EMPLOYMENT AGREEMENT

         THIS AGREEMENT  entered into and effective this 15th day of July, 1999,
by and between River Valley Financial Bank, a federal savings bank (the "Bank"),
and Matthew P. Forrester (the "Employee").  The parties agree, however, that the
"Effective Date" of this Agreement shall be October 12, 1999.

         WHEREAS,  the Employee is being  employed by the Bank as its  President
and as such will perform valuable services for the Bank; and

         WHEREAS,  the Board of Directors of the Bank believes it is in the best
interests of the Bank to enter into this Agreement with the Employee in order to
assure  continuity  of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his assigned duties; and

         WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.

         NOW, THEREFORE, it is AGREED as follows:

         1.  Employment:  The Employee is employed as the President of the Bank.
The Employee shall render such  administrative  and management  services for the
Bank as are  currently  rendered  and as are  customarily  performed  by persons
situated in a similar executive  capacity.  The Employee shall also promote,  by
entertainment or otherwise,  as and to the extent permitted by law, the business
of the Bank. The Employee's other duties shall be such as the Board of Directors
(the  "Board") of the Bank may from time to time  reasonably  direct,  including
normal duties as an officer of the Bank.

         2. Base  Compensation:  The Bank agrees to pay the Employee  during the
term of this Agreement a salary at the rate of $95,000.00 per annum,  payable in
cash not less  frequently  than monthly,  and shall be effective and  calculated
commencing  the  Effective  Date.  The salary shall be reviewed  annually by the
Board of Directors of the Bank in February of each year  commencing  February of
2000 and any  adjustment  in the future on salary shall be effective on February
1st of each year.

         3.  Bonuses:  The  Employee  shall  participate  in any year end  bonus
granted to other employees by the Board. The Employee shall further  participate
in an equitable manner with all other senior management employees of the Bank in
discretionary  bonuses  that the Board may award from time to time to the Bank's
senior  management  employees.  No  other  compensation  provided  for  in  this
Agreement  shall be deemed a substitute for the Employee's  right to participate
in such discretionary bonuses.

         4.(a) Participation in Retirement,  Medical and Other Plans: During the
term of this  Agreement,  the Employee  shall be eligible to  participate in the
following benefit plans: group hospitalization, disability, health, dental, sick
leave,  retirement,  pension,  and/or other  present or future  qualified  plans
provided by the Bank,  generally,  which benefits,  taken as a whole, must be at
least  as  favorable  as those in  effect  on the  Effective  Date,  unless  the
continued  operation of such plans would adversely  affect the Bank's  operating
results or financial  condition in a material way, the Bank's Board of Directors
concludes that  modifications  to such plans are necessary to avoid such adverse
effects and such modifications apply consistently to all employees of the Bank.

         (b) Employee  Benefits:  Expenses:  The  Employee  shall be eligible to
participate  in any fringe  benefits  which are or may become  available  to the
Bank's senior management employees,  including, for example, any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the  responsibilities  and functions to be performed by the Employee  under this
Agreement.  The Employee shall be reimbursed  for all  reasonable  out-of-pocket
business  expenses  which he shall incur in connection  with his services  under
this  Agreement,  upon  substantiation  of such expenses in accordance  with the
policies of the Bank.

         5. Term: The Bank hereby employs the Employee,  and the Employee hereby
accepts such employment under this Agreement,  for the period  commencing on the
Effective Date and ending thirty six months  thereafter (or such earlier date as
is  determined  in  accordance  with  Section 9).  Additionally,  on each annual
anniversary  date from the Effective  Date,  the  Employee's  term of employment
shall be extended for an additional  one-year  period beyond the then  effective
expiration date, provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's  requirements and standards,
and that this  Agreement  shall be extended.  Only those members of the Board of
Directors  who have no personal  interest  in this  Employment  Agreement  shall
discuss and vote on the approval and subsequent review of this Agreement.

         6.  Loyalty; Noncompetition:

         (a)  During  the  period of his  employment  hereunder  and  except for
illnesses,  reasonable vacation periods,  and reasonable leaves of absence,  the
Employee shall devote all his full business time, attention,  skill, and efforts
to the faithful  performance of his duties hereunder;  provided,  however,  from
time to time, the Employee may serve on the Boards of Directors of, and hold any
other  offices or  positions  in,  companies  or  organizations,  which will not
present any  conflict of interest  with the Bank or any of its  subsidiaries  or
affiliates,  or unfavorably affect the performance of Employee's duties pursuant
to this  Agreement,  or will not violate any  applicable  statute or regulation.
"Full business time" is hereby defined as that amount of time usually devoted to
like companies by similarly situated executive officers.  During the term of his
employment  under this Agreement,  the Employee shall not engage in any business
or activity  contrary to the business  affairs or  interests of the Bank,  or be
gainfully employed in any other position or job other than as provided above.

         (b) Nothing contained in this Paragraph 6 shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities of
any  business  dissimilar  from that of the  Bank,  or,  solely as a passive  or
minority investor, in any business.

         (c) While  Employee  is  employed by the Bank and for a period of three
years after termination of Employee's  employment by the Bank or by the Employee
for  reasons  other than those set forth in Section 9 (d) hereof,  the  Employee
shall not directly or indirectly,  engage in any bank or  bank-related  business
which  competes  with the  business of the Bank as conducted  during  Employee's
employment by the Bank for any financial institution,  including but not limited
to banks,  savings and loan associations,  and credit unions within a forty mile
radius of Madison, Indiana.

         7.  Standards:  The  Employee  shall  perform  his  duties  under  this
Agreement  in  accordance  with  such  reasonable  standards  as the  Board  may
establish  from time to time.  The Bank will provide  Employee  with the working
facilities and staff  customary for similar  executives and necessary for him to
perform his duties.

         8.  Vacation, Sick Leave and Disability:

         The  Employee  shall be entitled to twenty days  vacation  annually and
shall be entitled to the same sick leave and disability leave as other employees
of the Bank.

         The Employee  shall not receive any  additional  compensation  from the
Bank on  account  of his  failure  to take a  vacation  or sick  leave,  and the
Employee shall not accumulate unused vacation or sick leave from one fiscal year
to the next, except in either case to the extent authorized by the Board.

         In addition to the  aforesaid  paid  vacations,  the Employee  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 may in its  discretion
determine.  Further,  the Board may grant to the  Employee  a leave or leaves of
absence,  with or  without  pay,  at such time or times and upon such  terms and
conditions as such Board in its discretion may determine.

         9. Termination and Termination  Pay: Subject to Section 11 hereof,  the
Employee's   employment   hereunder  may  be  terminated   under  the  following
circumstances:

         (a)  Death.  The  Employee's  employment  under  this  Agreement  shall
terminate upon his death during the term of this  Agreement,  in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.

         (b)  Disability.

                            (1)  The   Bank   may   terminate   the   Employee's
employment, should the Employee become disabled, in a manner consistent with the
Bank's  and the  Employee's  rights and  obligations  under the  Americans  With
Disabilities   Act  or  other  applicable  state  and  federal  laws  concerning
disability. For the purpose of this Agreement,  "Disability" means a physical or
mental condition which  substantially  limits the employee's  ability to perform
the essential functions of his position,  as established by this Agreement,  and
which  results  in the  Employee  becoming  eligible  for  long-term  disability
benefits under the Bank's long-term disability plan.

                            (2)  During  any  period  that  the  Employee  shall
receive  disability  benefits  and to the  extent  that  the  Employee  shall be
physically  and  mentally  able to do so,  he shall  furnish  such  information,
assistance  and documents so as to assist in the continued  ongoing  business of
the Bank and, if able,  shall make  himself  available  to the Bank to undertake
reasonable  assignments  consistent with his prior position and his physical and
mental  health.  The Bank  shall pay all  reasonable  expenses  incident  to the
performance  of any  assignment  given to the  Employee  during  the  disability
period.

                            (c) Just Cause:  The Board may, by written notice to
the Employee,  immediately terminate his employment at any time, for Just Cause.
The Employee 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  because of, in the good faith  determination of the Board, the
Employee's personal  dishonesty,  incompetence,  willful  misconduct,  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  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. Notwithstanding the foregoing, in the
event of  termination  for Just Cause there shall be delivered to the Employee a
copy of a  resolution  duly adopted by the  affirmative  vote of not less than a
majority of the entire  membership of the Board at a meeting of the Board called
and held for that  purpose  (after  reasonable  notice  to the  Employee  and an
opportunity for the Employee,  together with the Employee's counsel, to be heard
before the Board),  such meeting and the  opportunity  to be heard to be held at
least 30 days prior to such termination,  finding that in the good faith opinion
of the Board the  Employee  was guilty of conduct  set forth above in the second
sentence  of this  Subsection  (c) and  specifying  the  particulars  thereof in
detail.

         (d)  Without Just Cause; Constructive Discharge:

                            (1)  The  Board  may,  by  written   notice  to  the
Employee,  immediately  terminate his  employment at any time for a reason other
than Just Cause,  in which event the  Employee  shall be entitled to receive the
following  compensation and benefits (unless such termination  occurs within the
time period set forth in Section 11(b)  hereof,  in which event the benefits and
compensation  provided for in Section 11 shall apply):  (i) the salary  provided
pursuant  to  Section 2  hereof,  up to the date of  termination  of the term as
provided in Section 5 hereof (including any renewal term) of this Agreement (the
"Expiration Date"), plus said salary for an additional 12-month period, and (ii)
at the  Employee's  election,  either (A) cash in an amount equal to the cost to
the  Employee of  obtaining  all health,  life,  disability  and other  benefits
(excluding  stock  options)  which the  Employee  would  have been  eligible  to
participate  in through  the  Expiration  Date,  based upon the  benefit  levels
substantially equal to those that the Bank provided for the Employee at the date
of  termination of employment,  or (B) continued  participation  under such Bank
benefit plans through the  Expiration  Date, but only to the extent the Employee
continues  to qualify for  participation  therein.  All  amounts  payable to the
Employee  shall be paid, at the option of the  Employee,  either (I) in periodic
payments  through the  Expiration  Date, or (II) in one lump sum within ten (10)
days of such termination.

                            (2)  The  Employee  may  voluntarily  terminate  his
employment under this Agreement, and the Employee shall thereupon be entitled to
receive the  compensation  and benefits  payable under Section  9(d)(1)  hereof,
within ninety (90) days following the occurrence of any of the following events,
which has not been  consented to in advance by the  Employee in writing  (unless
such  voluntary  termination  occurs within the time period set forth in Section
11(b)  hereof,  in which event the  benefits  and  compensation  provided for in
Section 11 shall apply): (i) the requirement that the Employee move his personal
residence,  or perform his principal executive functions,  more than thirty (30)
miles from his primary office;  (ii) a material reduction in the Employee's base
compensation, unless part of an institution-wide reduction; (iii) the failure by
the Bank to continue to provide the  Employee  with  compensation  and  benefits
provided for under this  Agreement,  as the same may be  increased  from time to
time, or with benefits  substantially similar to those provided to him under any
of the employee  benefit plans in which the Employee now or hereafter  becomes a
participant,  or the taking of any action by the Bank which  would  directly  or
indirectly  reduce any of such  benefits or deprive the Employee of any material
fringe benefit  enjoyed by him,  unless part of an  institution-wide  reduction;
(iv) the  assignment to the Employee of duties and  responsibilities  materially
different  from those  normally  associated  with his position as  referenced in
Section  1; (v) a failure  to elect or  re-elect  the  Employee  to the Board of
Directors  of the  Bank;  or (vi) a  material  diminution  or  reduction  in the
Employee's  responsibilities or authority (including reporting responsibilities)
in connection with his employment with the Bank.

                            (3) Notwithstanding  the foregoing,  but only to the
extent  required  under  federal  banking law, the amount  payable  under clause
(d)(1)(i)  hereof  shall  be  reduced  to the  extent  that  on the  date of the
Employee's termination of employment,  the present value of the benefits payable
under  clauses  (d)(1)(i)  and (ii) hereof  exceeds the  limitation on severance
benefits  that is set forth in  Regulatory  Bulletin 27a of the Office of Thrift
Supervision,  as in effect on the Effective Date. In the event that Section 280G
of the  Internal  Revenue  Code  of  1986,  as  amended  (the  "Code"),  becomes
applicable to payments made under this Section 9(d), and the payments exceed the
"Maximum Amount" as defined in Section  11(a)(1)  hereof,  the payments shall be
reduced as provided by Section 11(a)(2) of this Agreement.

         (e)  Termination or Suspension Under Federal Law.

                            (1) If the  Employee 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
vested rights of the parties shall not be affected.

                            (2) 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;  however,  this Paragraph shall not affect the vested rights of
the parties.

                            (3)  All  obligations  under  this  Agreement  shall
terminate,  except to the extent  determined that continuation of this Agreement
is necessary for the continued operation of the Bank; (i) by the Director of the
Office of Thrift Supervision ("Director of OTS"), or his or her designee, at the
time that the Federal  Deposit  Insurance  Corporation  ("FDIC")  enters into an
agreement to provide  assistance to or on behalf of the Bank under the authority
contained in Section  13(c) of FDIA;  or (ii) by the Director of the OTS, or his
or her  designee,  at the time  that  the  Director  of the  OTS,  or his or her
designee approves a supervisory  merger to resolve problems related to operation
of the Bank or when the Bank is  determined  by the Director of the OTS to be in
an unsafe or unsound  condition.  Such action shall not affect any vested rights
of the parties.

                            (4) If a notice  served  under  Section  8(e)(3)  or
(g)(1) of the FDIA (12 U.S.C.  1818(e)(3) or (g)(1) suspends and/or  temporarily
prohibits the Employee from  participating in the conduct of the Bank's affairs,
the Bank's obligations under this Agreement shall be suspended as of the date of
such service,  unless stayed by appropriate  proceedings.  If the charges in the
notice are dismissed, the Bank may in its discretion (i) pay the Employee 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.

         (f) Voluntary  Termination  by Employee:  Subject to Section 11 hereof,
the Employee may voluntarily  terminate employment with the Bank during the term
of this  Agreement,  upon at least ninety (90) days' prior written notice to the
Board  of  Directors,  in  which  case  the  Employee  shall  receive  only  his
compensation,  vested  rights  and  employee  benefits  up to  the  date  of his
termination  (unless such termination occurs pursuant to Section 9(d)(2) hereof,
in which event the benefits and compensation  provided for in section 9(d) shall
apply).

    10. No Mitigation: The Employee shall not be required to mitigate the amount
of any payment  provided for in this  Agreement by seeking  other  employment or
otherwise  and no such  payment  shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.

    11.  Change in Control:

             (a)  Change in Control; Involuntary Termination:

                            (1)  Notwithstanding  any  provision  herein  to the
contrary, if the Employee's employment under this Agreement is terminated by the
Bank,  without the Employee's  prior written consent and for a reason other than
Just Cause,  in connection with or within twelve (12) months after any Change in
Control  of the Bank,  the  Employee  shall,  subject to  paragraph  (2) of this
Section 11(a), be paid an amount equal to the difference between (i) the product
of 2.99 times his "base amount" as defined in Section 280G(b)(3) of the Code and
regulations  promulgated  thereunder (the "Maximum Amount"), and (ii) the sum of
any other parachute  payments (as defined under Section  280G(b)(2) of the Code)
that the Employee  receives on account of the Change in Control.  Said sum shall
be paid in one lump sum within ten (10) days of such termination. This paragraph
would not apply to a  termination  of  employment  due to death,  disability  or
voluntary termination by the Employee.

                            (2) In the  event  that  the  Employee  and the Bank
jointly determine and agree that the total parachute  payments  receivable under
clauses  (i) and (ii) of Section  11(a)(1)  hereof  exceed the  Maximum  Amount,
notwithstanding  the payment procedure set forth in Section 11(a)(1) hereof, the
Employee shall determine  which and how much, if any, of the parachute  payments
to which he is  entitled  shall  be  eliminated  or  reduced  so that the  total
parachute  payments  to be  received  by the  Employee do not exceed the Maximum
Amount. If the Employee does not make his determination within ten business days
after  receiving  a  written  request  from the  Bank,  the  Bank may make  such
determination,  and shall  notify the  Employee  promptly  thereof.  Within five
business  days  of  the  earlier  of  the  Bank's   receipt  of  the  Employee's
determination  pursuant to this paragraph or the Bank's determination in lieu of
a determination  by the Employee,  the Bank shall pay to or distribute to or for
the benefit of the Employee such amounts as are then due the Employee under this
Agreement.

                            (3) As a result of  uncertainty  in  application  of
Section 280G of the Code at the time of payment  hereunder,  it is possible that
such  payments  will have been made by the Bank which  should not have been made
("Overpayment") or that additional  payments will not have been made by the Bank
which should have been made ("Underpayment"),  in each case, consistent with the
calculations  required to be made under Section  11(a)(1)  hereof.  In the event
that the  Employee,  based upon the  assertion by the Internal  Revenue  Service
against the  Employee of a  deficiency  which the  Employee  believes has a high
probability of success,  determines  that an Overpayment has been made, any such
Overpayment  paid or  distributed  by the Bank to or for the benefit of Employee
shall be treated for all purposes as a loan ab initio  which the Employee  shall
repay to the Bank together with interest at the applicable federal rate provided
for in Section  7872(f)(2)(B) of the Code; provided,  however, that no such loan
shall be deemed to have been made and no amount shall be payable by the Employee
to the Bank if and to the extent such  deemed loan and payment  would not either
reduce the amount on which the  Employee  is subject to tax under  Section 1 and
Section  4999 of the Code or generate a refund of such taxes.  In the event that
the Employee and the Bank determine,  based upon controlling  precedent or other
substantial authority,  that an Underpayment has occurred, any such Underpayment
shall  be  promptly  paid  by the  Bank to or for the  benefit  of the  Employee
together  with interest at the  applicable  federal rate provided for in Section
7872(f)(2)(B) of the Code.

                            (4) A "Change  in  Control"  shall be deemed to have
occurred if:

                           (i) as a result of, or in connection with, any public
         offering,  tender  offer or exchange  offer,  merger or other  business
         combination,  sale of assets or contested election,  any combination of
         the foregoing transactions, or any similar transaction, the persons who
         were   non-employee   directors  of  the  Bank  or  a  holding  company
         controlling  the Bank before such  transaction  cease to  constitute  a
         majority of the Board of Directors of the Bank or such holding  company
         or any successor thereof;

                           (ii) the Bank or a holding  company  controlling  the
         Bank transfers  substantially all of its assets to another  corporation
         which  is not a wholly  owned  subsidiary  of the Bank or such  holding
         company;

                           (iii) the Bank or a holding  company  controlling the
         Bank sells substantially all of the assets of a subsidiary or affiliate
         which,  at the time of such  sale,  is the  principal  employer  of the
         Employee; or

                           (iv) the Bank or a holding  company  controlling  the
         Bank is merged or  consolidated  with  another  corporation  and,  as a
         result of the  merger or  consolidation,  less than  fifty one  percent
         (51%)  of  the  outstanding  voting  securities  of  the  surviving  or
         resulting   corporation  is  owned  in  the  aggregate  by  the  former
         stockholders  of the Bank or of such holding  company  controlling  the
         Bank.

         Notwithstanding  the foregoing,  but only to the extent  required under
federal banking law, the amount payable under  Subsection(a)  of this Section 11
shall be reduced to the extent that on the date of the Employee's termination of
employment,  the amount payable under  Subsection(a)  of this Section 11 exceeds
the  limitation on severance  benefits that is set forth in Regulatory  Bulletin
27a of the Office of Thrift Supervision, as in effect on the Effective Date.

         (b) Change in Control; Voluntary Termination: Notwithstanding any other
provision of this  Agreement to the  contrary,  but subject to Section  11(a)(2)
hereof,  the  Employee  may  voluntarily  terminate  his  employment  under this
Agreement  within twelve (12) months  following a Change in Control of the Bank,
as defined in  paragraph  (a)(4) of this  Section  11,  and the  Employee  shall
thereupon be entitled to receive the payment  described  in Section  11(a)(1) of
this  Agreement,  within ninety (90) days following the occurrence of any of the
following events,  which has not been consented to in advance by the Employee in
writing;  (i) the requirement that the Employee perform his principal  executive
functions  more than thirty (30) miles from his primary office as of the date of
the  Change  in  Control;  (ii) a  material  reduction  in the  Employee's  base
compensation  as in effect on the date of the  Change in  Control or as the same
may be  changed  by  mutual  agreement  from  time to  time,  unless  part of an
institution-wide reduction; (iii) the failure by the Bank to continue to provide
the Employee with  compensation and benefits  provided for under this Agreement,
as the same may be increased  from time to time, or with benefits  substantially
similar  to those  provided  to him  under  any  employee  benefit  in which the
Employee is a participant at the time of the Change in Control, or the taking of
any action  which would  materially  reduce any of such  benefits or deprive the
Employee of any material fringe benefit enjoyed by him at the time of the Change
in Control, unless part of an institution-wide reduction; (iv) the assignment to
the  Employee of duties and  responsibilities  materially  different  from those
normally  associated with his position as referenced at Section 1; (v) a failure
to elect or re-elect the Employee to the Board of Directors of the Bank,  if the
Employee is serving on the Board on the date of the Change in Control; or (vi) a
material diminution or reduction in the Employee's responsibilities or authority
(including  reporting  responsibilities)  in connection with his employment with
the Bank.

         (c) Compliance with 12 U.S.C. Section 1828(k): Any payments made to the
Employee  pursuant  to  this  Agreement,  or  otherwise,   are  subject  to  and
conditioned  upon  their  compliance  with 12  U.S.C.  Section  1828(k)  and any
regulations promulgated thereunder.

         (d) Trust:  (1) Within five  business  days before or after a Change in
Control as defined in Section 11(a) of this Agreement  which was not approved in
advance by a resolution of a majority of the  Continuing  Directors of the Bank,
the Bank shall (i) deposit,  or cause to be  deposited,  in a grantor trust (the
"Trust"),  designed to conform with Revenue  Procedure  93-64 (or any successor)
and having a trustee  independent of the Bank, an amount equal to 2.99 times the
Employee's "base amount" as defined in Section  280G(b)(3) of the Code, and (ii)
provide  the trustee of the Trust with a written  direction  to hold said amount
and any investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of such amounts from the Trust.

                            (2) During the twelve (12) consecutive  month period
following  the date on which  the Bank  makes  the  deposit  referred  to in the
preceding  paragraph,  the  Employee may provide the trustee of the Trust with a
written  notice  requesting  that the  trustee  pay to the  Employee  an  amount
designated  in the notice as being  payable  pursuant  to Section  11(a) or (b).
Within three business days after receiving said notice, the trustee of the Trust
shall send a copy of the notice to the Bank via overnight and  registered  mail,
return receipt  requested.  On the tenth (10th)  business day after mailing said
notice to the  association,  the trustee of the Trust shall pay the Employee the
amount designated therein in immediately  available funds,  unless prior thereto
the Bank  provides the trustee with a written  notice  directing  the trustee to
withhold such payment. In the latter event, the trustee shall submit the dispute
to non-appealable  binding arbitration for a determination of the amount payable
to the  Employee  pursuant  to  Section  11(a)  or (b)  hereof,  and  the  party
responsible for the payment of the costs of such arbitration  (which may include
any  reasonable  legal fees and  expenses  incurred  by the  Employee)  shall be
determined by the arbitrator.  The trustee shall choose the arbitrator to settle
the  dispute,  and such  arbitrator  shall be bound by the rules of the American
Arbitration Association in making his or her determination.  The parties and the
trustee shall be bound by the results of the  arbitration  and, within 3 days of
the  determination  by the arbitrator,  the trustee shall pay from the Trust the
amounts  required to be paid to the  Employee  and/or the Bank,  and in no event
shall the  trustee  be  liable  to either  party  for  making  the  payments  as
determined by the arbitrator.

                            (3) Upon the  earlier  of (i) any  payment  from the
Trust to the  Employee,  or (ii) the date twelve  (12) months  after the date on
which the Bank makes the  deposit  referred  to in the first  paragraph  of this
subsection  (d)(1),  the  trustee of the Trust  shall pay to the Bank the entire
balance  remaining in the segregated  account  maintained for the benefit of the
Employee.  The Employee shall  thereafter have no further  interest in the Trust
pursuant to this Agreement.

         (e) In the event that any dispute  arises  between the Employee and the
Bank as to the terms or interpretation of this Agreement, including this Section
11, whether  instituted by formal legal proceedings or otherwise,  including any
action that the  Employee  takes to enforce  the terms of this  Section 11 or to
defend  against any action taken by the Bank,  the Employee  shall be reimbursed
for all costs and expenses,  including reasonable  attorneys' fees, arising from
such dispute,  proceedings or actions, provided that the Employee shall obtain a
final  judgment by a court of competent  jurisdiction  in favor of the Employee.
Such reimbursement  shall be paid within ten (10) days of Employee's  furnishing
to the Bank written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Employee.

         Should the  Employee  fail to obtain a final  judgment  in favor of the
Employee  and a final  judgment  is entered in favor of the Bank,  then the Bank
shall be reimbursed for all costs and expenses,  including reasonable Attorneys'
fees arising from such dispute, proceedings or actions. Such reimbursement shall
be paid  within ten (10) days of the Bank  furnishing  to the  Employee  written
evidence,  which may be in the form, among other things,  of a canceled check or
receipt, of any costs or expenses incurred by the Bank.

   12. Employer will permit Employee or his personal representative(s) or heirs,
during a period of three months following  Employee's  termination of employment
by  Employer  for the reasons set forth in  Subsections  9(d) or 11(a),  if such
termination  follows a Change of  Control,  to require  Employer,  upon  written
request,  to  purchase  all  outstanding  stock  options  previously  granted to
Employee  under any stock  option  plan then in effect to the extent the options
are vested at a cash  purchase  price equal to the amount by which the aggregate
"fair market value" of the shares subject to such options  exceeds the aggregate
option price for such shares.  For  purposes of this  Agreement,  the term "fair
market  value"  shall mean the higher of (1) the  average of the  highest  asked
prices  for  shares in the  over-the-counter  market as  reported  on the NASDAQ
system or other  exchange  if the shares  are  traded on such  system for the 30
business days  preceding  such  termination,  or (2) the average per share price
actually paid for the most highly priced 1% of the shares acquired in connection
with the Change of Control by any person or group acquiring such control.

     13. Federal Income Tax  Withholding:  The Bank may withhold all federal and
state  income or other taxes from any benefit  payable  under this  Agreement as
shall be required pursuant to any law or government regulation or ruling.

     14. Successors and Assigns:

         (a) Bank. This Agreement shall not be assignable by the Bank,  provided
that this  Agreement  shall  inure to the  benefit  of and be  binding  upon any
corporate  or other  successor  of the Bank which  shall  acquire,  directly  or
indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets or stock of the Bank.

         (b) Employee. Since the Bank is contracting for the unique and personal
skills of the  Employee,  the  Employee  shall be  precluded  from  assigning or
delegating his rights or duties  hereunder  without first  obtaining the written
consent of the Bank;  provided,  however,  that nothing in this paragraph  shall
preclude (i) the Employee from  designating a beneficiary to receive any benefit
payable  hereunder  upon his death,  or (ii) the executors,  administrators,  or
other legal  representatives  of the Employee or his estate from  assigning  any
rights hereunder to the person or persons entitled thereunto.

         (c) 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 exclusion,
attachment,  levy or similar  process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.

     15.  Amendments.  No  amendments  or additions to this  Agreement  shall be
binding  unless  made in  writing  and signed by all of the  parties,  except as
herein otherwise specifically provided.

     16. Applicable Law. Except to the extent preempted by federal law, the laws
of the State of Indiana shall govern this Agreement in all respects,  whether as
to its validity, construction, capacity, performance or otherwise.

     17.  Severability.  The  provisions  of  this  Agreement  shall  be  deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

     18. Entire  Agreement.  This Agreement,  together with any understanding or
modifications  thereof as agreed to in writing by the parties,  shall constitute
the  entire  agreement  between  the  parties  hereto and  supersedes  any other
agreement between the parties hereto relating to the employment of the Employee

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.

ATTEST:                                   RIVER VALLEY FINANCIAL BANK


/s/ Lonnie D. Collins                     By: /s/ Fred W. Koehler
----------------------------------        --------------------------------------
Lonnie D. Collins, Secretary              Fred W. Koehler, Chairman of the Board



                                          /s/ Matthew P. Forrester
                                          --------------------------------------
                                          Matthew P. Forrester

         The undersigned, River Valley Bancorp, sole shareholder of Bank, agrees
that if it shall be determined for any reason that any obligation on the part of
Bank to continue to make any  payments  due under this  Agreement to Employee is
unenforceable for any reason,  River Valley Bancorp agrees to honor the terms of
this  Agreement and continue to make any such payments due hereunder to Employee
or to satisfy any such obligation  pursuant to the terms of this  Agreement,  as
though it were the Bank hereunder.


                                       RIVER VALLEY BANCORP


                                       By: /s/ Fred W. Koehler
                                           -------------------------------------
                                           Fred W. Koehler, Chairman