EXHIBIT 10(1)

                              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