which the Executive may
have access in connection with the Executive’s employment. Confidential
Information also includes the confidential information of others with which the
Bank has a business relationship. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain. The Executive
understands and agrees that the Executive’s employment creates a relationship of
confidence and trust between the Executive and the Bank with respect to all
Confidential Information. At all times, both during the Executive’s employment
with the Bank and after its termination, the Executive will keep in confidence
and trust all such Confidential Information, and will not use or disclose any
such Confidential Information without the written consent of the Bank, except as
may be necessary in the ordinary course of performing the Executive’s duties to
the Bank.

(c) Executive shall, upon reasonable notice, furnish such information and
assistance to the Bank as may reasonably be required by the Bank, in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party; provided, however, that Executive shall not be required to
provide information or assistance with respect to any litigation between the
Executive and the Bank or any of its subsidiaries or affiliates.

 

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(d) All payments and benefits to Executive under this Agreement shall be subject
to Executive’s compliance with this Section 11. The parties hereto, recognizing
that irreparable injury will result to the Bank, its business and property in
the event of Executive’s breach of this Section 11, agree that, in the event of
any such breach by Executive, the Bank will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive and all persons acting for or with Executive. Executive
represents and admits that Executive’s experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Bank, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood. Nothing herein
will be construed as prohibiting the Bank or the Company from pursuing any other
remedies available to them for such breach or threatened breach, including the
recovery of damages from Executive.

 

12. SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash or check
from the general funds of the Bank. The Company may accede to this Agreement but
only for the purposed of guaranteeing payment and provision of all amounts and
benefits due hereunder to Executive.

 

13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Bank or any predecessor of
the Bank and Executive, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to Executive of a kind elsewhere
provided. No provision of this Agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.

 

14. NO ATTACHMENT; BINDING ON SUCCESSORS.

(a) Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void, and of
no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive
and the Bank and their respective successors and assigns.

 

15. MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived,
nor shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future as to any act other than that specifically waived.

 

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16. REQUIRED PROVISIONS.

(a) The Bank may terminate Executive’s employment at any time, but any
termination by the Board other than termination for Cause shall not prejudice
Executive’s right to compensation or other benefits under this Agreement.
Executive shall have no right to receive compensation or other benefits for any
period after termination for Cause.

(b) If Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the
Federal Deposit Insurance Act, the Bank’s obligations under this contract shall
be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of its obligations which were suspended.

(c) If Executive 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) [12
USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit
Insurance Act, all obligations of the Bank under this Agreement shall terminate
as of the effective date of the order, but vested rights of the contracting
parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)]
of the Federal Deposit Insurance Act, all obligations of the Bank under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties.

(e) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of the contract is necessary for the
continued operation of the Bank, (i) by the Director of the OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) [12 USC
§1823(c)] of the Federal Deposit Insurance Act; 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 such action.

(f) Notwithstanding anything herein contained to the contrary, any payments to
Executive by the Bank or the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with
Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k),
and the regulations promulgated thereunder in 12 C.F.R. Part 359.

 

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17. SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

 

18. HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

 

19. GOVERNING LAW.

This Agreement shall be governed by the laws of the State of Ohio except to the
extent superseded by federal law.

 

20. ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a
panel of three arbitrators sitting in a location selected by Executive within
fifty (50) miles from the main office of the Bank, in accordance with the rules
of the American Arbitration Association’s National Rules for the Resolution of
Employment Disputes (“National Rules”) then in effect. One arbitrator shall be
selected by Executive, one arbitrator shall be selected by the Bank and the
third arbitrator shall be selected by the arbitrators selected by the parties.
If the arbitrators are unable to agree within fifteen (15) days upon a third
arbitrator, the arbitrator shall be appointed for them from a panel of
arbitrators selected in accordance with the National Rules. Judgment may be
entered on the arbitrator’s award in any court having jurisdiction.

 

21. INDEMNIFICATION.

(a) Executive shall be provided with coverage under a standard directors’ and
officers’ liability insurance policy, and shall be indemnified for the term of
this Agreement and for a period of six years thereafter to the fullest extent
permitted under applicable law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Bank or any affiliate (whether or not he continues to be a
director or officer at the time of incurring such expenses or liabilities), such
expenses and liabilities to include, but not be limited to, judgments, court
costs and attorneys’ fees and the cost of reasonable settlements (such
settlements must be approved by the Board), provided, however, Executive shall
not be indemnified or reimbursed for legal expenses or liabilities incurred in
connection with an action, suit or proceeding arising from any illegal or
fraudulent act committed by Executive. Any such indemnification shall be made
consistent with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
§1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

 

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(b) Any indemnification by the Bank shall be subject to compliance with any
applicable regulations of the Federal Deposit Insurance Corporation.

 

22. 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 when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below:

 

To the Bank:   

Versailles Savings and Loan Co.

27 Main Street

Versailles, Ohio 45380

To Executive:   

Douglas P. Ahlers

At the address last appearing on

the personnel records of the Bank

 

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SIGNATURES

IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to be
executed by their duly authorized representatives, and Executive has signed this
Agreement, on the date first above written.

 

VERSAILLES SAVINGS AND LOAN COMPANY By:  

/s/ Edward L. Borchers

  Chairman of the Board VERSAILLES FINANCIAL CORPORATION By:  

/s/ Edward L. Borchers

  Chairman of the Board EXECUTIVE:

       /s/ Douglas P. Ahlers

  Douglas P. Ahlers

 

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