EXHIBIT 10.1





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                                CB BANCORP, INC.
                              EMPLOYMENT AGREEMENT


         This AGREEMENT, as amended, is effective as of December 23, 1992 by and
between CB Bancorp, Inc. (the "Holding Company"),  a corporation organized under
the laws of Delaware, with its principal  administrative office at 126 E. Fourth
Street,  Michigan City, Indiana and Joseph F. Heffernan (the  "Executive").  Any
reference to "Bank" herein shall mean Community  Bank, a Federal Savings Bank or
any successor thereto.

         WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and

         WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.

         NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  herein
contained,  and upon the other terms and conditions  hereinafter  provided,  the
parties hereby agree as follows:

1.       POSITION AND RESPONSIBILITIES.

         During  the period of his  employment  hereunder,  Executive  agrees to
serve as Chairman of the Board,  President  and Chief  Executive  Officer of the
Holding  Company.  The  Executive  shall render  administrative  and  management
services to the Holding Company such as are customarily  performed by persons in
a similar  executive  capacity.  During said  period,  Executive  also agrees to
serve, if elected,  as an officer and director of any subsidiary or affiliate of
the Holding Company.  Failure to nominate Executive to the Board of Directors or
failure to reelect  Executive as President  and Chief  Executive  Officer of the
Holding Company or Bank shall constitute a breach of this Agreement.  Failure to
reelect  Executive as a director of the Holding  Company shall not  constitute a
breach of this Agreement.

2.       TERMS.

         (a) The period of Executive's  employment under this Agreement shall be
deemed to have  commenced as of the date first above written and shall  continue
for a period of thirty-six (36) full calendar months  thereafter.  Commencing on
the first anniversary date of this Agreement, and continuing at each anniversary
date thereafter,  the Agreement shall renew for an additional year such that the
remaining  term shall be three (3) years  unless  written  notice is provided to
Executive at least ten (10) days and not more than twenty (20) days prior to any
such anniversary date, that this Agreement shall cease at the end of twenty-four
(24) months following such anniversary  date. Prior to the written notice period
for  non-renewal,  the Board of Directors of the Holding Company  ("Board") will
conduct  a formal  performance  evaluation  of the  Executive  for  purposes  of
determining  whether to give such notice  under the  Agreement,  and the results
thereof shall be included in the minutes of the Board's meeting.



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         (b) During the period of his employment  hereunder,  except for periods
of absence occasioned by illness,  reasonable  vacation periods,  and reasonable
leaves of absence,  Executive shall devote  substantially all his business time,
attention,  skill,  and  efforts  to the  faithful  performance  of  his  duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Holding Company and  participation  in community
and civic  organizations;  provided,  however,  that,  with the  approval of the
Board, as evidenced by a resolution of such Board, from time to time,  Executive
may serve,  or continue to serve,  on the boards of  directors  of, and hold any
other  offices or positions  in,  companies  or  organizations,  which,  in such
Board's  judgment,  will not present any  conflict of interest  with the Holding
Company,  or materially affect the performance of Executive's duties pursuant to
this Agreement.

         (c) In the event  that  Executive's  duties and  responsibilities  with
respect  to the Bank are  temporarily  or  permanently  terminated  pursuant  to
Section 7 or 15 of the Employment  Agreement  dated  December 23, 1992,  between
Executive and the Bank ("Bank  Agreement")  and the course of conduct upon which
such termination is based would not constitute grounds for Termination for Cause
under  Section  7  of  this  Agreement  then  Executive  shall,  to  the  extent
practicable,  assume such duties and responsibilities  formerly performed at the
Bank as part of his duties and responsibilities as President and Chief Executive
Officer of the Holding  Company.  Nothing in this provision shall be interpreted
as  restricting  the Holding  Company's  right to remove  Executive for Cause in
accordance with Section 7 of this Agreement.

3.       COMPENSATION AND REIMBURSEMENT.

         (a) The  compensation  specified under this Agreement shall  constitute
the salary and  benefits  paid for the duties  described in Section 1 and 2. The
Holding  Company shall pay Executive as  compensation  a salary of not less than
$92,500 per year ("Base Salary").  Such Base Salary shall be payable bi-monthly.
During the period of this Agreement,  Executive's  Base Salary shall be reviewed
at least  annually;  the first such  review  will be made no later than one year
from the date of this  Agreement.  Such review shall be conducted by a Committee
designated  by the Board,  and the Board may increase  Executive's  Base Salary.
Such  increased  amount shall then become the "Base Salary" for purposes of this
Agreement.  In addition to the Base Salary  provided in this Section  3(a),  the
Holding  Company shall provide  Executive at no cost to Executive  with all such
other benefits as are provided uniformly to permanent full-time employees of the
Holding  Company  and the  Bank.  Base  Salary  shall  include  any  amounts  of
compensation  deferred by Executive  under a qualified  plan  maintained  by the
Holding Company or the Bank.

         (b) The Holding  Company will provide  Executive with employee  benefit
plans,  arrangements and perquisites  substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the  beginning of the term of this  Agreement,  and the Holding  Company will
not, without Executive's prior written consent,  make any changes in such plans,
arrangements or perquisites which would adversely affect  Executive's  rights or
benefits thereunder. Without limiting the generality of the foregoing provisions
of this Subsection (b), Executive will be entitled to participate in or receive
benefits

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under any employee  benefit  plans  including,  but not  limited  to, retirement
plans, supplemental retirement plans, pension plans,  profit-sharing plans,
health-and-accident plans, medical coverage or any other employee  benefit plan
or arrangement made available by the Holding Company in the future to its senior
executives  and key  management  employees, subject to and on a basis consistent
with the terms,  conditions  and  overall administration  of such plans and
arrangements.  Executive  will be entitled to incentive  compensation and
bonuses  as  provided  in any plan of the  Holding Company in which Executive is
eligible  to  participate.  Nothing  paid to the Executive  under any such plan
or  arrangement  will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.

         (c) In addition to the Base Salary  provided  for by  paragraph  (a) of
this Section 3, the Holding  Company  shall pay or reimburse  Executive  for all
reasonable travel and other reasonable expenses incurred by Executive performing
his   obligations   under  this  Agreement  and  may  provide  such   additional
compensation  in such form and such  amounts  as the Board may from time to time
determine.

         (d)  In  the  event  that  Executive  assumes   additional  duties  and
responsibilities  pursuant to Section 2(c) of this Agreement by reason of one of
the circumstances contained in Section 2(c) of this Agreement, and the Executive
receives or will receive less than the full amount of compensation  and benefits
formerly  entitled to him under the Bank  Agreement,  the Holding  Company shall
assume the obligation to provide Executive with his compensation and benefits in
accordance with the Bank Agreement less any compensation  and benefits  received
from the Bank,  subject to the terms and conditions of this Agreement  including
the termination for cause provisions in Section 7.

4.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

         (a) Upon the occurrence of an Event of Termination  (as herein defined)
during the Executive's term of employment  under this Agreement,  the provisions
of  this  Section  shall  apply.  As  used  in  this  Agreement,  an  "Event  of
Termination"  shall mean and include any one or more of the  following:  (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason  other  than a Change in  Control,  as  defined  in Section  5(a)
hereof, upon Retirement, as defined in Section 6 hereof or for Cause, as defined
in Section 7 hereof;  (ii) unless  consented  to by the  Executive,  Executive's
resignation from the Holding Company's employ, upon any: (A) failure to nominate
Executive  as director  or failure to elect or re-elect or appoint or  reappoint
Executive as President and Chief  Executive  Officer,  (B) change in Executive's
function,  duties,  or  responsibilities,  which change would cause  Executive's
position to become one of lesser responsibility,  importance,  or scope from the
position and  attributes  thereof  described in Section 1, above,  (and any such
change shall be deemed a continuing breach of this Agreement), (C) relocation of
Executive's  principal place  of  employment  by more  than 30  miles  from its
location at the effective date of this Agreement, or a material reduction in the
benefits and perquisites  to the Executive  from those being provided as of the
effective date of this Agreement,  (D) liquidation or dissolution of the Bank or
Holding Company or (E) breach of this Agreement by the Holding Company.  Upon
the occurrence of any event described in clauses (A),

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(B), (C), (D) or (E) above, Executive shall have the right to elect to terminate
his employment  under this Agreement by resignation  upon not less than sixty
(60) days prior  written notice given within a reasonable  period of time not to
exceed,  except in case of a continuing breach, four calendar months after the
event giving rise to said right to elect.

         (b) Upon the occurrence of an Event of Termination, the Holding Company
shall be obligated to pay Executive,  or, in the event of his subsequent  death,
his  beneficiary  or  beneficiaries,  or his  estate,  as the  case  may be,  as
severance  pay or liquidated  damages,  or both, a sum equal to the payments due
for the remaining term of the agreement  including Base Salary,  bonuses and any
other cash or deferred  compensation paid, or to be paid, to the Executive,  and
the amount of any  benefits  received  pursuant to any  employee  benefit  plans
maintained by the Bank or the Holding Company for the term of the Agreement.  At
the election of the  Executive,  which election is to be made within thirty (30)
days of the Date of  Termination,  such payments  shall be made in a lump sum or
paid  monthly  during  the  remaining  term  of  the  agreement   following  the
Executive's  termination.  In the event that no election is made, payment to the
Executive  will be made on a monthly  basis  during  the  remaining  term of the
Agreement. Such payments shall not be reduced in the event the Executive obtains
other employment following termination of employment.

         (c) Upon the occurrence of an Event of Termination, the Holding Company
will  cause to be  continued  life,  medical,  dental  and  disability  coverage
substantially  identical to the coverage  maintained  by the Bank or the Holding
Company  for  Executive  prior to his  termination,  except to the  extent  such
coverage may be changed in its application to all Bank employees.  Such coverage
shall cease upon the expiration of the remaining term of this Agreement.

         (d) In the event  that the  Executive  is  receiving  monthly  payments
pursuant to Section 4(b) hereof,  on an annual  basis,  thereafter,  between the
dates of January 1 and January 31 of each year,  Executive  shall elect whether,
the balance of the amount payable under the Agreement at that time shall be paid
in a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.

5.       CHANGE IN CONTROL.

         (a) No benefit shall be payable under this Section 5 unless there shall
have been a Change in  Control of the Bank or the  Holding  Company as set forth
below.  For  purposes of this Plan, a "Change in Control" of the Bank or Company
shall mean an event of a nature  that:  (i) would be  required to be reported in
response  to Item 1(a) of the  current  report on Form 8-K,  as in effect on the
date hereof,  pursuant to Section 13 or 15(d) of the Securities  Exchange Act of
1934 (the "Exchange Act"); or (ii) results in a Change in Control of the Bank or
the Holding Company within the meaning of the Home Owners' Loan Act of 1933 and
the Rules and  Regulations  promulgated by the Office of Thrift  Supervision (or
its predecessor  agency),  as in effect on the date hereof  (provided,  that in
applying  the  definition  of change in control as set forth under the rules and
regulations of the OTS, the Board shall substitute its judgment for that of the
OTS);  or (iii)  without  limitation  such a Change in  Control  shall be deemed
to have

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occurred at such time as (A) any "person" (as the term is used in Sections
13(d) and 14(d) of the  Exchange  Act) is or becomes  the  "beneficial owner"
(as  defined  in  Rule  13d-3  under  the  Exchange  Act),  directly  or
indirectly, of securities of the Bank or the Holding Company representing 20% or
more of the Bank's or the Holding  Company's  outstanding  securities except for
any securities of the Bank purchased by the Holding  Company in connection  with
the conversion of the Bank to the stock form and any securities purchased by the
Bank's  employee  stock  ownership  plan  and  trust;  or  (B)  individuals  who
constitute  the Board on the date hereof (the  "Incumbent  Board") cease for any
reason to  constitute  at least a  majority  thereof,  provided  that any person
becoming a director subsequent to the date hereof whose election was approved by
a vote of at least  three-quarters  of the  directors  comprising  the Incumbent
Board, or whose  nomination for election by the Holding  Company's  stockholders
was approved by the same Nominating  Committee serving under an Incumbent Board,
shall be, for purposes of this clause (B), considered as though he were a member
of the Incumbent Board; or (C) a plan of reorganization,  merger, consolidation,
sale of all or  substantially  all the assets of the Bank or the Holding Company
or similar  transaction is approved by the Incumbent Board and the shareholders,
or otherwise occurs upon which the Board so notifies the OTS of such occurrence,
and in which the Bank or Holding  Company is not the surviving  institution;  or
(D) a proxy statement shall be distributed  soliciting proxies from stockholders
of the Holding  Company,  by someone  other than the current  management  of the
Holding  Company,  seeking  stockholder  approval  of a plan of  reorganization,
merger  or  consolidation  of the  Holding  Company  or  Bank  with  one or more
corporations  as a result  of  which  the  outstanding  shares  of the  class of
securities  then  subject  to such  plan or  transaction  are  exchanged  for or
converted  into cash or  property  or  securities  not issued by the Bank or the
Holding  Company;  or (E) a tender  offer is made for 20% or more of the  voting
securities of the Bank or Holding Company then outstanding.

         (b) If any of the events described in Section 5(a) hereof  constituting
a Change in Control have occurred or the Board has  determined  that a Change in
Control has occurred,  Executive  shall be entitled to the benefits  provided in
paragraphs  (c),  (d),  (e),  and  (f) of this  Section  5 upon  his  subsequent
termination  of  employment  at any  time  during  the  term of  this  Agreement
(regardless  of whether  such  termination  results  from his  dismissal  or his
resignation  at any  time  during  the  term of  this  Agreement  following  any
demotion,  loss of title,  office or  significant  authority or  responsibility,
reduction in the annual  compensation or benefits or relocation of his principal
place of employment by more than 30 miles from its location immediately prior to
the change in  control),  unless such  termination is because of his death,  or
termination for Cause.

         (c)  Upon  the  occurrence  of a  Change  in  Control  followed  by the
Executive's termination of employment,  the Holding Company shall pay Executive,
or in the event of his subsequent  death, his beneficiary or  beneficiaries,  or
his estate, as the case may be, as severance pay or liquidated damages, or both,
a sum equal to the greater of the  payments  due for the  remaining  term of the
Agreement or three (3) times the average of the three (3) preceding  years' Base
Salary,  including bonuses and any other cash or deferred  compensation paid, or
to be  paid,  to  the  Executive  during  such  years,  and  the  amount  of any
contributions made to any employee benefit plans, on behalf of the Executive,
maintained by the Bank or the Holding Company

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during such years,  except to the extent such  benefits  are  otherwise payable
to Executive under such plans upon a Change in Control.  At the election of the
Executive,  which  election is to be made within thirty (30) days of the Date of
Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the thirty-six (36) months
following the  Executive's termination.  In the event that no election is made,
payment to the  Executive will be made on a monthly  basis during the remaining
term of the Agreement.

         (d)  Upon  the  occurrence  of a  Change  in  Control  followed  by the
Executive's  termination  of  employment,  the Holding  Company will cause to be
continued life, medical,  dental and disability coverage substantially identical
to the coverage  maintained  by the Bank for Executive  prior to his  severance.
Such coverage and payments  shall cease upon the  expiration of thirty-six  (36)
months.

         (e) In the event  that the  Executive  is  receiving  monthly  payments
pursuant to Section 5(c) hereof,  on an annual  basis,  thereafter,  between the
dates of January 1 and January 31 of each year,  Executive  shall elect  whether
the balance of the amount payable under the Agreement at that time shall be paid
in a lump sum or on a pro rata basis  pursuant to such  section.  Such  election
shall be irrevocable for the year for which such election is made.

         (f) Notwithstanding the preceding  paragraphs of this Section 5, in the
event  that  the  aggregate  payments  or  benefits  to be made or  afforded  to
Executive,  which are deemed to be parachute payments as defined in Section 280G
of the Internal  Revenue Code of 1986,  as amended (the "Code") or any successor
thereof,  (the  "Termination  Benefits")  would be deemed to  include an "excess
parachute  payment"  under Section 280G of the Code,  then upon the  Executive's
entitlement to benefits under Section 5 hereof, the Holding Company shall pay to
the  Executive,  or in the event of his  subsequent  death,  his  beneficiary or
beneficiaries,  or his estate,  as the case may be, an amount equal to the total
of all the federal  excise taxes imposed on the Executive  under section 4999 of
the Code;  plus (ii) an amount  equal to any federal and state income taxes owed
by the Executive with respect to any payments or benefits due on the Termination
Benefits.  Notwithstanding  the  preceding,  no benefits shall be payable by the
Holding Company with respect to any excise tax imposed under Section 4999 of the
Code on the amounts paid under this paragraph.

6.       TERMINATION UPON RETIREMENT.

         Termination  by  the  Holding   Company  of  the  Executive   based  on
"Retirement"  shall mean termination in accordance with the Holding Company's or
Bank's  retirement  policy  or in  accordance  with any  retirement  arrangement
established  with  Executive's  consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement  plan of the  Holding  Company  or the Bank and other  plans to which
Executive is a party.

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7.       TERMINATION FOR CAUSE.

         The term "Termination for Cause" shall mean termination  because of the
Executive's  intentional  failure to perform stated duties,  personal dishonesty
which results in material loss to the Holding  Company or one of its affiliates,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order which results in material loss
to the Holding  Company or one of its affiliates or any material  breach of this
Agreement.  For  purposes  of this  Section,  no act,  or the failure to act, on
Executive's  part shall be "willful"  unless done, or omitted to be done, not in
good faith and without  reasonable belief that the action or omission was in the
best  interest of the Holding  Company or its  affiliates.  Notwithstanding  the
foregoing,  Executive  shall not be deemed  to have  been  terminated  for Cause
unless and until there shall have been  delivered to him a Notice of Termination
which shall include a copy of a resolution duly adopted by the affirmative  vote
of not less than  three-fourths  of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice to Executive and
an opportunity  for him,  together with counsel,  to be heard before the Board),
finding  that in the good faith  opinion of the Board,  Executive  was guilty of
conduct justifying  termination for Cause and specifying the particulars thereof
in detail.  The Executive  shall not have the right to receive  compensation  or
other benefits for any period after termination for Cause. Any stock options and
related  limited rights granted to Executive under any stock option plan, or any
unvested  awards granted to Executive  under any other stock benefit plan of the
Bank, the Holding Company or any subsidiary or affiliate  thereof,  shall become
null and void effective upon  Executive's  receipt of Notice of Termination  for
Cause pursuant to Section 9 hereof, and shall not be exercisable by or delivered
to Executive at any time subsequent to such Termination for Cause.

8.       NOTICE.

         (a) Any purported  termination  by the Holding  Company or by Executive
shall be  communicated  by Notice of Termination to the other party hereto.  For
purposes  of this  Agreement,  a "Notice  of  Termination"  shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's  employment  under the
provision so indicated.

         (b) "Date of  Termination"  shall mean the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

         (c) If,  within  thirty  (30) days after any Notice of  Termination  is
given,  the party receiving such Notice of Termination  notifies the other party
that a dispute exists concerning the termination,  except upon the occurrence of
a Change in Control and voluntary termination by the Executive in which case the
Date of  Termination  shall be the date  specified  in the Notice,  the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding arbitration award, or
by a final judgment,  order or

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decree of a court of  competent  jurisdiction (the time for appeal  there from
having  expired and no appeal  having  been perfected)  and provided  further
that the Date of Termination  shall be extended by a notice of dispute  only if
such  notice is given in good faith and the party  giving  such notice  pursues
the  resolution of such  dispute  with reasonable  diligence. Notwithstanding
the pendency of any such dispute,  the Company will continue to pay Executive
his full compensation in effect when the notice giving rise to the dispute was
given (including,  but not limited to, Base Salary) and continue him as a
participant in all  compensation,  benefit and insurance  plans in which he was
participating  when the notice of dispute was given,  until the dispute is
finally  resolved in  accordance  with this Agreement.  Amounts paid under this
Section are in addition to all other amounts due under this  Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.

9.       POST-TERMINATION OBLIGATIONS.

         (a) All payments and benefits to Executive  under this Agreement  shall
be subject to Executive's compliance with paragraph (b) of this Section 9 during
the term of this  Agreement  and for one (1) full year after the  expiration  or
termination hereof.

         (b) Executive shall, upon reasonable  notice,  furnish such information
and  assistance  to the  Holding  Company as may  reasonably  be required by the
Holding  Company in  connection  with any  litigation  in which it or any of its
subsidiaries or affiliates is, or may become, a party.

10.      NON-COMPETITION.

         (a) Upon any termination of Executive's  employment  hereunder pursuant
to an Event of Termination as provided in Section 4 hereof, Executive agrees not
to compete with the Bank and/or the Holding Company for a period of one (1) year
following such  termination in any city, town or county in which the Bank and/or
the Holding  Company has an office or has filed an  application  for  regulatory
approval to establish an office,  determined  as of the  effective  date of such
termination,  except as agreed to pursuant to a  resolution  duly adopted by the
Board.  Executive  agrees that during such period and within said cities,  towns
and counties, Executive shall not work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the  depository,  lending or other  business  activities  of the Bank and/or the
Holding Company.  The parties hereto,  recognizing that irreparable  injury will
result to the Bank and/or the Holding Company,  its business and property in the
event of Executive's  breach of this Subsection 10(a) agree that in the event of
any such  breach by  Executive,  the Bank  and/or the  Holding  Company  will be
entitled,  in  addition  to any other  remedies  and  damages  available,  to an
injunction to restrain the violation hereof by Executive,  Executive's partners,
agents,  servants,  employers,  employees  and all  persons  acting  for or with
Executive.  Executive represents and admits that in the event of the termination
of his  employment  pursuant  to Section 7 hereof,  Executive's experience  and
capabilities are such that Executive can obtain employment in a business engaged
in other  lines  and/or of a  different  nature than the Bank and/or the Holding
Company, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood.  Nothing herein will be  construed

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as  prohibiting  the Bank  and/or the Holding  Company  from pursuing any other
remedies available to the Bank and/or the Holding Company for such  breach or
threatened  breach,  including  the  recovery  of damages  from Executive.

         (b) Executive  recognizes  and  acknowledges  that the knowledge of the
business activities and plans for business activities of the Holding Company and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique  asset of the  business of the Bank.  Executive  will not,  during or
after the term of his employment,  disclose any knowledge of the past,  present,
planned or considered  business  activities of the Bank or affiliates thereof to
any  person,  firm,  corporation,  or other  entity  for any  reason or  purpose
whatsoever.  Notwithstanding the foregoing, Executive may disclose any knowledge
of banking,  financial and/or economic  principles,  concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Holding Company.  In the event of a breach or threatened breach by the Executive
of the  provisions of this Section,  the Holding  Company will be entitled to an
injunction  restraining  Executive  from  disclosing,  in whole or in part,  the
knowledge of the past, present, planned or considered business activities of the
Holding  Company or affiliates  thereof,  or from  rendering any services to any
person, firm,  corporation,  other entity to whom such knowledge, in whole or in
part, has been  disclosed or is threatened to be disclosed.  Nothing herein will
be construed as prohibiting the Holding Company from pursuing any other remedies
available to the Holding Company for such breach or threatened breach, including
the recovery of damages from Executive.

11.      SOURCE OF PAYMENTS.

         All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company.

12.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

         This Agreement  contains the entire  understanding  between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any  predecessor  of the  Holding  Company  and  Executive,  except that this
Agreement  shall not affect or operate  to reduce  any  benefit or  compensation
inuring to the  Executive  of a kind  elsewhere  provided.  No provision of this
Agreement  shall be  interpreted  to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.

13.      EFFECT OF ACTION UNDER BANK AGREEMENT.

         Notwithstanding  any provision  herein to the  contrary,  to the extent
that  compensation  payments  and  benefits are paid to or received by Executive
under the Employment  Agreement dated as of December 23, 1992, between Executive
and the Bank, such  compensation  payments and benefits paid by the Bank will be
deemed to satisfy the  corresponding  obligations  of the Holding  Company under
similar provisions of this Agreement.

                                       9

<PAGE>

14.      NO ATTACHMENT.

         (a) Except as required by law, no right to receive  payments under this
Agreement  shall be  subject to  anticipation,  commutation,  alienation,  sale,
assignment,  encumbrance,  charge,  pledge, or  hypothecation,  or to execution,
attachment,  levy, or similar process or assignment by operation of law, and any
attempt,  voluntary  or  involuntary,  to affect any such action  shall be null,
void, and of no effect.

         (b) This Agreement  shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.

15.      MODIFICATION AND WAIVER.

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

         (b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement,  except by written  instrument of the party charged with such
waiver or estoppel.  No such written waiver shall be deemed a continuing  waiver
unless specifically  stated therein,  and each such waiver shall operate only as
to the specific  term or condition  waived and shall not  constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.

16.      SEVERABILITY.

         If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this  Agreement or any part of such  provision not held so invalid,  and each
such other  provision and part thereof shall to the full extent  consistent with
law continue in full force and effect.

17.      HEADINGS FOR REFERENCE ONLY.

         The headings of sections and paragraphs  herein are included solely for
convenience of reference and shall not control the meaning or  interpretation of
any of the provisions of this Agreement.

18.      GOVERNING LAW.

         This  Agreement  shall be governed by the laws of the State of Indiana,
unless otherwise specified herein.


                                       10


<PAGE>



19.      ARBITRATION.

         Any dispute or  controversy  arising under or in  connection  with this
Agreement shall be settled exclusively by arbitration,  conducted before a panel
of three  arbitrators  sitting in a location  selected by the  Executive  within
fifty (50) miles from the location of the Bank, 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; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination  during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

         In the event any dispute or controversy  arising under or in connection
with Executive's  termination is resolved in favor of the Executive,  whether by
judgment, arbitration or settlement,  Executive shall be entitled to the payment
of all  back-pay,  including  salary,  bonuses and any other cash  compensation,
fringe  benefits and any  compensation  and benefits  due  Executive  under this
Agreement.

20.      PAYMENT OF LEGAL FEES.

         All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of  interpretation  relating to this Agreement shall be paid
or reimbursed by the Holding  Company,  if Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.

21.      INDEMNIFICATION.

         The Holding  Company  shall  provide  Executive  (including  his heirs,
executors and  administrators)  with coverage  under a standard  directors'  and
officers' liability  insurance policy at its expense, or in lieu thereof,  shall
indemnify Executive (and his heirs, executors and administrators) to the fullest
extent  permitted  under  Delaware  law against  all  expenses  and  liabilities
reasonably incurred by him in connection with or arising out of any action, suit
or  proceeding  in which he may be  involved  by  reason  of his  having  been a
director or officer of the Holding Company  (whether or not he continues to be a
director or officer at the time of incurring such expenses or liabilities), such
expenses and  liabilities to include,  but not be limited to,  judgments,  court
costs and attorneys' fees and the cost of reasonable settlements.

22.      SUCCESSOR TO THE HOLDING COMPANY.

         The Holding  Company shall  require any successor or assignee,  whether
direct or indirect, by purchase,  merger,  consolidation or otherwise, to all or
substantially  all the  business or assets of the Bank or the  Holding  Company,
expressly  and  unconditionally  to assume  and  agree to  perform  the  Holding
Company's  obligations under this Agreement,  in the same manner and to the same
extent  that  the  Holding  Company  would be  required  to perform  if no such
succession or assignment had taken place.


                                       11

<PAGE>



                                   SIGNATURES


         IN WITNESS  WHEREOF,  CB Bancorp,  Inc. has caused this Agreement to be
executed and its seal to be affixed hereunto by its duly authorized  officer and
Executive has signed this Agreement, on the 27th day of November, 1996.

ATTEST:                                CB BANCORP, INC.


________________________               BY:________________________________
Secretary                                   Duly Authorized Officer



          [SEAL]



WITNESS:


________________________               BY:________________________________
                                            Joseph F. Heffernan
                                            Executive



<PAGE>


CONFORMED


                                   SIGNATURES


         IN WITNESS  WHEREOF,  CB Bancorp,  Inc. has caused this Agreement to be
executed and its seal to be affixed hereunto by its duly authorized  officer and
Executive has signed this Agreement, on the 27th day of November, 1996.

ATTEST:                                CB BANCORP, INC.


/s/ Allen E. Jones                     BY: /s/ George L. Koehm
____________________________               _____________________________
Allen E. Jones                             George L. Koehm
Secretary                                  Duly Authorized Officer




          [SEAL]




WITNESS:


/s/ Carlyne E. Graves                  BY: /s/ Joseph F. Heffernan
____________________________               _____________________________
Carlyne E. Graves                          Joseph F. Heffernan
                                           Executive