Exhibit 10(7)



                                                              December ___, 2001




Home Federal Savings Bank, as Trustee
of the City Savings Financial Corporation
   Employee Ownership Plan and Trust
501 Washington Street
Columbus, Indiana   47201

Dear Sir:

     This letter  confirms City Savings  Financial  Corporation's  commitment to
fund a leveraged ESOP in an amount up to $444,360.  The commitment is subject to
the following terms and conditions:

          1)   Lender: City Savings Financial Corporation.

          2)   Borrower:  City  Savings  Financial  Corporation  Employee  Stock
               Ownership Plan.

          3)   Trustee: Home Federal Savings Bank.

          4)   Security:  Unallocated shares of stock of the Company held in the
               City Savings Financial Corporation Employee Stock Ownership Plan.

          5)   Maturity: Up to 15 years from takedown.

          6)   Amortization:  Equal  annual  principal  payments,  plus  accrued
               interest.

          7)   Pricing:

               a.   The Prime Rate as  published  in the Wall Street  Journal on
                    the date of the loan transaction.

          8)   Interest Payments:

               a.   Annual on a 360 day basis.

          9)   Funding:  In full by the date of closing of the conversion of The
               Michigan  City  Savings and Loan  Association  to stock form (the
               "Closing Date").

          10)  Prepayment: Voluntary prepayments are permitted at any time.

          11)  Conditions  Precedent  to Closing:  Receipt by the Company of all
               supporting loan documents in a form and with terms and conditions
               satisfactory to the Company and its counsel.  Consummation of the
               transaction  will also be  contingent  upon no  material  adverse
               change  occurring in the  condition of The Michigan  City Savings
               and Loan Association of City Savings Financial Corporation.

          12)  Closing Date:  Not later than the Closing Date,  unless such date
               is waived by City Savings Financial Corporation.

     If the terms and  conditions  are  agreeable to you,  please  indicate your
acceptance by signing the enclosed copy and returning it to my attention.

                                   Sincerely,

                                   CITY SAVINGS FINANCIAL CORPORATION


                                   By:
                                      -------------------------------
                                      Thomas F. Swirski

Accepted on behalf of City Savings Financial Corporation
Employee Stock Ownership Plan and Trust


By: Home Federal Savings Bank, as Trustee


----------------------------------------
Trust Officer



<PAGE>


















                    EXEMPT LOAN AND SHARE PURCHASE AGREEMENT



                                     between




                                   TRUST UNDER
                       CITY SAVINGS FINANCIAL CORPORATION
                 EXEMPT STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
                        (EFFECTIVE AS OF JANUARY 1, 2001)

                                       and



                       CITY SAVINGS FINANCIAL CORPORATION





<PAGE>






                                TABLE OF CONTENTS
                                                                           Page

ARTICLE I             DEFINITIONS AND INTERPRETATION.........................-2-
         Section 1.1. General Interpretation.................................-2-
         Section 1.2. Certain Definitions....................................-2-

ARTICLE II            TRUST LOAN; TRUST NOTE; PAYMENTS.......................-2-
         Section 2.1. Trust Loan.............................................-2-
         Section 2.2. Use of Trust Loan Proceeds.............................-3-
         Section 2.3. Trust Note.............................................-3-
         Section 2.4. Interest...............................................-3-
         Section 2.5. Payments...............................................-3-
         Section 2.6. Optional Prepayment....................................-3-
         Section 2.7. Place and Time of Payment..............................-4-
         Section 2.8. Application of Certain Payments........................-4-
         Section 2.9. Due Date Extension.....................................-4-
         Section 2.10.Computations...........................................-4-
         Section 2.11.Interest on Overdue Amounts............................-4-

ARTICLE III           SECURITY...............................................-5-
         Section 3.1. Security...............................................-5-
         Section 3.2. Release of Shares......................................-5-

ARTICLE IV            REPRESENTATIONS, WARRANTIES AND COVENANTS..............-5-
         Section 4.1. Representations and Warranties of Trustee..............-5-
         Section 4.2. Representations and Warranties of Company..............-6-
         Section 4.3. Covenants of Company...................................-7-

ARTICLE V             CONDITIONS PRECEDENT...................................-8-
         Section 5.1. Documentation Satisfactory to Company..................-8-
         Section 5.2. Other Conditions Precedent to Company Obligations......-8-
         Section 5.3. Documentation Satisfactory to Trustee..................-9-
         Section 5.4. Other Conditions Precedent to Trustee's Obligation.....-9-

ARTICLE VI            EVENTS OF DEFAULT AND THEIR EFFECT.....................-9-
         Section 6.1. Events of Default; Effect..............................-9-

ARTICLE VII           SHARE PURCHASES.......................................-10-
         Section 7.1. Purchase of Shares....................................-10-
         Section 7.2. Manner of Purchase....................................-10-
         Section 7.3. Readily Tradeable.....................................-10-
         Section 7.4. No Prohibited Transactions............................-10-
         Section 7.5. Maximum Number of Shares..............................-10-

ARTICLE VIII          GENERAL...............................................-10-
         Section 8.1. Waivers; Amendments...................................-10-
         Section 8.2. Confirmations; Information............................-10-
         Section 8.3. Captions..............................................-11-
         Section 8.4. Governing Law.........................................-11-
         Section 8.5. Notices...............................................-11-
         Section 8.6. Expenses..............................................-11-
         Section 8.7. Reimbursement.........................................-11-
         Section 8.8. Entire Agreement......................................-11-
         Section 8.9. Severability..........................................-11-
         Section 8.10.No Assignment.........................................-12-
         Section 8.11.Counterparts..........................................-12-

ARTICLE IX            LIMITED RECOURSE......................................-12-
         Section 9.1. Limited Recourse......................................-12-
         Section 9.2. No Personal Recourse Against Trustee..................-12-

Exhibit A             TRUST NOTE............................................-14-
Exhibit B             SHARE PLEDGE AGREEMENT.................................-1-
Exhibit C             CERTIFICATE OF TRUSTEE................................-10-
Exhibit D             CERTIFICATE OF THE COMPANY............................-11-




<PAGE>

                    EXEMPT LOAN AND SHARE PURCHASE AGREEMENT


     THIS EXEMPT LOAN AND SHARE PURCHASE  AGREEMENT  (this  "Agreement" or "Loan
Agreement"),   dated  December  ___,  2001,  between  the  Trust  (the  "Trust")
established pursuant to the provisions of the CITY SAVINGS FINANCIAL CORPORATION
EMPLOYEE STOCK  OWNERSHIP PLAN AND TRUST  AGREEMENT  (EFFECTIVE AS OF JANUARY 1,
2001) (the "ESOP") by Home Federal Savings Bank, as Trustee (the "Trustee"), and
City Savings Financial Corporation, an Indiana corporation (the "Company").

                              W I T N E S S E T H:

     WHEREAS, the Company has duly established the ESOP in connection with which
the Trust has been created;

     WHEREAS,  pursuant to the ESOP and  direction  of the  Company  pursuant to
Section 8.7 of the ESOP,  the Trust desires to borrow from the Company,  and the
Company desires to lend to the Trust, an aggregate  principal amount equal to up
to Four Hundred Forty-Four  Thousand Three Hundred Sixty Dollars ($444,360) (the
"Trust  Loan"),  representing  the cost of 8% of the  shares  of  Common  Stock,
without  par  value,  of  the  Company  (the  "Common  Stock"),  offered  in the
Subscription  Offering and the Community  Offering of the Company's Common Stock
being made in connection  with the Company's  acquisition of the common stock of
The  Michigan  City  Savings  and  Loan  Association  (the  "Association")  upon
conversion  of  the  Association  from  an  Indiana  mutual  building  and  loan
association to an Indiana stock savings association (the "Conversion");

     WHEREAS,  the  parties  hereto  intend  that the Trust Loan  constitute  an
"exempt  loan" within the meaning of Section  4975(d)(3)  of the Code,  Treasury
Regulation ss. 54.4975-7(b), Section 408(b)(3) of ERISA, and Department of Labor
Regulation  ss.  2550.408b-3  (collectively,  the  "Exempt  Loan  Rules") and an
"Exempt Loan" within the meaning of Sections 1.20 and 8.7 of the ESOP;

     WHEREAS,  the parties  intend that the Trustee  will utilize the Trust Loan
for  the  purpose  of  effecting  purchases  in the  Subscription  Offering  and
Community  Offering  (collectively,  the  "Offering")  or otherwise of shares of
Company Common Stock, without par value ("Shares"),  to be held in the Trust for
participants in the ESOP.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
and agreements herein contained and other good and valuable  consideration  (the
receipt,  adequacy  and  sufficiency  of which  each party  hereto  respectively
acknowledges by its execution  hereof),  the parties hereto intending legally to
be bound do hereby agree as follows:



<PAGE>

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

     Section 1.1.General  Interpretation . This Agreement shall be construed and
interpreted  so as to maintain  the status of the ESOP as a qualified  leveraged
employee stock  ownership plan under Sections 401(a) and 4975(e)(7) of the Code,
the Trust as exempt from  taxation  under  Section  501(a) of the Code,  and the
Trust Loan as an "exempt  loan" under the Exempt  Loan Rules,  and as an "Exempt
Loan" under Section 8.7 of the ESOP (collectively, the "Required Status").

     Section  1.2.Certain  Definitions  . In  this  Agreement,  unless  a  clear
contrary  intention  appears,  the  terms  set forth  below  have the  following
meanings when used herein. Other terms are defined elsewhere herein.

               (a) "Business Day" means a day, other than a Saturday,  Sunday or
          public holiday,  on which  commercial banks are open in Michigan City,
          Indiana for the purpose of conducting commercial banking business.

               (b) "Code" means the Internal  Revenue Code of 1986,  as amended,
          and regulations promulgated thereunder.

               (c) "Default" means an event or circumstance  which,  with notice
          or lapse of time or both,  would  constitute  an Event of  Default  as
          defined in Section 6.1.

               (d) "ERISA" means the Employee  Retirement Income Security Act of
          1974, as amended, and regulations promulgated thereunder.

               (e) "Loan  Documents" shall mean,  collectively,  this Agreement,
          the Trust Note, the Share Pledge  Agreement and any other  instruments
          or documents required to be delivered  pursuant hereto or thereto,  in
          each case as amended and in effect from time to time.

                                   ARTICLE II
                        TRUST LOAN; TRUST NOTE; PAYMENTS

     Section  2.1.Trust  Loan .  Subject  to the  terms and  conditions  of this
Agreement,  the Company agrees to make available to the Trust, and the Trust may
borrow from the Company,  on the Closing Date (hereinafter  defined),  the Trust
Loan under this  Agreement in an amount up to Four Hundred  Forty-Four  Thousand
Three Hundred Sixty Dollars ($444,360) representing the cost of 8% of the Shares
offered in the Offering,  valued at $10.00 per share.  The Company  shall,  upon
fulfillment of the applicable  conditions set forth in Article V, on the Closing
Date  make  the  Trust  Loan up to  such  amount  available  to the  Trustee  in
immediately  available  funds,  at its  principal  office.  Notwithstanding  the
foregoing,  the Company  shall not be obligated to make any portion of the Trust
Loan available to the Trust if the Conversion is not consummated, or if the ESOP
is not permitted to purchase any shares  because of an  oversubscription  in the
first  category  of  eligible  subscribers.  The  Closing of the Trust Loan (the
"Closing")  will occur at the offices of Barnes & Thornburg,  11 South  Meridian
Street,  Indianapolis,  Indiana  46204,  on the same  date  that the  Conversion
closes, or such later date as the parties shall agree upon (the "Closing Date").

     Section 2.2.Use of Trust Loan Proceeds . The Trust will use the proceeds of
the Trust Loan to purchase  Shares in the Offering,  in accordance  with Article
VII hereof.

     Section 2.3.Trust Note . The Trust Loan will be represented by a promissory
note of the Trust (the  "Trust  Note"),  substantially  in the form of Exhibit A
hereto, appropriately completed, dated the Closing Date, payable to the order of
the  Company in the  original  principal  amount of the Trust  Loan,  or so much
thereof as may at any time have been advanced  hereunder and thereunder,  on the
maturity date thereof.

     Section 2.4.Interest . The portion of the Trust Loan principal  outstanding
at any time shall accrue and bear daily interest at a fixed rate per annum equal
to the prime rate as published in "The Wall Street  Journal" on the Closing Date
(the "Interest  Rate"),  payable annually in accordance with Section 2.5. On any
stated or accelerated maturity of the Trust Loan all accrued and unpaid interest
thereon shall be forthwith due and payable.

     Section  2.5.Payments  . The Trust  shall pay the  principal  amount of the
Trust Loan together with accrued interest as follows:

               (a) an initial  principal  installment of one twentieth (1/15) of
          the  initial  principal  amount  of the Trust  Loan,  shall be due and
          payable on December 31, 2002,  together  with all interest  accrued on
          the Trust Loan from the Closing  Date through and  including  December
          31, 2002; and

               (b) thereafter,  payments of principal and interest shall be made
          in annual  installments  due and payable on the last  business  day of
          December of each year,  commencing  on December 31, 2003,  through and
          including December 31, 2016, which annual installments shall include a
          principal  payment  in the  amount  of one  twentieth  of the  initial
          principal  amount of the Trust Loan, plus all interest  accrued on the
          Trust Loan through and including the date of such payment.

The  outstanding  principal  of the Trust  Loan,  together  with all accrued and
unpaid interest and any other obligations then outstanding, will in any event be
due and payable in full on December 31, 2016.

     Section 2.6.Optional Prepayment .

               (a) Upon  compliance  with this Section  2.6,  the Trust,  at its
          option,  may  prepay the Trust Note at any time and from time to time,
          either in whole or in part, by payment of the principal  amount of the
          Trust Note or  portion  thereof to be  prepaid  and  accrued  interest
          thereon to the date of such prepayment.

               (b) The Trustee will give notice of any  prepayment  of the Trust
          Note  pursuant to this Section 2.6 to the Company not less than 3 days
          nor  more  than 60 days  before  the  date  fixed  for  such  optional
          prepayment  specifying  (i) such date,  (ii) that  prepayment is to be
          made under Section 2.6 of this Agreement,  (iii) the principal  amount
          of the  Trust  Note to be  prepaid  on such  date,  and  (iv)  accrued
          interest applicable to the prepayment. Such notice of prepayment shall
          be signed by the Trustee.  Notice of prepayment  having been so given,
          the  aggregate  principal  amount of the Trust Note  specified in such
          notice,  together with accrued  interest  thereon shall become due and
          payable on the prepayment date.

               (c) Partial  prepayments  of the Trust Note made pursuant to this
          Section 2.6 shall be credited in each case against remaining scheduled
          payments  on the Trust Note in the  inverse  order of the due dates of
          such payments.

               (d) No such  prepayment  shall,  however,  be  permitted  if such
          prepayment would adversely affect the Required Status.

     Section  2.7.Place  and Time of Payment . All payments of principal  of, or
interest  on, the Trust  Note shall be made by the Trust to the  Company in same
day funds at Michigan City, Indiana,  not later than 11:00 a.m. on the date due.
Funds received after that hour shall be deemed to have been received on the next
following Business Day.

     Section 2.8.Application of Certain Payments . If, and to the extent, Shares
acquired  with  proceeds  of the  Trust  Loan,  held  in the  Trust  and not yet
allocated to participant accounts are sold, then, to the extent allowable by the
Exempt Loan Rules and applicable law, the Trustee,  at the direction of the ESOP
Committee  administering  the ESOP (the  "Committee"),  may  apply the  proceeds
thereof  toward  the  repayment  of the  Trust  Loan.  Dividends  or other  cash
distributions  paid on the Shares  purchased with the proceeds of the Trust Loan
(whether or not allocated to the accounts of Participants)  shall be used by the
Trustee, at the discretion of the Committee,  to the extent permissible to repay
the Trust Loan in accordance with the provisions of Section 4.5 of the ESOP.

     Section  2.9.Due  Date  Extension  . If any  payment  of  principal  of, or
interest on, the Trust Note falls due on a day that is not a Business  Day, then
such due  date  shall  be  extended  to the next  following  Business  Day,  and
additional  interest  shall  accrue  and be  payable  for  the  period  of  such
extension.


     Section  2.10.Computations . All computations of interest on the Trust Loan
and other amounts due hereunder shall be based on a year of 360 days, comprising
twelve 30-day months.

     Section  2.11.Interest on Overdue Amounts . If any payment of principal of,
or interest  on, the Trust Note is not made when due,  interest  shall accrue on
the amount  thereof,  commencing on such due date through the date on which such
amount is paid in full,  at a rate per annum equal to the Interest Rate plus two
percent (2%).

                                   ARTICLE III
                                    SECURITY

     Section  3.1.Security  . Payment of the Trust Note and  performance  by the
Trust of its obligations under this Agreement and the Trust Note will be secured
by a pledge  of,  and the grant of a  security  interest  in,  the Shares by the
Trustee  on  behalf of the  Trust to and in favor of the  Company  under a Share
Pledge  Agreement,  substantially  in the form of Exhibit B hereto  (the  "Share
Pledge Agreement").

     Section  3.2.Release  of Shares .  Notwithstanding  any  provision  of this
Agreement  or the Share Pledge  Agreement to the contrary  contained or implied,
the Company will release from the pledge and security  interest  under the Share
Pledge Agreement,  such Shares as must be allocated to ESOP  participants  under
the ESOP pursuant to Section  8.7(h) of the ESOP and  otherwise  under the Code,
the Exempt Loan Rules or other  applicable law,  provided that Section 8.7(h) of
the ESOP shall not be amended without the Trustee's prior consent.

                                   ARTICLE IV
                    REPRESENTATIONS, WARRANTIESAND COVENANTS

     Section  4.1.Representations  and  Warranties  of  Trustee . To induce  the
Company  to  enter  this  Agreement  and to make the  Trust  Loan,  the  Trustee
represents and warrants to the Company as follows:

               (a) The Trustee has  determined  that the Trust Loan is primarily
          for the benefit of ESOP participants and their beneficiaries and bears
          interest  at a rate not in  excess of a  reasonable  rate and that the
          terms of the loan are at least as  favorable to the Trust and the ESOP
          participants  as  the  terms  of  a  comparable  loan  resulting  from
          arm's-length negotiations between completely independent parties;

               (b)  The  Trustee  is  a  federal  savings  Association,  legally
          existing and in good standing  under federal law, has corporate  power
          and  authority  and is duly  authorized  to enter into and perform the
          Trust;

               (c) The Trustee has full right,  power and  authority to execute,
          deliver and perform on behalf of the Trust under the Trust  Agreement,
          the  ESOP  and  otherwise  the  obligations  set  forth  in  the  Loan
          Documents,  and the execution and performance of such obligations will
          not  conflict  with or  result in a breach of the terms of the ESOP or
          the Trust or result in a breach or violation of the Trustee's Articles
          of Association or By-Laws or of any law or  regulation,  order,  writ,
          injunction or decree of any court or governmental authority binding on
          the Trust or Trustee;

               (d) The ESOP (and related Trust) has been duly  authorized by all
          necessary  corporate  action on the part of the  Trustee,  if any, has
          been  duly  executed  by an  authorized  officer  of the  Trustee  and
          delivered and constitutes a legal, valid and binding obligation of the
          Trustee and  declaration of trust  enforceable in accordance  with its
          terms;

               (e) The Loan  Documents have been duly  authorized,  executed and
          delivered  by the  Trustee  and  constitute  legal,  valid and binding
          obligations,  contracts and agreements of the Trustee on behalf of the
          Trust, enforceable in accordance with their respective terms;

               (f) The execution, delivery and performance of the Loan Documents
          do not conflict  with,  or result in the creation or imposition of any
          lien or  encumbrance  upon any of the  property of the Trustee  (other
          than  the  Collateral,  as  defined  in the  Share  Pledge  Agreement)
          pursuant  to the  provisions  of the ESOP (and  related  Trust) or any
          other agreement or other instrument to which the Trustee is a party or
          may be bound; and

               (g) No approval,  consent or withholding of objection on the part
          of, or filing,  registration or  qualification  with, any governmental
          body,  Federal,  state or local,  is necessary in connection  with the
          execution,  delivery  and  performance  by the  Trustee  of  the  Loan
          Documents.

     Section 4.2.Representations and Warranties of Company . To induce the Trust
to enter this  Agreement and undertake the  obligations  hereunder,  the Company
represents and warrants to the Trust as follows:

               (a) The  Company is a  corporation  duly  organized  and  validly
          existing under the laws of the State of Indiana,  has corporate  power
          and  authority  and is duly  authorized  to enter into and perform its
          obligations under this Agreement;

               (b) Neither the execution and delivery of this Agreement, nor the
          performance of the terms hereof nor the  establishment  of the ESOP or
          the Trust  violates,  conflicts  with or  constitutes  a default under
          Company's  Articles  of  Incorporation  or  By-Laws  or  any  material
          agreement  to which the  Company is a party or by which the Company or
          any of its assets is bound, or violates any law, regulation,  order or
          decree of any court,  arbitration or governmental authority applicable
          to the  Company,  in any manner  that  would  have a material  adverse
          effect on the Trust, the ESOP, the Required Status or the Company;

               (c) The  Company  and the  Association  have  taken  all  actions
          required  to be taken  by it to  establish  the  ESOP and the  related
          Trust.  The ESOP and  related  Trust are  intended  to,  and the terms
          thereof  have  been  drafted  with the  purpose  to,  comply  with the
          requirements of Sections 401(a) and 501(a) of the Code, as applicable,
          with the  requirements  for  treatment as a leveraged  employee  stock
          ownership  plan, as that term is defined in Section  4975(e)(7) of the
          Code, and with other applicable laws;

               (d) The  Association has duly appointed the Trustee as trustee of
          the Trust and the Committee under the ESOP;

               (e) The Company has  delivered to Trustee  copies of its Articles
          of  Incorporation  and its By-Laws,  the ESOP, and  resolutions of its
          Board of  Directors  with  respect to approval of this  Agreement  and
          entering  into of the  transactions  and  execution  of all  documents
          contemplated  by  this  Agreement,  in  each  case  certified  by  the
          Secretary of the Company, which copies are true, correct and complete.
          None of such documents or resolutions  has been amended or modified in
          any respect and such  documents and  resolutions  remain in full force
          and in effect, in the form previously delivered to the Trustee;

               (f) Other than the Common Stock, the Company has no other classes
          of shares outstanding or treasury shares.

               (g)  The  Company's  ability  to  honor  put  options  (the  "Put
          Options"),  which would  obligate the Company to repurchase  shares of
          Common Stock  distributed  from time to time to ESOP  participants and
          beneficiaries  under  Section  6.13  of the  ESOP,  is  not  presently
          restricted by the  provisions of any law, rule or regulation in effect
          on  the  date  hereof  (except  for  capital,   liquidation   account,
          requirements to obtain regulatory approval of repurchase transactions,
          and similar constraints  imposed by regulatory  authorities on savings
          associations)  or by  the  terms  of  any  loan,  financing  or  other
          agreement  or  instrument  to which the Company is a party or by which
          the Company is or may be bound.

               (h) There are no actions,  proceedings, or investigations pending
          or, to the Company's  knowledge,  threatened  against or affecting the
          Company or any of its property or rights at law or in equity or before
          or by any  court or  tribunal  that  have not  been  disclosed  to the
          Trustee  and may have a  material  adverse  effect on the value of the
          Common Stock.

               (i) All employee plans of the  Association and the Company are in
          compliance,  in all material respects,  with all applicable reporting,
          disclosure  and filing  requirements  pertaining  to employee  benefit
          plans set forth in the Code and ERISA.

               (j) No consent,  approval or other authorization or notice to any
          governmental authority or expiration of any government-imposed waiting
          period is required in  connection  with the  execution  or delivery of
          this  Agreement,  except such as has been obtained,  given or expired.
          (k)  The  shares  of  Common  Stock  constitute  "qualifying  employer
          securities" within the meaning of Section 409(l) of the Code.

     Section 4.3.Covenants of Company . The Company covenants that:

               (a) The  Company  shall  submit or cause to be  submitted  to the
          Internal Revenue Service within ninety (90) days following the Closing
          Date an application  for a  determination  letter  confirming that the
          ESOP,  effective  as of  January 1, 2001,  and the  related  Trust are
          qualified and exempt from taxation under  Sections  401(a) and 501(a),
          respectively,  of the Code and that the ESOP meets the requirements of
          Section 4975(e)(7) of the Code.

               (b) The  Company  and the  Association  shall  make  all  changes
          reasonably requested by the Internal Revenue Service as a condition of
          obtaining a  determination  letter from the Internal  Revenue  Service
          with respect to the ESOP,  effective  January 1, 2001. The Company and
          the Association shall continue to do all things necessary to cause the
          ESOP and the Trust at all times to be operated and  administered  such
          that the ESOP remains  qualified  under Section  401(a) and remains an
          employee stock ownership plan under Section 4975(e)(7) of the Code and
          the Trust remains tax-exempt under Section 501(a) of the Code.

               (c) If at any time the ESOP is required, by applicable law, court
          order, or otherwise,  to make  distributions  of Shares that otherwise
          would be in violation of Federal or state securities laws, the Company
          shall take all actions necessary to permit such required distributions
          to be made in full compliance with such laws.

               (d) The  Company  shall  honor  the Put  Options  if,  and to the
          extent,  required  by  Section  409(h)  of the  Code  and  regulations
          thereunder,  and shall not permit its ability to honor such Options to
          be materially restricted in any way.

               (e) The Company or the  Association  shall provide to the Trustee
          all governmental  filings relating to the ESOP and all ESOP amendments
          within  sixty days of the date on which such  filing or  amendment  is
          effected,  and, on an annual basis,  shall provide complete  financial
          statements of the ESOP and the Company.

                                    ARTICLE V
                              CONDITIONS PRECEDENT

               Section   5.1.Documentation   Satisfactory   to   Company  .  The
          obligation  of the  Company to make the Trust Loan is, in  addition to
          the  conditions  precedent  contained in Section  5.2,  subject to the
          condition  precedent  that the Company shall have received each of the
          following,  duly  executed  and dated as of the Closing  Date (or such
          earlier date as shall be  satisfactory to the Company) and in form and
          substance satisfactory to the Company:

               (a) the Trust Note;

               (b) the Share Pledge Agreement; and

               (c) a certificate  of the Trustee,  substantially  in the form of
          Exhibit C hereto,  with such changes thereto as shall be acceptable to
          the Company and its counsel, and with respect to such other matters as
          the Company may reasonably request.

     Section 5.2.Other Conditions Precedent to Company Obligations . In addition
to the  condition  precedent  contained in Section 5.1,  the  obligation  of the
Company to make the Trust Loan available is subject to the conditions  precedent
that (i) the Conversion is consummated,  (ii) the representations and warranties
made by the Trustee herein shall be true and correct in all material respects on
the Closing  Date as if made on and as of the Closing  Date;  and (iii) the ESOP
shall be permitted to purchase Shares in the Conversion.

     Section  5.3.Documentation  Satisfactory to Trustee . The obligation of the
Trust to enter into the Trust Loan is subject to the  condition  precedent  that
the Trustee shall have received each of the  following,  duly executed and dated
as of the  Closing  Date (or such  earlier  date as  shall  be  satisfactory  to
Trustee) and in form and substance satisfactory to Trustee:

               (a) The Share Pledge Agreement; and

               (b) A certificate  of the Company,  substantially  in the form of
          Exhibit D hereto,  with such changes thereto as shall be acceptable to
          the Trustee and its counsel, and with respect to such other matters as
          the Trustee may reasonably request.

     Section  5.4.Other  Conditions  Precedent  to  Trustees  Obligation  .  The
obligation  of the  Trustee  to enter  into the  Trust  Loan is  subject  to the
conditions   precedent  that  (i)  the  Conversion  is  consummated,   (ii)  the
representations  and  warranties  made by the Company  herein  shall be true and
correct in all material respects on the Closing Date as if made on and as of the
Closing Date, and (iii) no injunction or restraining order shall be in effect or
litigation  pending or  threatened to forbid or enjoin the  consummation  of the
transaction contemplated by this Agreement.

                                   ARTICLE VI
                       EVENTS OF DEFAULT AND THEIR EFFECT

     Section 6.1.Events of Default;  Effect . If default in the payment when due
of any  principal  of, or default  (and  continuance  thereof for 5 days) in the
payment when due of interest on, the Trust Note (an "Event of Default")  occurs,
unless the effect  thereof as an Event of Default  has been waived in writing by
the Company,  then the Company may declare the Trust Note to be due and payable,
whereupon  the Trust Note shall  become  immediately  due and  payable,  without
presentment,  demand,  protest  or notice  to the  Trust or other  action by the
Company of any kind whatsoever,  all of which actions the Trust hereby waives to
the maximum extent permitted by law.

     The Company shall promptly  advise the Trust of any declaration of default,
but  failure  to do so or delay in doing so shall not  impair the effect of such
declaration.  Notwithstanding  anything to the  contrary  herein or in the Trust
Note or the Share Pledge Agreement  contained or implied,  if a Default or Event
of Default  occurs  with  respect  to the Trust Loan by the Trust,  the value of
Trust assets transferred in satisfaction  thereof shall not exceed the amount of
such default. In addition, such a transfer of such Trust assets shall only occur
upon and to the extent of the failure of the Trust to meet the payment  schedule
of the Trust Loan provided in Article II.

                                   ARTICLE VII
                                 SHARE PURCHASES

     Section  7.1.Purchase  of Shares . The  Company  is making  the Trust  Loan
available  to the Trustee  for the  purpose of allowing  the Trustee to purchase
Shares in the Conversion.  To the extent the ESOP is permitted to purchase up to
44,436 Shares in the  Conversion,  the Trustee agrees to use all of the proceeds
of the Trust Loan to purchase Shares in accordance with this Article VII.

     Section  7.2.Manner  of Purchase . The Trustee  shall  timely  subscribe to
purchase the Shares the ESOP is permitted to purchase in the Conversion pursuant
to the Association's  Plan of Conversion.  The Trustee shall draw upon the Trust
Loan and use the proceeds  thereof to purchase the number of Shares the ESOP may
purchase in the Offering, simultaneously with consummation of the Conversion.

     Section  7.3.Readily  Tradeable  . The  Company  agrees  to use  reasonable
efforts  to cause the  Shares to be,  and to  maintain  the  Shares'  status as,
"readily  tradeable on an established  securities  market" within the meaning of
Section 409(l)(1) of the Code.

     Section 7.4.No Prohibited  Transactions . The Trustee in the performance of
its obligations  under this Agreement,  shall observe its fiduciary  obligations
under Section 404 of ERISA,  shall not engage in any  transaction  prohibited by
ERISA or contrary to such fiduciary obligations, and, in acquiring Shares, shall
not  (and  shall  not  be  deemed   obligated   to)  pay  more  than   "adequate
consideration", as defined in Section 3(18) of ERISA.

     Section  7.5.Maximum Number of Shares . The Trust shall not purchase Shares
with proceeds of the Trust Loan in excess of 44,436 Shares.

                                  ARTICLE VIII
                                    GENERAL

     Section  8.1.Waivers;  Amendments . No delay on the part of the Company, or
the holder of the Trust Note in the exercise of any right, power or remedy shall
operate as a waiver thereof,  nor shall any single or partial exercise by any of
them of any right,  power or remedy preclude other or further exercise  thereof,
or the exercise of any other right, power or remedy. No amendment,  modification
or waiver of, or consent with respect to, any provision of this  Agreement,  the
Trust Note or the Share Pledge  Agreement shall in any event be effective unless
the same shall be in writing  and signed and  delivered  by the Company and then
any such amendment,  modification,  waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.



<PAGE>

     Section  8.2.Confirmations;  Information  . The  Company  and the Trust (or
holder of the Trust Note) agree from time to time, upon written request received
by it from the other,  to confirm to the other in writing the  aggregate  unpaid
principal  balance then outstanding  under the Trust Note and such other matters
relating to the Trust Loan, the Trust, the ESOP or the purchase of Shares as may
reasonably be the subject of inquiry.

     Section  8.3.Captions  . Section  captions  used in this  Agreement are for
convenience only, and shall not affect the construction of this Agreement.

     Section  8.4.Governing  Law . To the extent not  preempted  by ERISA,  this
Agreement  and the Trust Note shall be a contract made under and governed by the
laws of the State of Indiana, without regard to conflict of laws principles. All
obligations of the Trust and rights of the Company and other holder of the Trust
Note  expressed  herein or in such Trust Note shall be in addition to and not in
limitation of those provided by law.

     Section  8.5.Notices . All communications and notices hereunder shall be in
writing  and shall be deemed to be given when sent by  registered  or  certified
mail,  postage  prepaid,  return  receipt  requested,  or  by  telecopier,  duly
confirmed, and addressed to such party at the address indicated below or to such
other  address as such party may  designate in writing  pursuant to this Section
8.5.

                            City Savings Financial Corporation
                            2000 Franklin Street
                            Michigan City, Indiana   46360-4599
                            Attention: Thomas F. Swirski, President

                            Home Federal Savings Association
                            501 Washington Street
                            Columbus, Indiana 47201
                            Attention: David L. Fisher

     Section 8.6.Expenses . All expenses of the transaction contemplated by this
Agreement shall be paid by the Company.

     Section  8.7.Reimbursement  . If the Trustee uses  proceeds  from the Trust
Loan to purchase  Common Stock directly from the Company and it is  subsequently
determined by a court of competent  jurisdiction that the Trustee paid in excess
of "adequate  consideration"  within the meaning of ERISA for such  shares,  the
Company  shall,  as soon as practicable  following such judgment,  reimburse the
Trustee for the amount of the excess payment.

     Section  8.8.Entire  Agreement  . This  Agreement  constitutes  the  entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties.

     Section  8.9.Severability  . Should any clause,  paragraph  or part of this
Agreement  be held or declared  to be void or illegal for any reason,  all other
clauses,  paragraphs or parts of this  Agreement  which can be affected  without
such illegal clause,  paragraph or part shall nevertheless  remain in full force
and effect.

     Section  8.10.No  Assignment . This  Agreement and the  obligations  of the
parties herein may not be assigned or assumed by any other parties.


<PAGE>


     Section  8.11.Counterparts  . This Agreement may be executed in two or more
counterparts,  each of which shall be deemed an  original,  but all of which put
together shall constitute one and the same instrument.

                                   ARTICLE IX
                                LIMITED RECOURSE

     Section  9.1.Limited  Recourse .  Notwithstanding  anything to the contrary
herein or in the Trust Note, the Share Pledge Agreement or any other instrument,
agreement or document  contained or implied,  the obligations of the Trust under
this Agreement, the Trust Note and the Share Pledge Agreement (collectively, the
"Trust Loan  Obligations")  shall be enforceable to the extent  permitted  under
law,  including  (without  limitation)  the Exempt Loan Rules,  only against the
Trust to the extent of the Collateral (as defined in the Share Pledge Agreement)
not theretofore  released from the pledge and security  interest under the Share
Pledge Agreement as provided in Section 3.2 and contributions and other payments
(other  than  contributions  of  employer  securities)  made  to  the  Trust  in
accordance  with the ESOP to enable the Trust to pay and  satisfy the Trust Loan
Obligations and from earnings  attributable  to the Shares  purchased with Trust
Loan   proceeds  and  the   investment  of  such   contributions   and  payments
(collectively,  the "Trust Loan  Collateral").  No  recourse  shall be had to or
against the Trust or the assets thereof  (other than the Trust Loan  Collateral)
for any  deficiency  judgment  against  the Trust for the  purpose of  obtaining
payment or other satisfaction of the Trust Loan Obligations.

     Section 9.2.No Personal  Recourse  Against  Trustee . Without  limiting the
provisions  of Section  9.1,  the  Trustee of the Trust  shall have no  personal
liability for any of the Trust Loan Obligations.




<PAGE>



     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed  and  delivered  by their  respective  representatives  thereunto  duly
authorized as of the date first above written.

                            TRUST UNDER CITY SAVINGS FINANCIAL
                            CORPORATION EMPLOYEE STOCK OWNERSHIP
                            PLAN AND TRUST AGREEMENT

                            By: Home Federal Savings Association, Trustee


                            By:
                               -------------------------------------------------
                            Printed:  David L. Fisher
                                    --------------------------------------------

                            Its:   Senior Vice President & Trust Officer
                                ------------------------------------------------


                            CITY SAVINGS FINANCIAL CORPORATION


                            By:
                               -------------------------------------------------

                            Printed:   Thomas F. Swirski
                                    --------------------------------------------

                            Its:   President and Chief Executive Officer
                                ------------------------------------------------

<PAGE>

                                                                      Exhibit A

                                   TRUST NOTE


$___________      December ___, 2001
                                                          Due: December 31, 2016

     FOR VALUE RECEIVED,  the undersigned,  the Trust (the "Trust")  established
pursuant to the provisions of the CITY SAVINGS  FINANCIAL  CORPORATION  EMPLOYEE
STOCK OWNERSHIP PLAN AND TRUST  AGREEMENT,  DATED AND EFFECTIVE AS OF JANUARY 1,
2001 (the  "Plan") by HOME FEDERAL  SAVINGS  BANK,  as Trustee (the  "Trustee"),
promises to pay to the order of City Savings Financial  Corporation,  an Indiana
corporation   (together  with  its  successors,   endorsees  and  assigns,   the
"Company"),  at such place and in such other manner as the Company may direct in
writing,  and when required  pursuant to the  provisions of that certain  Exempt
Loan  and  Share  Purchase  Agreement,  dated  December  ___,  2001  (the  "Loan
Agreement"),  by and among the Trustee and the Company,  the principal amount of
____________________________  Dollars ($__________) or so much thereof as may be
advanced by the  Company to the Trust  hereunder  and under the Loan  Agreement,
said  amount  being due and  payable  together  with  accrued  interest  in such
installments  and at such  times as  provided  in the Loan  Agreement,  with the
entire unpaid principal balance due and payable with accrued interest in full on
December 31, 2016, as provided in the Loan Agreement.

     The  principal  balance  hereof  from time to time  outstanding  shall bear
interest from the date of each  disbursement of the Trust Loan evidenced by this
Trust Note through and including the date on which such principal amount is paid
in full, at the times provided in the Loan  Agreement,  at the Interest Rate, as
defined in the Loan Agreement which is _____________  percent (_____%) per annum
(or, in the case of overdue  principal and, to the extent  legally  enforceable,
overdue interest, at the Interest Rate plus two percent (2%) per annum).

     This Trust Note has been issued by the Trust in  accordance  with the terms
of the Loan  Agreement  to  evidence  the Trust Loan made by the  Company to the
Trust  under the Loan  Agreement,  to which  reference  is  hereby  made for the
statement of the terms thereof.  This Trust Note and the Company are entitled to
the benefits of the Loan Agreement and the Company may enforce the agreements of
the Trust  contained  therein and in the Loan  Documents,  and may  exercise the
respective  remedies  provided  for thereby or  otherwise  available  in respect
thereof,  all in accordance with the respective  terms thereof.  All capitalized
terms used in this Trust Note which are not  otherwise  defined  herein have the
respective meanings assigned to them in the Loan Agreement.

     The Trust has the right to prepay the  principal  amount of this Trust Note
without penalty on the terms and conditions specified in the Loan Agreement.

     If any Event of Default shall occur,  the entire unpaid principal amount of
this Trust Note and all of the accrued but unpaid interest thereon may become or
be due and  payable  in the  manner  and with the  effect  provided  in the Loan
Agreement.  The collection and enforcement of this Trust Note are subject to the
provisions and limitations of Section 9.1 of the Loan Agreement.

     To the extent not preempted by ERISA,  this Trust Note and the  obligations
of the Trust  hereunder  shall be  governed  by the laws of the State of Indiana
without regard to principles of conflict of laws.

     All  parties  to  this  Trust  Note,  including  endorsers,   sureties  and
guarantors,  if any, hereby waive presentment,  demand, protest,  notice, relief
from valuation and  appraisement  laws and any and all other notices and demands
in connection with the delivery, acceptance, performance and enforcement of this
Trust  Note and also  hereby  assent to  extensions  of the time of  payment  or
forbearance or other indulgences without notice, and agree to remain bound until
the principal,  premium, if any, and interest are paid in full,  notwithstanding
any extensions of time for payment which may be granted,  even though the period
or periods of extension may be indefinite,  and notwithstanding any inaction by,
or  failure to assert any legal  rights  available  to, the holder of this Trust
Note.

     IN WITNESS WHEREOF,  the Trust has caused this instrument to be executed by
the Trustee, the day and year first above written.

                                  TRUST UNDER CITY SAVINGS FINANCIAL
                                  CORPORATION EMPLOYEE STOCK OWNERSHIP
                                  PLAN AND TRUST AGREEMENT

                                  By:  Home Federal Savings Bank, Trustee


                                  By:
                                     ------------------------------------
                                        David L. Fisher, Senior Vice President
                                        and Trust Officer

<PAGE>


                                                                       Exhibit B




                             SHARE PLEDGE AGREEMENT



                                     between



                                   TRUST UNDER
                       CITY SAVINGS FINANCIAL CORPORATION
                    STOCK OWNERSHIP PLAN AND TRUST AGREEMENT


                                       and

                       CITY SAVINGS FINANCIAL CORPORATION

                           Dated: December ___, 2001

<PAGE>

                             SHARE PLEDGE AGREEMENT

     THIS SHARE PLEDGE AGREEMENT (this "Agreement" or "Share Pledge Agreement"),
dated as of December  ___,  2001,  between the Trust (the  "Trust")  established
pursuant to the provisions of the CITY SAVINGS  FINANCIAL  CORPORATION  EMPLOYEE
STOCK OWNERSHIP PLAN AND TRUST AGREEMENT  (EFFECTIVE AS OF JANUARY 1, 2001) (the
"Plan") by HOME FEDERAL SAVINGS BANK, as Trustee  ("Trustee"),  and City Savings
Financial Corporation, an Indiana corporation (the "Company").


                                   WITNESSETH:

     WHEREAS, contemporaneously herewith, the Trust and the Company have entered
into  that  certain  Exempt  Loan  and  Share  Purchase   Agreement  (the  "Loan
Agreement";  definitions  of terms  appearing  in which  have the same  meanings
herein,  unless a clear contrary intention  appears),  dated December ___, 2001,
pursuant to which the Company has agreed to lend to the Trust, and the Trust has
agreed to borrow from the Company,  the Trust Loan,  and the Trust,  to evidence
its indebtedness to the Company with respect to the Trust Loan, has executed and
delivered the Trust Note to the Company; and

     WHEREAS,  it is a condition  precedent to the  obligation of the Company to
make the Trust Loan that, among other things, the Trust execute and deliver this
Agreement to the Company,

     NOW,  THEREFORE,  in consideration of the Loan Agreement and the Trust Loan
and other good and valuable consideration (the receipt, adequacy and sufficiency
of which the Trust  acknowledges by its execution hereof, the Trust intending to
be legally bound does hereby covenant and agree with the Company as follows:

     Section 1. Pledge.  To secure the due and punctual  payment and performance
of the  obligations of the Trust  hereunder and under the Loan Agreement and the
Trust Note (collectively, the "Liabilities"), the Trustee on behalf of the Trust
hereby pledges,  hypothecates,  assigns,  transfers, sets over and delivers unto
the Company,  its successors  and assigns and hereby grants to the Company,  its
successors and assigns a security interest in:

          (a) all Shares of Company  Common  Stock  purchased or to be purchased
     with the proceeds of the Trust Loan  (collectively,  the "Pledged  Shares")
     and the certificates representing or evidencing the Pledged Shares, and, to
     the extent permitted by Section  4975(e)(7) of the Internal Revenue Code of
     1986, as amended, and Reg. ss. 54.4975-7(b)(5)  promulgated thereunder, all
     cash,  securities,  interest,  dividends,  rights and other property at any
     time and from time to time received in respect of or in exchange for any or
     all of the Pledged Shares; and

          (b) all proceeds of all of the foregoing

(all such Pledged Shares, certificates,  cash, securities,  interest, dividends,
rights and other property, and proceeds thereof, other than as released, sold or
otherwise  applied by the Company  pursuant to the' terms  hereof,  being herein
collectively  called  the  "Collateral"),  TO HAVE AND TO HOLD such  Collateral,
together  with  all  rights,  titles,  interests,   privileges  and  preferences
appertaining or incidental  thereto,  forever,  subject,  however, to the terms,
covenants and conditions hereafter set forth.

          Section 2. Warranties and Covenants.

          (a) The Trust  represents  and  warrants to the Company that the Trust
     is, or at the time of any future delivery,  pledge,  assignment or transfer
     will be, the lawful owner of the  Collateral,  free of all claims and liens
     other than the  security  interest  hereunder,  with full right to deliver,
     pledge,  assign and transfer the  Collateral  to the Company as  Collateral
     hereunder.

          (b) So long as any of the Liabilities  remain  outstanding,  the Trust
     will, unless the Company shall otherwise consent in writing:

               (i)   promptly   deliver  to  the  Company   from  time  to  time
          certificates  representing Pledged Shares as the Trustee acquires them
          and,  upon  request  of the  Company,  such  stock  powers  and  other
          documents,  satisfactory  in form and  substance to the Company,  with
          respect to the  Collateral  as the Company may  reasonably  request to
          preserve and protect, and to enable the Company to enforce, its rights
          and remedies hereunder;

               (ii) not create or suffer to exist any lien, security interest or
          other charge or encumbrance  against, in or with respect to any of the
          Collateral  except for the pledge hereunder and the security  interest
          created hereby;

               (iii) not make or consent to any amendment or other  modification
          or waiver  with  respect  to any of the  Collateral  or enter into any
          agreement  or permit to exist any  restriction  with respect to any of
          the Collateral other than pursuant hereto; and

               (iv)  not  take or fail to take  any  action  which  would in any
          manner impair the value or  enforceability  of the Company's  security
          interest in any of the Collateral.

     Section  3.  Care of  Collateral.  The  Company  shall  be  deemed  to have
exercised  reasonable  care with  respect  to the  interest  of the Trust in the
custody  and  preservation  of the  Collateral  if it takes such action for that
purpose as the Trust  shall  request  in writing or as it would with  respect to
similar  assets of its own,  but  failure of the Company to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care.

     Section 4. Certain Rights Regarding Collateral and Liabilities.

     (a) The Company may from time to time,  whether  before or after any of the
Liabilities  shall become due and payable,  without notice to the Trust,  to the
extent  otherwise  permitted  (i)  retain or obtain a security  interest  in the
Collateral,  to secure payment and performance of any of the  Liabilities,  (ii)
retain or obtain the primary or secondary  liability of any party or parties, in
addition to the Trust,  with respect to any of the Liabilities,  (iii) extend or
renew for any  period  (whether  or not  longer  than the  original  period)  or
exchange any of the  Liabilities  or release or compromise any obligation of any
nature of any  party  with  respect  thereto,  and (iv)  surrender,  release  or
exchange  all or any  part  of any  property,  in  addition  to the  Collateral,
securing  payment and  performance of any of the  Liabilities,  or compromise or
extend or renew for any period (whether or not longer than the original  period)
any obligations of any nature of any party with respect to any such property.

     (b) The Company shall have no right to vote the Pledged Shares prior to the
occurrence of an Event of Default  (hereinafter in Section 6(a) hereof defined).
After the  occurrence of an Event of Default,  the Trust shall have the right to
vote any and all of the Pledged  Shares in  accordance  with the Plan unless and
until it receives  notice from the Company  that such right has been  terminated
with respect to shares subject to execution as a result of the Default.

          Section 5. Dividends, etc.

     (a) So long as no Default or Event of Default,  shall have  occurred and be
continuing, the Trust shall be entitled to receive any and all cash dividends on
the Pledged  Shares which it is otherwise  entitled to receive,  and to vote the
Pledged  Shares in accordance  with the terms of the Plan and to give  consents,
waivers  and  ratifications  in respect of the Pledged  Shares,  but any and all
stock  and/or  liquidating  dividends,  distributions  in  property,  returns of
capital or other  distributions  made on or in respect  of the  Pledged  Shares,
whether  resulting from a subdivision,  combination or  reclassification  of the
outstanding  capital stock of any issuer thereof or received in exchange for the
Pledged Shares or any part thereof or as a result of any merger,  consolidation,
acquisition  or other  exchange  of assets to which any issuer may be a party or
otherwise,  and any and all cash and other property received in exchange for any
Collateral shall be, and become part of the Collateral pledged hereunder and, if
received  by the Trust,  shall  forthwith  be  delivered  to the  Company or its
designated  nominee  (accompanied,  if  appropriate,  by proper  instruments  of
assignment  and/or stock  powers  executed by the Trust in  accordance  with the
Company's  instructions)  to be held subject to the terms of this  Agreement and
the Plan.

     (b) Upon the occurrence and during the  continuance of an Event of Default,
subject to the terms of Section 4(b) hereof, all rights of the Trust pursuant to
Section  5(a)  hereof  shall  cease  and the  Company  shall  have  the sole and
exclusive  right and  authority  to receive and retain the  dividends  which the
Trust would  otherwise be authorized  to retain and, to the extent  permitted by
law, to vote and give consents,  waivers and  ratifications  pursuant to Section
5(a) hereof.  Any and all money and other  property  paid over to or received by
the Company  pursuant to the  provisions of this paragraph (b) shall be retained
by the Company as additional  Collateral  hereunder and be applied in accordance
with the provisions hereof.

          Section 6. Event of Default.

     (a) The  occurrence  of any of the following  shall  constitute an Event of
Default hereunder nonpayment, when due, whether by acceleration or otherwise, of
any amount payable on any of the Liabilities;  an Event of Default as defined in
the Loan Agreement; any representation or warranty of the Trust contained herein
or given pursuant  hereto being untrue in any material  respect;  or the Trust's
failure to perform any covenant or agreement contained herein.

     (b)  Upon  the  occurrence  of an Event of  Default,  (i) the  Company  may
exercise  from time to time any rights and  remedies  available  to it under the
Uniform  Commercial  Code as in effect from time to time in Indiana or otherwise
available  to it,  including,  but not limited to,  sale,  assignment,  or other
disposal of the  Pledged  Shares in  exchange  for cash or credit,  and (ii) the
Company  may,  without  demand or notice of any kind,  but subject to Section 7,
appropriate and apply toward the payment of such of the Liabilities, and in such
order of application,  as the Company may from time to time elect, any balances,
credits,  deposits,  accounts  or moneys of the Trust.  If any  notification  of
intended  disposition  of  any  of the  Collateral  is  required  by  law,  such
notification, if mailed, shall be deemed reasonably and properly given if mailed
at least five (5) days before such  disposition,  postage prepaid,  addressed to
the Trust,  either at the  address  of the Trust  shown  below,  or at any other
address of the Trust  appearing on the records of the  Company.  Any proceeds of
any disposition of Collateral  shall be applied as provided in Section 7 hereof.
All rights and remedies of the Company  expressed  hereunder  are in addition to
all other rights and remedies  possessed by it,  including those under any other
agreement or instrument relating to any of the Liabilities or security therefor.
No delay on the part of the Company in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Company of
any right or remedy  shall  preclude  other or further  exercise  thereof or the
exercise  of any other  right or  remedy.  No action  of the  Company  permitted
hereunder  shall  impair  or affect  the  rights  of the  Company  in and to the
Collateral.

     (c) The Trust agrees that in any sale of any of the Collateral  whenever an
Event of Default hereunder shall have occurred and be continuing, the Company is
hereby  authorized to comply with any  limitation or  restriction  in connection
with such sale as it may be advised by  counsel is  necessary  in order to avoid
any  violation  of law  (including,  without  limitation,  compliance  with such
procedures  as may restrict the number of  prospective  bidders and  purchasers,
require that such prospective bidders and purchasers have certain qualification,
and  restrict  such  prospective  bidders  and  purchasers  to persons  who will
represent  and  agree  that  they are  purchasing  for  their  own  account  for
investment  and  not  with  a  view  to  the  distribution  or  resale  of  such
Collateral),  or in order to obtain any required  approval of the sale or of the
purchaser by any governmental  regulatory  authority or official,  and the Trust
further  agrees  that  such  compliance  shall not  result  in such  sale  being
considered or deemed not to have been made in a commercially  reasonable manner,
nor shall the Company be liable nor  accountable  to the Trust for any  discount
allowed by the  reason of the fact that such  Collateral  is sold in  compliance
with any such limitation or restriction.

     (d) Notwithstanding anything to the contrary herein or in the Trust Note or
the Loan  Agreement  contained  or implied,  if an Event of Default  occurs with
respect to the Trust Loan by the Trust, the value of Trust assets transferred in
satisfaction  thereof shall not exceed the amount of such default.  In addition,
such a transfer of such Trust assets shall only occur upon, and to the extent of
the  failure  of,  the Trust to meet the  payment  schedule  of the  Trust  Loan
provided in Article II of the Loan Agreement.

     Section 7. Application of Proceeds of Sale or Cash Held as Collateral.  The
proceeds of sale of  Collateral  sold  pursuant to the terms of Section 6 hereof
and/or, after an Event of Default, the cash held as Collateral hereunder,  shall
be applied by the  Company,  to the  extent  permitted  by  applicable  law,  as
follows:

               First:  to  payment  of the  costs  and  expenses  of such  sale,
          including the out-of-pocket  costs and expenses of the Company and the
          reasonable  fees and  out-of-pocket  costs  and  expenses  of  counsel
          employed in connection  therewith,  and to the payment of all advances
          made by the  Company for the  account of the Trust  hereunder  and the
          payment  of  all  costs  and  expenses  incurred  by  the  Company  in
          connection with the  administration and enforcement of this Agreement,
          to the extent that such  advances,  costs and expenses  shall not have
          been reimbursed to the Company;

               Second: to the payment in full of the Liabilities; and

               Third: the balance, if any, of such proceeds shall be paid to the
          Trust,  its  successors  and  assigns,  or  as a  court  of  competent
          jurisdiction may direct.

     Section 8. Authority of Company.  The Company shall have and be entitled to
exercise all such powers hereunder as are specifically  delegated to the Company
by the terms hereof,  together with such powers as are incidental  thereto.  The
Company  may  execute  any of its  duties  hereunder  by or  through  agents  or
employees  and shall be entitled to retain  counsel and to act in reliance  upon
the advice of such  counsel  concerning  all  matters  pertaining  to its duties
hereunder.  Neither the Company,  nor any  director,  officer or employee of the
Company,  shall be liable for any  action  taken or omitted to be taken by it or
them  hereunder  or in  connection  herewith,  except for its or their own gross
negligence  or  wilful  misconduct.  The  Trust  hereby  agrees,  to the  extent
permitted by applicable law, to reimburse the Company,  on demand, for all costs
and expenses  incurred by the Company in connection with the enforcement of this
Agreement  (including  costs and expenses  incurred by any agent employed by the
Company).

     Section  9.  Termination.  This  Agreement  shall  terminate  when  all the
Liabilities have been fully paid and performed,  at which time the Company shall
reassign and redeliver (or cause to be reassigned and redelivered) to the Trust,
or to such person or persons as the Trust shall designate, against receipt, such
of the Collateral (if any) as shall not have been theretofore released,  sold or
otherwise applied by the Company pursuant to the terms hereof and shall still be
held by it hereunder,  together with any appropriate instruments of reassignment
and  release.   Any  such  reassignment  shall  be  without  recourse  upon,  or
representation or warranty by, the Company.

     Section 10. Required Release of Collateral.  Notwithstanding  any provision
of this Agreement or the Loan  Agreement to the contrary,  the Company from time
to time will  release  from the  pledge  and  security  interest  under the Loan
Agreement,  such Collateral as must be allocated to participants  under the Plan
pursuant to Section 8.7(h) of the Plan and otherwise  under the Code, the Exempt
Loan Rules or other applicable law.

     Section 11.  Limited  Recourse.  Notwithstanding  anything to the  contrary
herein  or in the  Trust  Note,  the Loan  Agreement  or any  other  instrument,
agreement or document contained or implied, the Liabilities shall be enforceable
to the extent permitted under applicable law, including, without limitation, the
Exempt Loan Rules,  only against the Trust to the extent of the  Collateral  not
theretofore  released from the pledge and security interest under this Agreement
as  provided  herein and  contributions  (other than  contributions  of employer
securities) made to the Trust in accordance with the Plan to enable the Trust to
pay and satisfy the Liabilities and from earnings attributable to the Shares and
the   investment  of  such   contributions   (collectively,   the  "`Trust  Loan
Collateral").  No  recourse  shall be had to or against  the Trust or the assets
thereof  (other  than the Trust Loan  Collateral)  for any  deficiency  judgment
against the Trust for the purpose of obtaining payment or other  satisfaction of
the Liabilities.  Without limiting the foregoing, the Trustee of the Trust shall
have no personal liability for any of the Liabilities, other than as required by
or arising under applicable law.

     Section 12. Notices.  All  communications and notices hereunder shall be in
writing and, if mailed,  shall be deemed to be given when sent by  registered or
certified mail,  postage prepaid,  return receipt  requested,  or by telecopier,
duly confirmed, and addressed to such party at the address indicated below or to
such other  address  as such party may  designate  in writing  pursuant  to this
Section 12.

                     CITY SAVINGS FINANCIAL CORPORATION
                     2000 Franklin Street
                     Michigan City, Indiana   46360-4599
                     Attention: Thomas F. Swirski, President

                     HOME FEDERAL SAVINGS BANK
                     501 Washington Street
                     Columbus, Indiana   47201
                     Attention: David L. Fisher


     Section 13. Binding Agreement  Assignment.  This Agreement,  and the terms,
covenants and conditions hereof,  shall be binding upon and inure to the benefit
of the parties hereto, and their respective  successors and assigns,  except the
Trust shall not be permitted to assign this Agreement or any interest  herein or
in the  Collateral,  or any part  thereof,  or  otherwise  grant any option with
respect to the Collateral,  or any part thereof and the Company shall not assign
any interest  herein or in the  Collateral  unless such  assignment is expressly
made subject to the terms of the Loan Documents.

     Section  14.  Miscellaneous  Provisions.  Neither  this  Agreement  nor any
provision hereof may be amended,  modified, waived, discharged or terminated nor
may any of the  Collateral  be released or the pledge or the  security  interest
created hereby extended, except by an instrument in writing duly signed by or on
behalf of the  Company  hereunder.  The  section  headings  used  herein are for
convenience  of reference  only and shall not define or limit the  provisions of
this Agreement. This Agreement may be executed in any number of counterparts and
by the  different  parties on separate  counterparts  and each such  counterpart
shall be deemed to be an  original,  but all such  counterparts  shall  together
constitute but one and the same Agreement.

     Section 15. Governing Law; Interpretation. This Agreement has been made and
delivered at Spencer,  Indiana,  and,  except to the extent  preempted by ERISA,
shall be governed by the internal laws of the State of Indiana,  without  regard
to principles  of conflict of laws.  Wherever  possible  each  provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Agreement.

     Section 16. Filing as a Financing Statement.  At the option of the Company,
this  Agreement,  or a  carbon,  photographic  or  other  reproduction  of  this
Agreement or of any Uniform  Commercial  Code financing  statement  covering the
Collateral or any portion  thereof  shall be sufficient as a Uniform  Commercial
Code financing statement and may be filed as such.


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed by their respective  representatives  thereunto duly authorized as
of the date first above written.

                                  TRUST UNDER THE CITY SAVINGS
                                  FINANCIAL CORPORATION EMPLOYEE
                                  STOCK OWNERSHIP PLAN AND TRUST
                                  AGREEMENT

                                  By: Home Federal Savings Bank, Trustee


                                  By:
                                     -----------------------------------------

                                  Printed:   David L. Fisher
                                           -----------------------------------
                                  Its:     Senior Vice President & Trust Officer
                                       -----------------------------------------

                                  CITY SAVINGS FINANCIAL CORPORATION


                                  By:
                                     -----------------------------------------

                                  Printed:  Thomas F. Swirski
                                          ------------------------------------

                                  Its:  President and Chief Executive Officer
                                      ----------------------------------------
<PAGE>

                                                                       Exhibit C



                             CERTIFICATE OF TRUSTEE

     The undersigned,  Home Federal Savings Bank, a federal savings bank, in its
capacity as Trustee  ("Trustee")  of the Trust under the City Savings  Financial
Corporation  Employee Stock Ownership Plan and Trust Agreement  (Effective as of
January 1, 2001) (the "Trust") hereby  certifies,  pursuant to Section 5.1(c) of
that certain Exempt Loan and Share Purchase Agreement between the Trust and City
Savings Financial Corporation of even date herewith (the "Loan Agreement") that:

               (i) it has determined that the Trust Loan, as defined in the Loan
          Agreement, is primarily for the benefit of ESOP participants and their
          beneficiaries  and  bears  interest  at a  rate  not  in  excess  of a
          reasonable  rate  and  that  the  terms  of the  loan  are at least as
          favorable  to the  Trust and the ESOP  participants  as the terms of a
          comparable  loan  resulting  from  arm's-length  negotiations  between
          completely independent parties;

               (ii)  the  other  representations  and  warranties  of the  Trust
          contained in the Loan  Agreement are true in all material  respects as
          of the date of this Certificate; and

               (iii)  the  conditions  set  forth  in  Article  V  of  the  Loan
          Agreement, to the extent their satisfaction depends upon action on the
          part of the Trust or the Trustee,  have been  satisfied as of the date
          of this Certificate.

     EXECUTED this ____ day of December, 2001.


                               HOME FEDERAL SAVINGS BANK,
                               as Trustee of the Trust
                               under the City Savings
                               Financial Corporation
                               Employee Stock Ownership
                               Plan and Trust Agreement
                               (Effective as of January 1,
                               2001)


                               By:
                                   --------------------------------------------
                                   David L. Fisher
                                   Senior Vice President & Trust Officer

<PAGE>
                                                                      Exhibit D

                           CERTIFICATE OF THE COMPANY

     The undersigned, City Savings Financial Corporation, an Indiana corporation
(the  "Company"),  pursuant to Section  5.3(b) of that  certain  Exempt Loan and
Share Purchase  Agreement  between Home Federal  Savings Bank, a federal savings
bank,  in its capacity as Trustee of the Trust under the City Savings  Financial
Corporation  Employee Stock Ownership Plan and Trust Agreement  (Effective as of
January 1, 2001) and the Company of even date herewith  (the "Loan  Agreement"),
hereby  certifies  that  the  representations  and  warranties  of  the  Company
contained in the Loan  Agreement are true and correct in all material  respects,
and the  Company  is in  compliance  with its  covenants  set  forth in the Loan
Agreement in all material respects, as of the date of this Certificate.

     EXECUTED as of this ___ day of December, 2001.


                                  CITY SAVINGS FINANCIAL CORPORATION


                                  By:
                                      ------------------------------------
                                      Thomas F. Swirski, President and
                                      Chief Executive Officer