**Exhibit
      10(1)**











**LINCOLN
      BANCORP INCENTIVE PLAN**





Lincoln
      Bank strives to be the best financial institution in which our employees can
      work and our customers can do business. Everything we do is for the benefit
      of
      people - our customers, employees and the communities that we serve. We
      demonstrate this through our history as a leader in community banking, and
      we
      value our employees and their contributions to our success.





As
      an
      employer we believe that it is in the best interest of both the organization
      and
      our employees to reward our workforce for the value of the work provided. It
      is
      our intent to use an incentive based system that will reward employees based
      on
      achievement of Bank performance.





On
      April
      18, 2006, the Board of Directors of Lincoln Bancorp approved the Lincoln Bancorp
      Incentive Plan. All Lincoln Bank employees (other than Commercial Lenders),
      including the Company’s Named Executive Officers, as defined by Item 402(a)(3)
      of the Securities and Exchange Commission’s Regulation S-K, will participate in
      the Plan. The Plan will be in effect beginning with the current fiscal year,
      which ends December 31, 2006. The Plan will replace the Performance Incentive
      Plan adopted March 21, 2000.





Under
      the
      Plan, a target percentage will be established for each participant, at the
      beginning of each fiscal year, based upon multiple factors, including median
      competitive award levels for incentive based compensation within the financial
      services industry and pay grades as dictated by the defined pay grade that
      governs the range of expected base salary for employees. The pay grade was
      established and continues to be managed based on industry specific compensation
      analysis performed on an annual basis. The target percentage, after being
      adjusted for performance as described below, will be applied to actual base
      salary paid for the fiscal year; base salary will include all income as required
      under The Fair Labor Standards Act. The target percentages approved by the
      Board
      of Directors for the current fiscal year for each of the Named Executive
      Officers are disclosed in the table below. The plan has been modified from
      the
      2006 plan to require minimum performance for each specific factor at the 40%
      level in order for that factor to count for executive and pay grade Band “B”
employees. In other words, the minimum threshold for a bonus to be paid for
      each
      factor is the 40% level for these employees.





Employees
      will be compensated based on Bank performance as measured by the following
      factors (the percentage in parenthesis is the weighting assigned to the factor):
      Net Income (30%), Deposit Growth (10%), Non-interest Expense (15%), Non-interest
      Income (10%), Net Interest Income (25%) and Loan Growth (10%). Minimum threshold
      requirements, required for any payment to be made, will be established for
      each
      factor.











The
      proposed target percentage payouts for the 2006 fiscal year are as
      follows:





Named
                Executive Officer
            
            Incentive
                Target PercentageJerry
                R Engle, President and Chief Executive Officer
            
            30%John
                M. Baer, Senior Vice President, Chief Financial Officer, Secretary
                and
                Treasurer
            
            30%John
                Ditmars, Senior Vice President, Administration
            
            30%John
                D. Slaughter, Senior Vice President, Chief Credit Officer
            
            30%Bryan
                Mills, Senior Vice President, Mortgage Lending Manager
            
            30%Pay
                Grade Band B
            
            25%Pay
                Grades 1-3
            
            15%Pay
                Grades 4-5
            
            10%Pay
                Grades 6-8
            
            5%





Awards
      under the Plan for a fiscal year will be paid in cash to participants after
      the
      awards have been determined and approved by the Compensation Committee, but
      in
      no event later than March 15 of the subsequent fiscal year. Any taxes required
      to be withheld by Federal, state, or local regulations will be deducted from
      payments made under the Plan. An employee must be actively employed on the
      date
      awards are paid to receive any incentive payment pursuant to the Plan. The
      Plan
      does not give any employee the right to be retained in the employ of Lincoln
      Bank; specifically, the Plan does not in any way create an employment contract
      or constitute an agreement to employ the employee for any period of time. All
      payments will be pro-rated for employees hired during the plan year. Amounts
      payable to an employee under this Plan shall be paid solely from the general
      assets of Lincoln Bank as they come due from time to time. Employees’ rights
      under this Plan are no greater than the right of an unsecured general creditor
      and this Plan does not give an employee any security interest, lien, or claim
      against any specific asset of Lincoln Bank or Lincoln Bancorp.





The
      Plan
      may be amended or discontinued at any time at the election of the Compensation
      Committee. To the extent not preempted by Federal law, the Plan shall be
      governed by and construed according to the laws of the State of Indiana without
      regard to conflict of law principles thereof.





Note:
      Commercial Lenders are only eligible to participate in the Lincoln Bank
      Commercial Lending Incentive Plan.