EMPLOYMENT AGREEMENT


     THIS  AGREEMENT,  made  effective  as of  February  26, 2001 by and between
AMERIANA BANK & TRUST OF INDIANA ("Ameriana" or the "Bank"),  with its principal
office in New Castle, Indiana, and Timothy G. Clark ("Executive"), an individual
residing in the State of Indiana.

     WHEREAS,  the Bank wishes to assure itself of the services of Executive for
the period provided in this Agreement,  and Executive is willing to serve in the
employ of the Bank on a full-time basis for said period; and

     WHEREAS,  the Board of Directors of the Bank has  determined  that the best
interests of the Bank would be served by providing the Executive with protection
and special benefits following any change of control of the Bank;

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:

     1.   Employment.  The Bank agrees to continue  Executive in its employ, and
          ----------
          Executive  agrees to remain in the employ of the Bank,  for the period
          stated in  paragraph 3 hereof and upon the other terms and  conditions
          herein provided.

     2.   Position  and   Responsibilities.   The  Bank  employs  Executive  and
          --------------------------------
          Executive  agrees to serve as Chief Operating  Officer of the Bank for
          the term and on the conditions hereinafter set forth. Executive agrees
          to perform such services not  inconsistent  with his position as shall
          from time to time be assigned to him by the Bank's Board of Directors.

     3.   Term and Duties.
          ---------------

          (a)  Term of  Employment.  The term of this  Agreement  shall be for a
               -------------------
               period of thirty-six (36) months and any extensions.  During each
               calendar  year  hereafter,  the  Board of  Directors  of the Bank
               ("Board") shall review the performance of the Executive, and such
               Board shall determine whether to extend the term of the Agreement
               beyond its expiration date.

          (b)  Duties.  During the period of his employment hereunder and except
               ------
               for illnesses, reasonable vacation periods, and reasonable leaves
               of absence,  Executive shall devote his business time, attention,
               skill,  and  efforts to the  faithful  performance  of his duties
               hereunder; provided, however, that with the approval of the Board
               of Directors of the Bank, from time to time, Executive may serve,
               or continue to serve, on the boards of directors of, and hold any
               other offices or positions in companies or organizations,  which,
               in such Board's judgment,  will not present any material conflict
               of  interest  with  the  Bank  or  any  of  its  subsidiaries  or
               affiliates or divisions, or




<PAGE>


               unfavorably affect the performance of Executive's duties pursuant
               to this Agreement,  or will not violate any applicable statute or
               regulation.

     4.   Compensation and Reimbursement of Expenses.
          ------------------------------------------

          (a)  Compensation.  The Bank  agrees to pay the  Executive  during the
               ------------
               term of this  Agreement  a  salary  at the rate of  $147,500  per
               annum;  provided,  that the rate of such salary shall be reviewed
               by the  Board  of  Directors  of the Bank  not  less  often  than
               annually.  Such rate of salary,  or increased rate of salary,  if
               any,  as the  case  may be,  may be  further  increased  (but not
               decreased)  from time to time in such  amount as the Board in its
               discretion may decide. Such salary shall be payable in accordance
               with the customary payroll practices of the Bank, but in no event
               less frequently  than monthly,  and any bonus shall be payable in
               the manner specified by such committee or such Board of Directors
               at the time any such bonus is awarded.

          (b)  Reimbursement  of  Expenses.  The  Bank  shall  pay or  reimburse
               ---------------------------
               Executive for all reasonable  travel and other expenses  incurred
               by Executive in the  performance  of his  obligations  under this
               Agreement  in  accordance  with the Bank's  policy on the date of
               this Agreement or as approved by the Board of Directors. The Bank
               further  agrees  to  provide  the  Executive  with  the use of an
               automobile  commensurate  with his position  during his period of
               employment.

     5.   Participation in Benefit Plans. The payments provided in paragraphs 4,
          ------------------------------
          7, and 8 hereof are in addition to any benefits to which Executive may
          be, or may become,  entitled under any group hospitalization,  health,
          dental  care,  or sick leave plan,  life or other  insurance  or death
          benefit plan, travel or accident  insurance,  or executive  contingent
          compensation plan, including, without limitation, capital accumulation
          and termination pay programs, restricted or stock purchase plan, stock
          option plan, retirement income,  qualified pension plan,  supplemental
          pension plan (excess benefit plan), executive supplemental  retirement
          plan,  or other  present  or future  group  employee  benefit  plan or
          program of the Bank for which executives are or shall become eligible,
          and  Executive  shall be eligible to receive  during the period of his
          employment under this Agreement,  and during any subsequent period for
          which he shall be  entitled  to receive  payments  from the Bank under
          paragraph  7 or  paragraph 8 all  benefits  and  emoluments  for which
          executives are eligible under every such plan or program to the extent
          permissible  under the general  terms and  provisions of such plans or
          programs and in accordance with the provisions thereof.

     6.   Vacation  and Sick  Leave.  At such  reasonable  times as the Board of
          -------------------------
          Directors shall in its discretion permit, Executive shall be entitled,
          without loss of pay, to


                                      -2-
<PAGE>

          absent  himself  voluntarily  from the  performance  of his employment
          under this Agreement, all such voluntary absences to count as vacation
          time; provided that:

          (a)  Executive  shall be entitled to an annual  vacation in accordance
               with the  policies as  periodically  established  by the Board of
               Directors  for senior  management  officials  of the Bank,  which
               shall in no event be less than four weeks per annum.

          (b)  The timing of vacations shall be scheduled in a reasonable manner
               by the Board of  Directors.  Executive  shall not be  entitled to
               receive any additional  compensation  from the Bank on account of
               his  failure  to take a  vacation;  nor shall he be  entitled  to
               accumulate  unused  vacation  from  one  fiscal  year to the next
               except to the extent  authorized  by the Board of  Directors  for
               senior management officials of the Bank.

          (c)  In addition to the aforesaid paid  vacations,  Executive shall be
               entitled, without loss of pay, to absent himself voluntarily from
               the  performance  of  his  employment  with  the  Bank  for  such
               additional  periods  of time and for such  valid  and  legitimate
               reasons  as  the  Board  of  Directors  in  its   discretion  may
               determine.  Further,  the Board of Directors shall be entitled to
               grant to  Executive a leave or leaves of absence  with or without
               pay at such time or times and upon such terms and  conditions  as
               the Board of Directors in its discretion may determine.

          (d)  In addition,  Executive shall be entitled to an annual sick leave
               as  established  by the Board of Directors for senior  management
               officials of the Bank. In the event any sick leave time shall not
               have been  used  during  any year,  such  leave  shall  accrue to
               subsequent  years only to the extent  authorized  by the Board of
               Directors.  Upon  termination of his employment,  Executive shall
               not be entitled to receive any additional  compensation  from the
               Bank for unused sick leave.

     7.   Benefits Payable Upon Disability.
          --------------------------------

          (a)  Primary Disability  Benefits.  In the event of the disability (as
               ----------------------------
               hereinafter defined) of Executive, the Bank shall continue to pay
               Executive the monthly compensation provided in paragraph 4 hereof
               during the period of his disability  provided,  however,  that in
               the event Executive is disabled for a continuous period exceeding
               eighteen  (18)  calendar  months,  the Bank may, at its election,
               terminate  the  Agreement,  in  which  event  Executive  shall be
               entitled to receive the benefits described in paragraph 7(b).

               As used in this Agreement,  the term "disability"  shall mean the
               complete  inability of Executive to perform his duties under this
               Agreement as


                                      -3-
<PAGE>

               determined by an independent physician selected with the approval
               of the Bank and the Executive.

          (b)  Secondary  Disability  Benefits.   The  Bank  shall  pay  to  the
               -------------------------------
               Executive  a  monthly  disability  benefit  equal to  sixty  (60)
               percent  of his  monthly  salary at the time he became  disabled.
               Payment of such disability benefit shall commence on the last day
               of the month  following  the  month  for which the final  payment
               under  paragraph  7(a) was made and cease with the earlier of (i)
               the payment for the month in which the Executive dies or (ii) the
               payment  for the  month  preceding  the  month  in  which  occurs
               Executive's normal retirement date under the Bank's pension plan.

          (c)  Disability  Benefit  Offset.  Any amounts payable under paragraph
               ---------------------------
               7(a)  or  7(b)  shall  be  reduced  by any  amounts  paid  to the
               Executive under any other  disability  program  maintained by the
               Bank.

          (d)  Services  During  Disability.  During  the  period  Executive  is
               ----------------------------
               entitled to receive  payments under  paragraphs 7(a) and (b), the
               Executive shall, to the extent that he is physically and mentally
               able to do so,  furnish  information  and assistance to the Bank,
               and, in addition, upon reasonable request in writing on behalf of
               the Board of  Directors,  or an executive  officer  designated by
               such Board, from time to time, make himself available to the Bank
               to undertake reasonable  assignments consistent with the dignity,
               importance,  and scope of his prior position and his physical and
               mental health. During such period of service,  Executive shall be
               responsible  and report to, and be subject to the supervision of,
               the  Board  of  Directors  of the  Bank or an  executive  officer
               designated by the Board,  as to the method and manner in which he
               shall perform such assignments,  subject always to the provisions
               of this  paragraph  7(d),  and  shall  keep such  Board,  or such
               executive officer, appropriately informed of his progress in each
               such assignment.

     8.   Payments to Executive Upon Termination of Employment.
          ----------------------------------------------------

          (a)  Event  of  Termination.  Upon  the  occurrence  of  an  Event  of
               ----------------------
               Termination  (as  hereinafter   defined)  during  the  period  of
               Executive's  employment  under this Agreement,  the provisions of
               this  paragraph  8 shall  apply.  As used in this  Agreement,  an
               "Event of Termination" shall mean that termination by the Bank of
               Executive's  employment  hereunder  for  any  reason  other  than
               "cause" or retirement at or after the normal retirement age under
               a qualified  pension plan  maintained by the Bank or  termination
               pursuant to Paragraph 7. A termination  for "cause" shall include
               termination  because  of  the  Executive's  personal  dishonesty,
               incompetence,   willful  misconduct,  breach  of  fiduciary  duty
               involving personal profit,  intentional failure to perform stated
               duties, willful


                                      -4-
<PAGE>


               violation  of any law,  rule or  regulation  (other than  traffic
               violations or similar offenses) or final cease-and-desist  order,
               or material  breach of any  provision of this  Agreement.  In the
               event of termination  for cause the Executive shall have no right
               to receive  compensation  or other  benefits for any period after
               such termination.

          (b)  Event  of  Termination  Without  Change  of  Control.   Upon  the
               ----------------------------------------------------
               occurrence of an Event of  Termination  other than after a Change
               of Control (as  hereinafter  defined),  the Bank shall pay to the
               Executive  monthly,  or in the event of his subsequent  death, to
               his designated beneficiary or beneficiaries, or to his estate, as
               the case may be, as severance pay or liquidated damages, or both,
               during  the period  below  described  a sum equal to the  highest
               monthly  rate of salary paid to the  Executive  at any time under
               this  Agreement.  Such payments shall commence on the last day of
               the month  following  the date of said event of  termination  and
               shall continue  until the date this Agreement  would have expired
               but for said  occurrence,  with such occurrence being viewed as a
               determination by the Bank not to extend the Agreement as provided
               for  in  paragraph  3  of  this  Agreement.  Notwithstanding  the
               foregoing,  in no event shall all such  payments made pursuant to
               this  subparagraph  8(b) exceed three times the final annual rate
               of salary being paid to Executive as of the date of termination.

          (c)  Event of  Termination  In Connection  with Change of Control.  If
               ------------------------------------------------------------
               either, (1) after a "Change of Control" (as hereinafter  defined)
               of the Bank or Parent (as  hereinafter  defined),  either (A) the
               Bank shall  terminate the employment of the Executive  during the
               period of  employment  under this  Agreement for any reason other
               than  "cause," as defined in  Paragraph  8(a),  retirement  at or
               after the normal  retirement  age under a qualified  pension plan
               maintained by the Bank or termination pursuant to Paragraph 7, or
               otherwise  change the present  capacity or circumstances in which
               the  Executive  is employed  as set forth in  Paragraph 2 of this
               Agreement   or   cause   a   reduction    in   the    Executive's
               responsibilities  or authority or  compensation or other benefits
               provided under this  Agreement  without the  Executive's  written
               consent,  or  (B)  the  Executive   voluntarily   terminates  his
               employment  hereunder  for any  reason  within  thirty  (30) days
               following  a Change  of  Control  of the Bank or  Parent,  or (2)
               during the  period  that  begins on the date six months  before a
               Change of Control and ends on the later of the first  anniversary
               of  the  Change  of  Control  or  the  expiration  date  of  this
               Agreement, the Bank changes the present capacity or circumstances
               in which the Executive is employed as set forth in Paragraph 2 of
               this   Agreement  or  causes  a  reduction  in  the   Executive's
               responsibilities  or authority or  compensation or other benefits
               provided under this  Agreement  without the  Executive's  written
               consent,  then in the case of either  (1) or (2),  the Bank shall
               pay to the Executive and provide

                                      -5-
<PAGE>

               the Executive,  or his  beneficiaries,  dependents and estate, as
               the case may be, with the following:

               (i)  The Bank shall  promptly pay to the Executive a sum equal to
                    2.99 times the average  annual  compensation  payable by the
                    Bank and includable by the Executive in gross income for the
                    most recent five  taxable  years  ending  before the date on
                    which the ownership or control of the Bank or Parent changed
                    or the portion of this period during which the Executive was
                    an employee of the Bank.

               (ii) During a period of thirty-six (36) calendar months beginning
                    with  the  Event  of   Termination,   the   Executive,   his
                    dependents,  beneficiaries  and estate shall  continue to be
                    covered  under  all  employee  benefit  plans  of the  Bank,
                    including without  limitation the Bank's pension plan, as if
                    the Executive were still  employed  during such period under
                    this Agreement.

              (iii) If and to the extent  that  benefits  of service  credit for
                    benefits provided by paragraph 8(c)(ii) shall not be payable
                    or  provided  under  any such  plans to the  Executive,  his
                    dependents,  beneficiaries  and estate,  by reason of his no
                    longer  being  an  employee  of  the  Bank  as a  result  of
                    termination  of  employment,  the Bank  shall  itself pay or
                    provide for payment of such benefits and services credit for
                    benefits to the Executive, his dependents, beneficiaries and
                    estate.  Any  such  payment  relating  to  retirement  shall
                    commence on a date selected by the Executive which must be a
                    date on which  payments under the Bank's  qualified  pension
                    plan or successor plan may commence.

               (iv) If the Executive  elects to have benefits  commence prior to
                    the normal  retirement age under the qualified  pension plan
                    or any  successor  plan  maintained  by the Bank and thereby
                    incurs an actuarial  reduction in his monthly benefits under
                    such plan,  the Bank shall itself pay or provide for payment
                    to the  Executive  the  difference  between  the amount that
                    would  have been paid if the  benefits  commenced  at normal
                    retirement age and the actuarially  reduced amount paid upon
                    the early commencement of benefits.

               (v)  The Bank  shall pay all legal  fees and  expenses  which the
                    Executive may incur as a result of a contest  concerning the
                    validity  or   enforceability  of  this  Agreement  and  the
                    Executive shall be entitled to receive  interest thereon for
                    the  period  of any  delay in  payment  from  the date  such
                    payment was due at the rate determined by adding two hundred
                    basis   points  to  the  six  month   Treasury   Bill  rate.
                    Notwithstanding anything herein to the


                                      -6-
<PAGE>

                    contrary, in no event shall the Bank be required to: (a) pay
                    legal fees or expenses  incurred by Executive to enforce the
                    Agreement unless a court of competent jurisdiction renders a
                    final  judgment  in favor of the  Executive;  or (b) advance
                    legal fees or expenses  incurred by Executive to enforce the
                    contract  unless the  Executive is  terminated  without Just
                    Cause  after a  change  of  control  of  Bank or its  parent
                    corporation,  Ameriana Bancorp ("Parent") not recommended by
                    Parent's  board of  directors.  Provided  further,  that the
                    Executive  shall be required to  reimburse  the Bank for the
                    legal  fees  and   expenses   advanced   pursuant   to  this
                    subparagraph if a court of competent  jurisdiction  does not
                    render a final judgment in favor of the Executive.

               (vi) The  Executive  shall not be required to mitigate the amount
                    of any payment  provided  for in this  Agreement  by seeking
                    other employment or otherwise nor shall any amounts received
                    from other  employment or otherwise by the Executive  offset
                    in any manner the obligations of the Bank hereunder.

              (vii) Notwithstanding  anything  contained  in this  Section  8(c)
                    herein  to the  contrary,  in no event  shall  payments  and
                    benefits  made  pursuant to this  Section 8(c) be made which
                    would result in such payments being classified as an "excess
                    parachute  payment"  as such term is defined  under  Section
                    280G of the  Internal  Revenue  Code  of  1986,  as  amended
                    ("Code").  In the event that such payments and benefits,  if
                    made, would be considered as an "excess parachute  payment",
                    such  payments  shall be reduced by such dollar amount as is
                    required  so that  the  total  value  of such  payments  and
                    benefits  when made  shall not be  considered  as an "excess
                    parachute payment".

          (d)  Change of Control.  A "Change of  Control"  shall mean any one of
               -----------------
               the following events:  (i) the acquisition of ownership,  holding
               or power to vote  more  than 25% of the  Bank's  or the  Parent's
               voting stock,  (ii) the acquisition of the ability to control the
               election of a majority of the Bank's or the  Parent's  directors,
               (iii)  the  acquisition  of  a  controlling  influence  over  the
               management or policies of the Bank or the Parent by any person or
               by persons  acting as a "group"  (within  the  meaning of Section
               13(d) of the Securities Exchange Act of 1934), or (iv) during any
               period of two consecutive  years,  individuals  (the  "Continuing
               Directors")  who at the beginning of such period  constitute  the
               Board of  Directors  of the  Bank or the  Parent  (the  "Existing
               Board") cease for any reason to  constitute  at least  two-thirds
               thereof,   provided  that  any   individual   whose  election  or
               nomination  for  election as a member of the  Existing  Board was
               approved  by a vote  of at  least  two-thirds  of the  Continuing
               Directors then in office



                                      -7-
<PAGE>

               shall be considered a Continuing  Director.  Notwithstanding  the
               foregoing,  ownership or control of the Bank by the Parent itself
               shall not  constitute  a Change of Control.  Further,  "Change of
               Control"  shall not include the  acquisition  of securities by an
               employee benefit plan of the Bank or the Parent.  For purposes of
               this paragraph only, the term "person" refers to an individual or
               a corporation,  partnership,  trust, association,  joint venture,
               pool, syndicate, sole proprietorship, unincorporated organization
               or any other form of entity not specifically listed herein.

          (e)  Suspension and Special Regulatory Rules.
               ---------------------------------------

               (i)  The Bank's board of directors may terminate the  Executive's
                    employment at any time,  but any  termination  by the Bank's
                    board of directors other than  termination for "Just Cause",
                    shall not prejudice the Executive's right to compensation or
                    other benefits under the Agreement. The Executive shall have
                    no right to receive  compensation  or other benefits for any
                    period after  termination for "Just Cause".  Termination for
                    "Just Cause" shall mean termination for personal dishonesty,
                    incompetence,  willful misconduct,  breach of fiduciary duty
                    involving  personal profit,  intentional  failure to perform
                    stated   duties,   willful   violation  of  any  law,  rule,
                    regulation (other than a law, rule or regulation relating to
                    a   traffic   violation   or   similar    offense),    final
                    cease-and-desist  order, or material breach of any provision
                    of this Agreement. Subject to the provisions of 8(c) and (d)
                    hereof,  in the event this  Agreement is terminated for Just
                    Cause,  the Bank shall only be  obligated to continue to pay
                    Executive his salary up to the date of termination,  and the
                    vested rights of the parties shall not be affected.

               (ii) If the Executive 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)(1) of the Federal
                    Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)) 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 the 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.

                                      -8-
<PAGE>

              (iii) If the Executive is removed  and/or  permanently  prohibited
                    from  participating  in the conduct of the Bank's affairs by
                    an order  issued  under  Sections  8(e)(4) or 8(g)(1) of the
                    Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4)
                    and  (g)(1)),   all  obligations  of  the  Bank  under  this
                    Agreement shall  terminate,  as of the effective date of the
                    order,  but the vested  rights of the  parties  shall not be
                    affected.

               (iv) If the Bank is in default (as defined in Section  3(x)(1) of
                    FDIA), all obligations  under this Agreement shall terminate
                    as of the date of default,  but this subparagraph  shall not
                    affect any vested rights of the parties.

          (f)  Power of the Board of Directors to Terminate the  Executive.  The
               -----------------------------------------------------------
               Board of Directors of the Bank may terminate the Executive at any
               time; in the event of such  termination,  the  provisions of this
               paragraph 8 shall fully apply.

          (g)  Any payments made to the employee pursuant to this agreement,  or
               otherwise,  are subject to and conditioned  upon their compliance
               with 12 USC 1828(k) and any regulations promulgated thereunder.

          (h)  Post-termination  Health Insurance. If the Executive's employment
               ----------------------------------
               terminates  with the Bank for any reason  other than Just  Cause,
               the Executive shall be entitled to purchase from the Bank, at his
               own expense which shall not exceed applicable COBRA rates, family
               medical  insurance  under  any  group  health  plan that the Bank
               maintains for its employees.  This right shall be (i) in addition
               to, and not in lieu of, any other rights that the  Executive  has
               under this  Agreement and (ii) shall continue until the Executive
               first becomes eligible for participation in Medicare.

     9.   Source of Payments.  All payments  provided in  paragraphs 4, 7, and 8
          ------------------
          shall be paid in cash  from the  general  funds  of the  Bank,  and no
          special or separate fund shall be established and no other segregation
          of assets  shall be made to assure  payment.  Executive  shall have no
          right,  title, or interest whatever in or to any investments which the
          Bank may make to aid the Bank in meeting its obligations hereunder.

     10.  Noncompetition.  The Executive hereby  expressly  covenants and agrees
          --------------
          that  during the term of this  Agreement  and for a period of one year
          thereafter, he shall not, unless acting with the prior written consent
          of the Bank, directly or indirectly, for himself or on behalf of or in
          conjunction with any other person,  firm,  corporation or entity, own,
          manage,  operate,  join,  control,   finance  or  participate  in  the
          ownership, management operation or control of, or be connected with as
          a


                                      -9-
<PAGE>


          director, officer, employee,  consultant,  partner, stockholder (other
          than to the extent he is a stockholder therein as of the date hereof),
          and excepting any ownership,  solely as an investment,  so long as the
          Executive  is not a member of any  control  group (with the meaning of
          the rules and  regulations of the Securities and Exchange  Commission,
          the Office of Thrift  Supervision or the Federal  Reserve Board of any
          such issue),  any business  engaged in the business of banking or that
          of owning or managing or controlling a bank or banks (which term shall
          include,  but is not limited to, mortgage companies,  savings and loan
          associations and savings banks),  in any county where the Bank and its
          Parent or any other subsidiary of either,  has an office or branch and
          the contiguous counties thereto.

     11.  Confidential Information. Executive shall not, to the detriment of the
          ------------------------
          Bank,  knowingly  disclose  or reveal to any  unauthorized  person any
          confidential  information  relating to the Bank, its  subsidiaries  or
          affiliates,  or to  any  of  the  businesses  operated  by  them,  and
          Executive  confirms that such  information  constitutes  the exclusive
          property of the Bank.  Executive shall not otherwise  knowingly act or
          conduct  himself  (i) to the  material  detriment  of  the  Bank,  its
          subsidiaries,  or affiliates, or (ii) in a manner which is inimical or
          contrary to the interests thereof.

     12.  Federal  Income  Tax  Withholding.  The  Bank  may  withhold  from any
          ---------------------------------
          benefits  payable under this  Agreement all federal,  state,  city, or
          other taxes as shall be required  pursuant to any law or  governmental
          regulation or ruling.

     13.  Effect  of  Prior  Agreements.  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.

     14.  Consolidation,  Merger,  or Sale of Assets.  Nothing in this Agreement
          ------------------------------------------
          shall preclude the Bank from consolidating or merging into or with, or
          transferring  all  or  substantially  all  of its  assets  to  another
          corporation  which  assumes this  Agreement  and all  obligations  and
          undertakings of the Bank hereunder. Upon such a consolidation, merger,
          or  transfer  of assets  or  assumption,  the term "the  Bank" as used
          herein,  shall mean such other  corporation  and this Agreement  shall
          continue in full force and effect.

     15.  General Provisions.
          ------------------

          (a)  Nonassignability.   Neither  this  Agreement  nor  any  right  or
               ----------------
               interest   hereunder  shall  be  assignable  by  Executive,   his
               beneficiaries,  or legal representatives without the Bank's prior
               written  consent;   provided,   however,  that  nothing  in  this
               paragraph  14(a) shall preclude (i) Executive from  designating a
               beneficiary  to receive any benefits  payable  hereunder upon his
               death, or (ii) the executors, administrators, or other legal


                                      -10-
<PAGE>

               representatives  of  Executive or his estate from  assigning  any
               rights hereunder to the person or persons entitled thereto.

          (b)  No  Attachment.  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  of  assignment  by  operation  of law,  and any
               attempt,  voluntary  or  involuntary,  to effect any such  action
               shall be null, void, and of no effect.

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

     16.  Modification and Waiver.
          -----------------------

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

          (b)  Waiver. No term or condition of this Agreement shall be deemed to
               ------
               have been  waived,  nor shall  there be an  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 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 or
               as to any act other than that specifically waived.

     17.  Severability.  If, for any reason,  any provision of this Agreement is
          ------------
          held invalid,  such invalidity shall not effect any other provision of
          this  Agreement  not held so  invalid,  and each such other  provision
          shall to the full extent  consistent  with law  continue in full force
          and effect.  If any provision of this Agreement  shall be held invalid
          in  part,  such  invalidity  shall in no way  affect  the rest of such
          provision,   which,   together  with  all  other  provisions  of  this
          Agreement,  shall to the full extent  consistent  with law continue in
          full force and effect.  If this Agreement is held invalid or cannot be
          enforced, then to the full extent permitted by law any prior agreement
          between the Bank (or any  predecessor  thereof) and Executive shall be
          deemed reinstated as if this Agreement has not been executed.

     18.  Headings.  The headings of 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.


                                      -11-
<PAGE>

     19.  Governing  Law. This  Agreement has been executed and delivered in the
          --------------
          State of Indiana, and is validity,  interpretation,  performance,  and
          enforcement shall be governed by the laws of said State, except to the
          extent Federal law is governing.

IN WITNESS  WHEREOF,  the Bank has caused this  Agreement to be executed and its
seal to be affixed  hereunto by its  officers  thereunto  duly  authorized,  and
Executive  has signed  this  Agreement,  all as of the day and year first  above
written.


                                         AMERIANA BANK AND TRUST OF
                                         INDIANA


                                         /s/ Donald C. Danielson
                                         -----------------------------------
                                         Donald C. Danielson
                                         Vice Chairman of the
                                         Board of Directors

ATTEST:

/s/ Harry J. Bailey
------------------------
                                         /s/ Timothy G. Clark
                                         -----------------------------------
                                         Timothy G. Clark
                                         Chief Operating Officer

WITNESS:


/s/ Richard E. Welling
--------------------------


                                      -12-