EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
this 6th day of  October,  1998,  by and  between  PERMANENT  BANCORP,  INC.,  a
Delaware  corporation which is registered  savings and loan holding company (the
"Holding  Company"),  PERMANENT  FEDERAL  SAVINGS  BANK,  a  federally-chartered
savings  bank  (hereinafter  referred to as the  "Bank"),  whose  address is 101
Southeast Third Street, Evansville,  Indiana 47708 and Donald P. Weinzapfel (the
"Employee") whose address is 7826 Briarwood, Evansville, Indiana 47715.

         WHEREAS,  the Employee is  currently  serving as Chairman of the Board,
and Chief  Executive  Officer of the Bank, and Chairman of the Board,  President
and Chief Executive Officer of the Holding Company; and


         WHEREAS,  the Boards of Directors  of the Bank and the Holding  Company
recognize that, as is the case with publicly held  corporations  generally,  the
possibility  of a change in control of the  Holding  Company  may exist and that
such  possibility,  and the  uncertainty  and questions which it may raise among
management,  may  result  in the  departure  or  distraction  of key  management
personnel  to  the  detriment  of  the  Bank,   the  Holding   Company  and  its
stockholders; and


         WHEREAS,  the Boards of Directors  of the Bank and the Holding  Company
believe it is in the best interests of the Bank and the Holding Company to enter
into  this  Agreement  with  the  Employee  in  order to  assure  continuity  of
management  of the Bank and the Holding  Company and to reinforce  and encourage
the continued  attention and  dedication of the Employee to his assigned  duties
without distraction in the face of potentially disruptive  circumstances arising
from the possibility of a change in control of the Holding Company,  although no
such change is now contemplated; and


         WHEREAS,  the Boards of Directors  of the Bank and the Holding  Company
have approved and  authorized  the execution of this Agreement with the Employee
to take effect as stated in Section 4 hereof and this Agreement  shall supersede
the prior  agreement  between the parties  related to the Employee's  employment
with the Bank such that the Employee  shall now have an agreement  with both the
Bank and the Holding Company;


         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants  and  agreements  of the  parties  herein  contained,  it is AGREED as
follows:

         1.  Employment.  The Employee will be employed solely as
Chairman of the Board of the Bank, such position to last until

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January 1, 1999, and shall additionally be employed as Chairman of the Board and
Chief  Executive  Officer  of the  Holding  Company  until  April  1,  2000.  In
performing  such duties,  Employee  shall render  administrative  and management
services as are customarily  performed by persons situated in similar  executive
capacities,  and shall have other  powers and duties as may from time to time be
prescribed  by the Board,  provided  that such  duties are  consistent  with the
Employee's  positions as described  above. The Employee shall continue to devote
his best efforts and  substantially  all his business  time and attention to the
business and affairs of the Bank, or the Holding Company, as appropriate.

         2.       Compensation.

                  (a)  Salary.  The  Bank,  until  January  1,  1999,  and  then
thereafter  the Holding  Company,  agree to pay the Employee  during the term of
this  Agreement  a salary  established  by the Board of  Directors.  The  salary
hereunder as of the Commencement  Date (as defined in Section 4 hereof) shall be
$174,000  per year.  The salary  provided  for herein  shall be payable not less
frequently than monthly in accordance with the practices of the Bank,  provided,
however,  that no such  salary  is  required  to be  paid by the  terms  of this
Agreement  in  respect  of  any  month  or  portion  thereof  subsequent  to the
termination of this Agreement.

                  (b) Expenses. During the term of his employment hereunder, the
Employee  shall be entitled to receive prompt  reimbursement  for all reasonable
expenses incurred by him (in accordance with policies and procedures at least as
favorable to the Employee as those presently  applicable to the senior executive
officers  of the  Bank) in  performing  services  hereunder,  provided  that the
Employee properly accounts therefor in accordance with Bank policy.

         3.       Benefits.

                  (a)  Participation  in Retirement and Employee  Benefit Plans.
The Employee shall be entitled while employed  hereunder to participate  in, and
receive  benefits under,  all plans relating to stock options,  stock purchases,
pension  (including  defined  benefit plan and employee stock  ownership  plan),
thrift,  profit-sharing  (including 401(k) plan), group life insurance,  medical
coverage,  education,  cash or stock bonuses,  and other  retirement or employee
benefits or combinations  thereof,  that are now or hereafter maintained for the
benefit of the Bank's executive employees or for its employees generally.

                  (b) Fringe  Benefits.  The  Employee  shall be eligible  while
employed  hereunder to participate  in, and receive  benefits  under,  any other
fringe  benefits  which are or may become  applicable  to the  Bank's  executive
employees or to its employees generally.

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<PAGE>
         4. Term.  The term of  employment  under this  Agreement  shall be from
October 6, 1998 to April 1, 2000,  subject to earlier  termination  as  provided
herein.

         5. Vacations.  The Employee shall be entitled,  without loss of pay, to
absent himself  voluntarily  from the  performance of his employment  under this
Agreement, all such voluntary absences to count as vacation time, provided that:

                  (a)      The Employee shall be entitled to an annual vacation
of not less than five (5) weeks per year;

                  (b)      The timing of vacations shall be scheduled in a
reasonable manner by the Employee; and

                  (c) Management  shall,  solely at the Employee's  request,  be
entitled to 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  management,  in
its discretion, may determine.

         6.  Termination of Employment; Death.

                  (a) The Board of  Directors  of either the Bank or the Holding
Company, as appropriate,  may terminate the Employee's employment (but not board
membership) at any time, but any such  termination,  other than  termination for
cause,  shall not  prejudice  the  Employee's  right to  compensation  and other
benefits under the Agreement. If the employment of the Employee is involuntarily
terminated,  other than for "cause" as provided in this Section 6(a) or pursuant
to any of Sections  6(d) through  6(g),  or by reason of death or  disability as
provided in Sections 6(c) or 7, the Employee  shall be entitled to receive,  (i)
his then  applicable  salary for the  then-remaining  term of the  Agreement  as
calculated  in accordance  with Section 4 hereof,  payable in such manner and at
such times as such salary would have been payable to the Employee  under Section
2 had he remained  in the employ of the Bank,  and (ii) all  benefits  currently
received,  including a car assignment,  club dues, disability benefits, and life
insurance,  as well as those  benefits  stated in Section 3(a) and 3(b) over the
then-remaining  term of the Agreement as calculated in accordance with Section 4
hereof.

                  The terms "termination" or "involuntarily  terminated" in this
Agreement shall refer to the  termination of the employment of Employee  without
his  express   written   consent.   The  Employee  shall  be  considered  to  be
involuntarily  terminated (1) if the employment of the Employee is involuntarily
terminated  for any reason  other than for "cause" as  provided in this  Section
6(a),  pursuant to any of Sections  6(d)  through  6(g) or by reason of death or
disability  as provided in Sections  6(c) and 7; or (2) there  occurs a material
diminution of or interference with the Employee's duties,  responsibilities  and
benefits  in the  Employee's  positions  as  described  in  Section 1. By way of
example  and  not by way  of  limitation,  any  of  the  following  actions,  if
unreasonable or
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<PAGE>
materially  adverse  to  the  Employee,  shall  constitute  such  diminution  or
interference unless consented to in writing by the Employee: (i) a change in the
principal  workplace  of the  Employee  to a  location  more than 30 miles  from
Evansville,  Indiana;  (ii) a material  demotion of the Employee,  a significant
reduction  in the  number  or  seniority  of other  personnel  reporting  to the
Employee,  or a reduction in the frequency  with which,  or in the nature of the
matters with respect to which,  such  personnel  are to report to the  Employee,
other  than as part of a Bank or Holding  Company-wide  reduction  in staff;  or
(iii) a  reduction  or  adverse  change in the  salary,  perquisites,  benefits,
contingent  benefits or vacation time which had theretofore been provided to the
Employee,  other than as part of an overall program  applied  uniformly and with
equitable  effect to all  members of the senior  management  of the Bank and the
Holding Company.

                  In case of termination of the Employee's employment for cause,
the Bank or the Holding  Company,  as  appropriate,  shall pay the  Employee his
salary  through  the date of  termination,  and neither the Bank nor the Holding
Company shall have any further  obligation to the Employee under this Agreement.
The Employee shall have no right to receive  compensation  or other benefits for
any  period  after  termination  for  cause.  For  purposes  of this  Agreement,
termination  for "cause" shall  include  termination  because of the  Employee's
personal  dishonesty,  incompetence,  willful misconduct,  breach of a 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,  the Employee shall
not be deemed to have been  terminated  for cause  unless and until  there shall
have been delivered to the Employee a copy of a resolution,  duly adopted by the
affirmative vote of not less than a majority of the disinterested members of the
Board of  Directors of the Bank or the Holding  Company,  as  appropriate,  at a
meeting of the Board called and held for such 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),  stating  that in the good
faith  opinion of the Board the  Employee  was  guilty of  conduct  constituting
"cause" as set forth above and specifying the particulars thereof in detail.

                  (b) The Employee's employment may be voluntarily terminated by
the Employee at any time upon ninety (90) days written notice to the Bank or the
Holding  Company,  as appropriate,  or upon such shorter period as may be agreed
upon  between the Employee and the Board of Directors of the Bank or the Holding
Company, as appropriate. In the event of such voluntary termination, the Bank or
the Holding Company,  as appropriate,  shall be obligated to continue to pay the
Employee  his salary  only  through  the date of  termination,  at the time such
payments  are due, and neither the Bank nor the Holding  Company  shall have any
further obligation to the Employee under this Agreement.

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<PAGE>
                  (c) In the event of the death of the Employee  during the term
of employment under this Agreement and prior to any termination  hereunder,  the
Employee's estate, or such person as the Employee may have previously designated
in writing,  shall be entitled to receive from the Bank or the Holding  Company,
as appropriate,  the salary of the Employee through the last day of the calendar
month in which his death shall have occurred,  and the term of employment  under
this Agreement shall end on such last day of the month.

                  (d)  If  the   Employee  is  suspended   from  office   and/or
temporarily  prohibited from  participating in the conduct of the Bank's affairs
by a notice  served  under  Section  8(e)(3)  or (g)(1) of the  Federal  Deposit
Insurance Act ("FDIA"), 12 U.S.C. ss.ss.  1818(e)(3) and (g)(1), the obligations
of the Bank and the Holding Company, as appropriate,  under this Agreement shall
be  suspended  as  of  the  date  of  service,   unless  stayed  by  appropriate
proceedings. If the charges in the notice are dismissed, the Bank or the Holding
Company, as appropriate,  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.

                  (e) If the Employee is removed from office and/or  permanently
prohibited from  participating  in the conduct of the Bank's affairs by an order
issued under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. ss.ss.  1818(e)(4)
or  (g)(1)),  all  obligations  of the Bank and the Holding  Company  under this
Agreement  shall  terminate,  as of the effective date of the order,  but vested
rights of the parties shall not be affected.

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

                  (g) All the Bank's  obligations  under this Agreement shall be
terminated,  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  ("OTS")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an  agreement to provide  assistance  to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDIA, 12 U.S.C. ss. 1823(c); or (ii)
by the  Director of the OTS or his or her  designee at the time 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.

                  Any rights of the parties that have already  vested,  however,
shall not be affected by any such action.

                  (h) In the event the Bank or the  Holding  Company  purport to
terminate the Employee for cause, but it is determined by a

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<PAGE>
court of competent  jurisdiction or by an arbitrator pursuant to Section 18 that
cause did not exist for such termination, or if in any event it is determined by
any  such  court  or  arbitrator  that  the  Bank  or the  Holding  Company,  as
appropriate,  has  failed to make  timely  payment  of any  amounts  owed to the
Employee under this Agreement,  the Employee shall be entitled to  reimbursement
for all reasonable  costs,  including  attorneys' fees,  incurred in challenging
such  termination or collecting  such amounts.  Such  reimbursement  shall be in
addition to all rights to which the  Employee is otherwise  entitled  under this
Agreement.

         7. Disability.  If during the term of employment hereunder the Employee
shall  become  disabled  or  incapacitated  to the  extent  that he is unable to
perform the duties of the positions  set forth in Section 1, above,  he shall be
entitled to receive disability benefits of the type provided for other executive
employees of the Bank.

         8.       Change in Control.

                  (a) Involuntary  Termination.  If the Employee's employment is
involuntarily  terminated  (other  than for cause or pursuant to any of Sections
6(c) through 6(g) or Section 7 of this  Agreement) in connection  with or within
twelve (12) months after a change in control which occurs at any time during the
term of employment  under this Agreement,  the Bank or the Holding  Company,  as
appropriate,  shall pay to the Employee in a lump sum in cash within twenty-five
(25) business days after the Date of  Termination  (as  hereinafter  defined) of
employment  an amount equal to 299 percent of the  Employee's  "base  amount" of
compensation  received  from the  Bank and any  affiliated  entity  thereof,  as
defined in Section  280G(b)(3) of the Internal  Revenue Code of 1986, as amended
("Code").

              (b)  Definitions.  For  purposes  of  Sections 8, 9 and 12 of this
Agreement,  "Date of  Termination"  means the earlier of (i) the date upon which
the Bank or the Holding Company, as appropriate, gives notice to the Employee of
the  termination  of his  employment  with the Bank or the Holding  Company,  as
appropriate (ii) the date upon which the Employee ceases to serve as an Employee
of the Bank or the Holding Company,  as appropriate,  and "change in control" is
defined  solely as any  acquisition  of  control  (other  than  pursuant  to the
Conversion  or by a  trustee  or other  fiduciary  holding  securities  under an
employee  benefit  plan of the Holding  Company or a  subsidiary  of the Holding
Company), as defined in 12 C.F.R. ss. 574.4, or any successor regulation, of the
Bank or Holding  Company  which would require the filing of an  application  for
acquisition  of  control or notice of change in control in a manner as set forth
in 12 C.F.R. ss. 574.3, or any successor regulation.

                  (c)  Compliance  with  Capital  Requirements.  Notwithstanding
anything in this Agreement to the contrary,  no payments may be made by the Bank
pursuant to Section 8 hereof without the prior  approval of the Regional  Deputy
Director of the
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OTS if following such payment the Bank would not be in compliance with its fully
phased-in capital requirements as defined in OTS regulations.

         9.  Certain  Reduction  of Payments by the Bank.  (a)  Anything in this
Agreement to the contrary  notwithstanding,  in the event it shall be determined
that  any  payment  or  distribution  by the  Bank or the  Holding  Company,  as
appropriate,  to or for the benefit of the Employee  (whether paid or payable or
distributed  or  distributable  pursuant  to the  terms  of  this  Agreement  or
otherwise)  (a  "Payment")  would  be  nondeductible  (in  whole or part) by the
employer for Federal  income tax  purposes  because of Section 280G of the Code,
then the aggregate  present value of amounts payable or  distributable to or for
the benefit of the Employee  pursuant to this Agreement (such amounts payable or
distributable  pursuant  to  this  Agreement  are  hereinafter  referred  to  as
"Agreement  Payments")  shall be reduced to the  Reduced  Amount.  The  "Reduced
Amount" shall be an amount,  not less than zero (0),  expressed in present value
which  maximizes  the  aggregate  present  value of Agreement  Payments  without
causing any Payment to be  nondeductible by the employer because of Section 280G
of the Code.  For purposes of this Section 9, present  value shall be determined
in accordance with Section 280G(d)(4) of the Code.

                  (b) All determinations  required to be made under this Section
9 shall be made by the Bank's independent  auditors,  or at the election of such
auditors  by such other firm or  individuals  of  recognized  expertise  as such
auditors  may  select  (such  auditors  or, if  applicable,  such  other firm or
individual,  are hereinafter  referred to as the "Advisory Firm").  The Advisory
Firm  shall  within ten  business  days of the Date of  Termination,  or at such
earlier time as is requested by the Bank or the Holding Company, as appropriate,
provide to both the Bank and the  Holding  Company  and the  Employee an opinion
(and detailed  supporting  calculations)  that the Bank and the Holding  Company
have  substantial  authority to deduct for federal  income tax purposes the full
amount of the Agreement Payments and that the Employee has substantial authority
not to report on his federal income tax return any excise tax imposed by Section
4999 of the Code with respect to the Agreement Payments.  Any such determination
and opinion by the  Advisory  Firm shall be binding  upon the Bank,  the Holding
Company and the Employee.  The Employee shall  determine  which and how much, if
any, of the Agreement  Payments shall be eliminated or reduced  consistent  with
the requirements of this Section 9, provided that, if the Employee does not make
such  determination  within  ten  (10)  business  days  of  the  receipt  of the
calculations  made by the Advisory  Firm,  the Bank or the Holding  Company,  as
appropriate,  shall elect which and how much, if any, of the Agreement  Payments
shall be eliminated or reduced  consistent with the requirements of this Section
9 and shall  notify the  Employee  promptly  of such  election.  Within five (5)
business days of the earlier of (i) the Bank or the Holding Company's receipt of
the Employee's  determination  pursuant to the immediately preceding sentence of
this  Agreement  or (ii) the Bank or the Holding  Company's  election in lieu of
such determination,
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the Bank or the Holding Company, as appropriate shall pay to or distribute to or
for the benefit of the Employee such amounts as are then due the Employee  under
this  Agreement.  The  Bank  and the  Holding  Company  and the  Employee  shall
cooperate fully with the Advisory Firm,  including without limitation  providing
to the Advisory Firm all information and materials  reasonably  requested by it,
in connection with the making of the determinations  required under this Section
9.

                  (c) As a result of  uncertainty in application of Section 280G
of the  Code at the  time of the  initial  determination  by the  Advisory  Firm
hereunder,  it is possible  that  Agreement  Payments  will have been made which
should not have been made  ("Overpayment") or that additional Agreement Payments
will not have been made which  should have been made  ("Underpayment"),  in each
case,  consistent with the  calculations  required to be made hereunder.  In the
event that the Advisory Firm,  based upon the assertion by the Internal  Revenue
Service  against the Employee of a deficiency  which the Advisory  Firm believes
has a high probability of success  determines that an Overpayment has been made,
any such  Overpayment  paid or distributed by the Bank or the Holding Company 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 or the  Holding  Company
together  with interest at the  applicable  federal rate provided for in Section
7872(f)(2) 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 or the
Holding  Company 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 Advisory Firm,  based upon controlling  precedent or other  substantial
authority,  determines that an Underpayment has occurred,  any such Underpayment
shall be promptly paid by the Bank or the Holding Company, as appropriate, to or
for the benefit of the Employee together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code.

                  (d)   Notwithstanding   anything  in  this  Agreement  to  the
contrary, in no event shall the sum of a payment to the Employee under Section 8
of this  Agreement  and  payments of salary  under  Section 6 of this  Agreement
exceed  an  amount  that is  three  (3)  times  the  Employee's  average  annual
compensation  from the Bank and the  Holding  Company,  based on the most recent
five taxable years at the time of termination of employment.

                  (e)  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. ss. 1828(k) and any regulations promulgated thereunder.

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<PAGE>
         10.      Confidential Information; Loyalty; Non-Competition.

                  (a) During the term of the Employee's employment hereunder and
thereafter,  the  Employee  shall not,  except as may be required to perform his
duties  hereunder  or as  required by law,  disclose  to others or use,  whether
directly or indirectly, any Confidential Information. "Confidential Information"
means  information  about the Bank or the Holding  Company and the Bank's or the
Holding  Company's  clients and customers  which is not available to the general
public  and was or  shall  be  learned  by the  Employee  in the  course  of his
employment by the Bank or the Holding Company,  including without limitation any
data, formulae,  information,  proprietary knowledge,  trade secrets, and credit
reports and analyses owned,  developed and used in the course of the business of
the Bank or the  Holding  Company,  including  client  and  customer  lists  and
information  related  thereto;  and  all  papers,  resumes,  records  and  other
documents (and all copies thereof) containing such Confidential Information. The
Employee acknowledges that such Confidential Information is specialized,  unique
in nature and of great value to the Bank and the Holding  Company.  The Employee
agrees that upon the expiration of the Employee's  term of employment  hereunder
or in the event the Employee's  employment hereunder is terminated prior thereto
for any reason whatsoever, the Employee will promptly deliver to the Bank or the
Holding  Company,  as  appropriate,  all  documents  (and  all  copies  thereof)
containing any Confidential Information.

                  (b) The Employee shall devote his full time to the performance
of his employment under this Agreement; provided, however, that the Employee may
serve,   without   compensation,   with   charitable,   community  and  industry
organizations  and continue to serve,  with  compensation,  as a director of any
business  corporation  of which he is  currently  a director  to the extent such
directorships  do not  inhibit  the  performance  of his  duties  thereunder  or
conflict with the business of the Bank or the Holding  Company.  During the term
of the  Employee's  employment  hereunder,  the Employee shall not engage in any
business or activity  contrary to the business  affairs or interests of the Bank
or the Holding Company.

                  (c)  Upon  the  expiration  of  the  term  of  the  Employee's
employment  hereunder  or in  the  event  the  Employee's  employment  hereunder
terminates prior thereto for any reason whatsoever,  the Employee shall not, for
a period of three (3) years after the occurrence of such event, for himself,  or
as the agent of, on behalf  of, or in  conjunction  with,  any person or entity,
solicit or attempt to solicit, whether directly or indirectly:  (i) any employee
of the Bank to terminate such employee's employment  relationship with the Bank;
or (ii) any savings  and loan,  banking or similar  business  from any person or
entity that is or was a client, employee, or customer of the Bank or the Holding
Company and had dealt with the Employee or any other employee of the Bank or the
Holding Company under the supervision of the Employee.

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<PAGE>
                  (d) In the event  Employee  voluntarily  resigns  pursuant  to
Section  6(b) of this  Agreement,  or in the  event  the  Employee's  employment
hereunder is terminated  for cause,  the Employee shall not, for a period of one
year from the date of termination,  directly or indirectly, own, manage, operate
or control,  or participate in the ownership,  management,  operation or control
of, or be employed by or connected in any manner with, any financial institution
having an office  located  within twenty (20) miles of any office of the Bank as
of the date of termination.

                  (e) The provisions of subsections (b) and (d) hereof shall not
prevent the Employee from purchasing,  solely for investment, not more than five
(5%)  percent of any other  financial  institution's  stock or other  securities
which are traded on any national or regional securities exchange or are actively
traded in the over-the-counter  market and registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended.

                  (f)  The   provisions   of  this  Section  shall  survive  the
termination of the Employee's  employment hereunder whether by expiration of the
term thereof or otherwise.

         11. No  Mitigation.  The Employee shall not be required to mitigate the
amount of any salary or other payment or benefit  provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation  earned by
the Employee as the result of  employment  by another  employer,  by  retirement
benefits after the date of termination or otherwise.

         12.  No Assignments.

                  (a) This Agreement is personal to each of the parties  hereto,
and  neither  party may  assign or  delegate  any of its  rights or  obligations
hereunder  without  first  obtaining  the  written  consent of the other  party;
provided,  however,  that the Bank and the  Holding  Company  will  require  any
successor  or  assign  (whether  direct  or  indirect,   by  purchase,   merger,
consolidation or otherwise) to all or  substantially  all of the business and/or
assets of the Bank or the Holding  Company,  by an assumption  agreement in form
and substance  satisfactory  to the Employee,  to expressly  assume and agree to
perform  this  Agreement in the same manner and to the same extent that the Bank
or the Holding  Company would be required to perform it if no such succession or
assignment  had taken  place.  Failure  of the Bank and the  Holding  Company to
obtain  such an  assumption  agreement  prior to the  effectiveness  of any such
succession or assignment  shall be a breach of this  Agreement and shall entitle
the Employee to  compensation  from the Bank and the Holding Company in the same
amount  and on the same  terms as the  compensation  pursuant  to  Section  8(a)
hereof.  For purposes of implementing  the provisions of this Section 12(a), the
date on which any such succession  becomes effective shall be deemed the Date of
Termination.
                                       10
<PAGE>
                  (b) This  Agreement  and all rights of the Employee  hereunder
shall inure to the benefit of and be enforceable by the Employee's  personal and
legal   representatives,    executors,   administrators,    successors,   heirs,
distributees,  devisees  and  legatees.  If the  Employee  should  die while any
amounts  would still be payable to the  Employee  hereunder  if the Employee had
continued to live, all such amounts,  unless otherwise provided herein, shall be
paid in accordance  with the terms of this Agreement to the Employee's  devisee,
legatee or other  designee or if there is no such  designee,  to the  Employee's
estate.

         13. Notice.  For the purposes of this Agreement,  notices and all other
communications  provided for in the  Agreement  shall be in writing and shall be
deemed to have been duly given when  personally  delivered  or sent by certified
mail,  return receipt  requested,  postage prepaid,  addressed to the respective
addresses  set  forth on the first  page of this  Agreement  (provided  that all
notices to the Bank or the Holding Company shall be directed to the attention of
the Board of Directors of the Bank or the Holding Company, as appropriate,  with
a copy to the Secretary of the Bank or the Holding Company, as appropriate),  or
to such other address as either party may have furnished to the other in writing
in accordance herewith.

         14. Prior  Agreements/Amendments.  Upon the  Commencement  Date of this
Agreement,  all prior agreements,  still in effect, among the parties related to
the employment of the Employee shall be deemed null and void and have no effect.
No amendments or additions to this Agreement  shall be binding unless in writing
and signed by both parties, except as herein otherwise provided.

         15. Paragraph  Headings.  The paragraph headings used in this Agreement
are  included  solely  for  convenience  and  shall  not  affect,  or be used in
connection with, the interpretation of this Agreement.

         16.  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.

         17.  Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Indiana.

         18.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.  Judgment may be entered on the  arbitrator's  award in any court having
jurisdiction.


                                                        11

<PAGE>
         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year first above written.

         THIS AGREEMENT  CONTAINS A BINDING  ARBITRATION  PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

                         PERMANENT FEDERAL SAVINGS BANK


                                        By: /s/ James W. Vogel
                                           ------------------------------------
                                                (Duly Authorized Representative)


                                        PERMANENT BANCORP, INC.



                                        By: /s/ James W. Vogel
                                           ------------------------------------
                                                James W. Vogel
                                                (Duly Authorized Representative)


                                        EMPLOYEE




                                                     Donald P. Weinzapfel

                                       12