Document:

EXHIBIT 10(13)

                              EMPLOYMENT AGREEMENT

     This Agreement, made and dated as of August 2, 2004, by and between Lincoln
Bank, a federal savings bank  ("Employer"),  and John B. Ditmars,  a resident of
Johnson County, Indiana ("Employee").

                               W I T N E S S E T H

     WHEREAS,  Employee is employed by Employer as its Senior Vice President and
has made valuable  contributions to the profitability and financial  strength of
Employer;

     WHEREAS,  Employer  desires  to  encourage  Employee  to  continue  to make
valuable  contributions  to Employer's  business  operations  and not to seek or
accept employment elsewhere;

     WHEREAS,  Employee  desires to be assured of a secure minimum  compensation
from Employer for his services over a defined term;

     WHEREAS,  Employer desires to assure the continued  services of Employee on
behalf of Employer on an objective and impartial  basis and without  distraction
or  conflict  of  interest  in the event of an  attempt  by any person to obtain
control of Employer or Lincoln  Bancorp  (the  "Holding  Company"),  the Indiana
corporation  which  owns all of the  issued  and  outstanding  capital  stock of
Employer;

     WHEREAS,  Employer  recognizes that when faced with a proposal for a change
of control of Employer or the Holding Company,  Employee will have a significant
role in helping the Boards of  Directors  assess the options  and  advising  the
Boards of  Directors on what is in the best  interests of Employer,  the Holding
Company,  and its  shareholders,  and it is necessary for Employee to be able to
provide this advice and counsel without being influenced by the uncertainties of
his own situation;

     WHEREAS,  Employer  desires  to provide  fair and  reasonable  benefits  to
Employee on the terms and subject to the conditions set forth in this Agreement;

     WHEREAS,   Employer  desires  reasonable  protection  of  its  confidential
business  and  customer  information  which it has  developed  over the years at
substantial  expense and assurance  that Employee will not compete with Employer
for a  reasonable  period  of time  after  termination  of his  employment  with
Employer, except as otherwise provided herein.

     NOW,  THEREFORE,  in consideration of these premises,  the mutual covenants
and undertakings  herein  contained and the continued  employment of Employee by
Employer as its Senior Vice President,  Employer and Employee, each intending to
be legally bound, covenant and agree as follows:

     1.  Upon  the  terms  and  subject  to the  conditions  set  forth  in this
Agreement,  Employer employs Employee as its Senior Vice President, and Employee
accepts such employment.
<PAGE>

     2.  Employee  agrees to serve as Senior Vice  President  of Employer and to
perform  such  duties in that  office as may  reasonably  be  assigned to him by
Employer's  Board of  Directors;  provided,  however,  that such duties shall be
performed  in or from the offices of Employer  currently  located at  Greenwood,
Indiana,  and shall be of the same  character as those  previously  performed by
Employee and  generally  associated  with the office held by Employee.  Employee
shall render services to Employer as its Senior Vice President, in substantially
the same manner and to  substantially  the same extent as Employee  rendered his
services  to First Bank before the date  hereof.  While  employed  by  Employer,
Employee  shall  devote  substantially  all his  business  time and  efforts  to
Employer's  business  during regular  business hours and shall not engage in any
other related business.

     3. The term of this Agreement  shall begin on the date set forth above (the
"Effective  Date") and shall end on the date which is two years  following  such
date; provided,  however, that such term shall be extended  automatically for an
additional year on each anniversary of the Effective Date if Employer's Board of
Directors  determines by resolution that the performance of the Employee has met
the  Board's  requirements  and  standards  and that  this  Agreement  should be
extended prior to such  anniversary of the Effective  Date,  unless either party
hereto gives  written  notice to the other party not to so extend  within ninety
(90)  days  prior  to such  anniversary,  in  which  case no  further  automatic
extension  shall  occur  and the  term  of this  Agreement  shall  end one  year
subsequent  to the  anniversary  as of which the  notice  not to  extend  for an
additional  year is given (such term,  including  any  extension  thereof  shall
herein be referred to as the "Term").  Notwithstanding  the foregoing,  the Term
may end earlier upon the occurrence of any event described in Section 7.

     In  the  event  of  termination  pursuant  to  Section  3,  subject  to the
occurrence of another event  described in Section 7,  compensation  provided for
herein  (including  Base  Compensation)  shall continue to be paid, and Employee
shall  continue  to  participate  in  the  employee  benefit,   retirement,  and
compensation  plans and other  perquisites  as  provided  in Sections 4, 5 and 6
hereof  through  and until the end of the  remaining  one year of the Term.  Any
benefits payable under insurance, health, retirement and bonus plans as a result
of Employee's  participation  in such plans through such date shall be paid when
due under those plans.

     4.   Employee   shall   receive  an  annual   salary  of  $118,500   ("Base
Compensation") payable at regular intervals in accordance with Employer's normal
payroll practices now or hereafter in effect.  Employer may consider and declare
from time to time increases in the salary it pays Employee and thereby increases
in his Base  Compensation.  Prior  to a Change  of  Control,  Employer  may also
declare  decreases in the salary it pays  Employee if the  Operating  results of
Employer are significantly  less favorable than those for the fiscal year ending
December 31, 2004, and Employer makes similar decreases in the salary it pays to
other executive officers of Employer. After a Change in Control,  Employer shall
consider and declare salary increases based upon the following standards:

     Inflation;

     Adjustments to the salaries of other senior management personnel; and

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<PAGE>

     Past performance of Employee and the  contribution  which Employee makes to
     the business and profits of Employer during the Term.

Any and all increases or decreases in Employee's salary pursuant to this Section
shall cause the level of Base  Compensation  to be increased or decreased by the
amount of each such  increase or decrease  for purposes of this  Agreement.  The
increased or decreased  level of Base  Compensation  as provided in this Section
shall  become the level of Base  Compensation  for the  remainder of the Term of
this  Agreement  until  there  is  a  further   increase  or  decrease  in  Base
Compensation as provided herein.

     5. So long as Employee is employed by Employer  pursuant to this Agreement,
he shall be  included  as a  participant  in all  present  and  future  employee
benefit, retirement, and compensation plans available to any management employee
of Employer,  consistent with his Base  Compensation and his positions as Senior
Vice  President of Employer  including,  without  limitation,  Employer's or the
Holding Company's pension plan, 401(k) plan, Stock Option Plan,  Recognition and
Retention Plan and Trust,  Employee Stock Ownership  Plan, and  hospitalization,
disability and group life  insurance  plans,  each of which  Employer  agrees to
continue in effect on terms no less favorable than those  currently in effect as
of the date  hereof (as  permitted  by law)  during  the Term of this  Agreement
unless  prior to a Change of  Control  the  operating  results of  Employer  are
significantly  less favorable than those for the fiscal year ending December 31,
2004,  and unless  (either  before or after a Change of Control)  changes in the
accounting,  legal,  or tax  treatment  of such  plans  would  adversely  affect
Employer's  operating results or financial  condition in a material way, and the
Board  of  Directors  of  Employer  or  the  Holding   Company   concludes  that
modifications  to such  plans  need to be made to avoid  such  adverse  effects.
However,   Employer  may  freeze  or  terminate   the  Lincoln  Bank   Financial
Institutions Retirement Fund without violating its obligations contained in this
Agreement,  nor shall  Employer be  obligated to provide a  replacement  plan or
benefit of equivalent value.

     In addition to the foregoing,  a  nonqualified  stock option for a total of
twenty  thousand  (20,000)  shares of Common Stock of Lincoln  Bancorp  shall be
granted to  Employee as of the  Effective  Date.  The option  price shall be one
hundred percent (100%) of the fair market value of one (1) share of Common Stock
of Lincoln  Bancorp as of the Effective  Date, as determined in accordance  with
the Lincoln  Bancorp  Stock Option Plan,  such option may not be exercised  more
than ten (10) years from the date of this grant, and such option shall otherwise
be subject in all respects to the terms and  conditions  of the Lincoln  Bancorp
Stock Option Plan.

     6. So long as Employee is employed by Employer  pursuant to this Agreement,
Employee shall receive  reimbursement from Employer for all reasonable  business
expenses  incurred in the course of his employment by Employer,  upon submission
to Employer of written  vouchers and  statements for  reimbursement.  So long as
Employee  is  employed  by  Employer  pursuant  to the terms of this  Agreement,
Employer shall continue in effect  vacation  policies  applicable to Employee no
less  favorable from his point of view than those written  vacation  policies in
effect on the date hereof.  So long as Employee is employed by Employer pursuant
to this  Agreement,  Employee  shall be  entitled  to office  space and  working
conditions no less favorable than were in effect for him on the date hereof.

     7.  Subject  to the  respective  continuing  obligations  of  the  parties,
including but not

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<PAGE>

limited to those set forth in  subsections  9(A),  9(B),  9(C) and 9(D)  hereof,
Employee's  employment by Employer may be terminated  prior to the expiration of
the Term of this Agreement as follows:

          (A)  Employer,  by action of its Board of  Directors  and upon written
     notice to Employee,  may  terminate  Employee's  employment  with  Employer
     immediately for cause. For purposes of this subsection 7(A),  "cause" shall
     be defined as (i) personal  dishonesty,  (ii)  incompetence,  (iii) willful
     misconduct,  (iv) breach of fiduciary duty involving  personal profit,  (v)
     intentional failure to perform stated duties, (vi) willful violation of any
     law,  rule,  or  regulation  (other  than  traffic  violations  or  similar
     offenses) or final cease-and-desist  order, or (vii) any material breach of
     any provision of this Agreement.

          (B)  Employer,  by  action  of its Board of  Directors  may  terminate
     Employee's  employment with Employer  without cause at any time;  provided,
     however,  that the  "date  of  termination"  for  purposes  of  determining
     benefits payable to Employee under subsection 8(B) hereof shall be the date
     which  is  60  days  after  Employee   receives   written  notice  of  such
     termination.

          (C)  Employee,  by  written  notice to  Employer,  may  terminate  his
     employment  with  Employer  immediately  for cause.  For  purposes  of this
     subsection  7(C),  "cause" shall be defined as (i) any action by Employer's
     Board of  Directors  to remove the  Employee  as Senior Vice  President  of
     Employer,  except for title changes in connection with promotions,  if any,
     and except where the Employer's Board of Directors  properly acts to remove
     Employee from such office for "cause" as defined in subsection 7(A) hereof,
     (ii) any action by  Employer's  Board of  Directors  to  materially  limit,
     increase,  or modify  Employee's  duties  and/or  authority  as Senior Vice
     President of Employer,  except for changes  commensurate with title changes
     in connection  with  promotions,  if any,  (iii) any failure of Employer to
     obtain the  assumption of the  obligation to perform this  Agreement by any
     successor  or  the  reaffirmation  of  such  obligation  by  Employer,   as
     contemplated in Section 20 hereof;  (iv) Holding  Company's  failure to use
     its best efforts to cause  Employer to convert from a federal  savings bank
     to an  Indiana  commercial  state  bank no later  than one year  after  the
     Effective Time; or (v) any material breach by Employer of a term, condition
     or covenant of this Agreement.

          (D)  Employee,  upon sixty (60) days written  notice to Employer,  may
     terminate his employment with Employer without cause.

          (E) Employee's  employment  with Employer shall terminate in the event
     of Employee's death or disability. For purposes hereof,  "disability" shall
     be defined as Employee's  inability by reason of illness or other  physical
     or mental  incapacity to perform the duties  required by his employment for
     any consecutive  One Hundred Eighty (180) day period,  provided that notice
     of any  termination by Employer  because of Employee's  "disability"  shall
     have been  given to  Employee  prior to the full  resumption  by him of the
     performance of such duties.

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<PAGE>

     8. In the event of  termination  of  Employee's  employment  with  Employer
pursuant to Section 7 hereof, compensation shall continue to be paid by Employer
to Employee as follows:

          (A) In the event of termination  pursuant to subsection  7(A) or 7(D),
     compensation  provided  for  herein  (including  Base  Compensation)  shall
     continue to be paid,  and Employee  shall  continue to  participate  in the
     employee benefit,  retirement, and compensation plans and other perquisites
     as provided in Sections 4, 5 and 6 hereof,  through the date of termination
     specified  in  the  notice  of  termination.  Any  benefits  payable  under
     insurance,  health,  retirement  and bonus plans as a result of  Employee's
     participation  in such plans through such date shall be paid when due under
     those plans. The date of termination specified in any notice of termination
     pursuant to subsection 7(A) shall be no later than the last business day of
     the month in which such notice is provided to Employee.

          (B) In the event of termination  pursuant to subsection  7(B) or 7(C),
     compensation  provided  for  herein  (including  Base  Compensation)  shall
     continue to be paid,  and Employee  shall  continue to  participate  in the
     employee benefit,  retirement, and compensation plans and other perquisites
     as provided in Sections 4, 5 and 6 hereof,  through the date of termination
     specified  in  the  notice  of  termination.  Any  benefits  payable  under
     insurance,  health,  retirement  and bonus plans as a result of  Employee's
     participation  in such plans through such date shall be paid when due under
     those plans. In addition, Employee shall be entitled to continue to receive
     from Employer his Base  Compensation  at the rates in effect at the time of
     termination (1) for three  additional  l2-month  periods if the termination
     follows a Change of Control or (2) for the remaining Term of the Agreement,
     but not less than six (6)  months,  if the  termination  does not  follow a
     Change of Control. In addition, during such periods and except as otherwise
     specifically  provided  herein,  Employer  will  maintain in full force and
     effect for the continued  benefit of Employee each employee welfare benefit
     plan and each employee  pension  benefit plan (as such terms are defined in
     the Employee  Retirement  Income Security Act of 1974, as amended) in which
     Employee was entitled to participate  immediately  prior to the date of his
     termination unless an essentially  equivalent and no less favorable benefit
     is  provided by a  subsequent  employer  of  Employee.  If the terms of any
     employee  welfare benefit plan or employee pension benefit plan of Employer
     do not permit continued participation by Employee, Employer will arrange to
     provide  to  Employee  a  benefit  substantially  similar  to,  and no less
     favorable  than,  the benefit he was entitled to receive under such plan at
     the end of the  period of  coverage.  For  purposes  of this  Agreement,  a
     "Change of Control"  shall mean an  acquisition of "control" of the Holding
     Company or of Employer within the meaning of 12 C.F.R.  ss.574.4(a)  (other
     than a change  of  control  resulting  from a  trustee  or other  fiduciary
     holding  shares of  Common  Stock  under an  employee  benefit  plan of the
     Holding Company or any of its  subsidiaries).  Notwithstanding  anything to
     the contrary in the foregoing,  any benefits  payable under this subsection
     8(B) shall be subject to the limitations on severance benefits set forth in
     Section  310 of the OTS  Thrift  Activities  Bulletin,  as in effect on the
     Effective Date.

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<PAGE>

          (C)  In  the  event  of  termination   pursuant  to  subsection  7(E),
     compensation  provided  for  herein  (including  Base  Compensation)  shall
     continue to be paid,  and Employee  shall  continue to  participate  in the
     employee benefit,  retirement, and compensation plans and other perquisites
     as provided in Sections 4, 5 and 6 hereof,  (i) in the event of  Employee's
     death,  through  the date of  death,  or (ii) in the  event  of  Employee's
     disability,  through the date of proper notice of disability as required by
     subsection 7(E). Any benefits payable under insurance,  health,  retirement
     and  bonus  plans as a result of  Employer's  participation  in such  plans
     through such date shall be paid when due under those plans.

          (D) 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  7(B) or
     (C), 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 Holding  Company  stock  option plan then in
     effect whether or not such options are then  exercisable 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 Holding
     Company  shares in the  over-the-counter  market as  reported on the NASDAQ
     system 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 Holding  Company shares  acquired
     in  connection  with the Change of Control  of the  Holding  Company by any
     person or group acquiring such control.

     9. In order to  induce  Employer  to enter  into this  Agreement,  Employee
hereby agrees as follows:

          (A) While  Employee is employed by Employer  and for a period of three
     years after  termination of such employment,  Employee shall not divulge or
     furnish  any trade  secrets  (as  defined  in IND.  CODE ss.  24-2-3-2)  of
     Employer or any confidential  information acquired by him while employed by
     Employer  concerning  the  policies,  plans,  procedures  or  customers  of
     Employer to any person,  firm or  corporation,  other than Employer or upon
     its  written  request,  or  use  any  such  trade  secret  or  confidential
     information  directly or indirectly  for  Employee's own benefit or for the
     benefit of any person, firm or corporation other than Employer,  since such
     trade secrets and  confidential  information are  confidential and shall at
     all times remain the property of Employer.

          (B)  For a  period  of  two  years  after  termination  of  Employee's
     employment   by  Employer  for  reasons  other  than  those  set  forth  in
     subsections  7(B) or (C) of this Agreement,  Employee shall not directly or
     indirectly  provide  banking or  bank-related  services  to or solicit  the
     banking or bank-related business of any customer of Employer at the time of
     such provision of services or  solicitation  which  Employee  served either
     alone or with others while employed by

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<PAGE>

     Employer in any city, town,  borough,  township,  village or other place in
     which  Employee  performed  services for Employer  while employed by it, or
     assist any actual or potential competitor of Employer to provide banking or
     bank-related  services  to  or  solicit  any  such  customer's  banking  or
     bank-related business in any such place. Notwithstanding the foregoing, the
     period for  application  of this  restriction  in subsection  9(B) shall be
     reduced from two years to six months  following  termination  of Employee's
     employment:  (i) in the event of  termination  under  Section 3 if Employer
     provides the notice not to extend for an additional  year; (ii) if Employer
     fails to appoint Jerry R. Engle as President and Chief Executive Officer of
     Employer by December 31, 2005; or (iii) if Jerry R. Engle's employment with
     Employer  has been  terminated  without  cause by Employer or with cause by
     Jerry R. Engle, as described in the separate  employment  agreement between
     Jerry R. Engle and Employer.

          (C) While  Employee is  employed  by Employer  and for a period of one
     year after  termination  of  Employee's  employment by Employer for reasons
     other than those set forth in  subsections  7(B) or (C) of this  Agreement,
     Employee  shall not,  directly  or  indirectly,  as  principal,  agent,  or
     trustee,  or through  the  agency of any  corporation,  partnership,  trade
     association,  agent  or  agency,  engage  in any  banking  or  bank-related
     business which  competes with the business of Employer as conducted  during
     Employee's  employment by Employer if Employee's  office with the competing
     business is within a radius of  twenty-five  (25) miles of Employer's  main
     office or within a radius of twenty-five (25) miles of Employer's Greenwood
     office.  (Notwithstanding  the  foregoing,  ownership  of less than 2% of a
     class of publicly held securities in any corporation  shall not violate the
     provisions  of  this  subsection  (C).)  Furthermore,  notwithstanding  the
     foregoing,  the period for  application  of this  restriction in subsection
     9(C) shall be reduced from one year to six months following  termination of
     Employee's  employment:  (i) in the event of termination under Section 3 if
     Employer  provides the notice not to extend for an additional year; (ii) if
     Employer  fails to appoint Jerry R. Engle as President and Chief  Executive
     Officer of Employer  by December  31,  2005;  or (iii) if Jerry R.  Engle's
     employment with Employer has been  terminated  without cause by Employer or
     with cause by Jerry R.  Engle,  as  described  in the  separate  employment
     agreement between Jerry R. Engle and Employer.

          (D) If Employee's  employment by Employer is terminated  hereunder for
     any reason,  Employee will turn over immediately thereafter to Employer all
     business  correspondence,   letters,  papers,  reports,  customers'  lists,
     financial statements,  credit reports or other confidential  information or
     documents of Employer or its  affiliates  in the  possession  or control of
     Employee,  all of which  writings are and will  continue to be the sole and
     exclusive property of Employer or its affiliates.

If  Employee's  employment  by  Employer is  terminated  during the Term of this
Agreement for reasons set forth in  subsections  7(B) or (C) of this  Agreement,
Employee   shall  have  no   obligations   to  Employer   with  respect  to  the
noncompetition provisions under this Section 9.

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     10. Any termination of Employee's  employment with Employer as contemplated
by Section 7 hereof,  except in the circumstances of Employee's death,  shall be
communicated by written "Notice of Termination" by the terminating  party to the
other party hereto.  Any "Notice of Termination"  pursuant to subsections  7(A),
7(C) or 7(E) shall  indicate the specific  provisions of this  Agreement  relied
upon and shall  set  forth in  reasonable  detail  the  facts and  circumstances
claimed to provide a basis for such termination.

     11.  If  Employee  is  suspended   and/or   temporarily   prohibited   from
participating  in the conduct of  Employer's  affairs by a notice  served  under
section  8(e)(3) or (g)(1) of the Federal Deposit  Insurance Act (12 U.S.C.  ss.
1818(e)(3) or (g)(1)),  Employer's  obligations  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,  Employer shall (i) pay Employee all
or part of the compensation  withheld while its obligations under this Agreement
were suspended and (ii)  reinstate (in whole or in part) any of its  obligations
which were suspended.

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

     13. If Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit  Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this provision shall not affect any vested rights of
Employer or Employee.

     14. All obligations  under this Agreement shall be terminated except to the
extent  determined  that the  continuation of the Agreement is necessary for the
continued  operation  of  Employer:  (i) by the Director of the Office of Thrift
Supervision  or his or her designee  (the  "Director"),  at the time the Federal
Deposit Insurance  Corporation enters into an agreement to provide assistance to
or on behalf of Employer  under the authority  contained in Section 13(c) of the
Federal Deposit  Insurance Act; or (ii) by the Director at the time the Director
approves a  supervisory  merger to resolve  problems  related  to  operation  of
Employer or when  Employer is  determined by the Director to be in an unsafe and
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     15.  Anything in this  Agreement  to the contrary  notwithstanding,  in the
event that the  Employer's  independent  public  accountants  determine that any
payment by the Employer to or for the benefit of the  Employee,  whether paid or
payable pursuant to the terms of this Agreement,  would be non-deductible by the
Employer for federal income tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the amount payable to or for
the benefit of the Employee pursuant to this Agreement shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Section 15, the "Reduced
Amount" shall be the amount which  maximizes the amount payable  without causing
the payment to be  non-deductible by the Employer because of Section 280G of the
Code. Any payments made to Employee pursuant to this Agreement or otherwise, are
subject to and conditional upon their  compliance with 12 U.S.C.  ss.1828(k) and
FDIC  regulation  12  C.F.R.  Part 359  (Golden  Parachute  and  Indemnification
Payments)  and any  other  regulations  promulgated  thereunder,  to the  extent
applicable to such parties.

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<PAGE>

     16. If a dispute arises  regarding the termination of Employee  pursuant to
Section 7 hereof or as to the  interpretation  or  enforcement of this Agreement
and  Employee  obtains a final  judgment  in his  favor in a court of  competent
jurisdiction  or his claim is settled by Employer  prior to the  rendering  of a
judgment by such a court,  all  reasonable  legal fees and expenses  incurred by
Employee in contesting or disputing any such termination or seeking to obtain or
enforce  any  right or  benefit  provided  for in this  Agreement  or  otherwise
pursuing his claim shall be paid by Employer, to the extent permitted by law.

     17. Should  Employee die after  termination of his employment with Employer
while any amounts are payable to him hereunder,  this  Agreement  shall inure to
the  benefit of and be  enforceable  by  Employee's  executors,  administrators,
heirs,  distributees,  devisees and legatees and all amounts  payable  hereunder
shall be paid in  accordance  with the  terms of this  Agreement  to  Employee's
devisee,  legatee or other  designee  or, if there is no such  designee,  to his
estate.

     18 For  purposes of this  Agreement,  notices and all other  communications
provided  for herein  shall be in writing and shall be deemed to have been given
when delivered or mailed by United States  registered or certified mail,  return
receipt requested, postage prepaid, addressed as follows:

         If to Employee:   John B. Ditmars
                           86 East SR 144
                           Franklin, IN 46131

         If to Employer:   Lincoln Bank
                           1121 E. Main Street
                           P.O. Box 510
                           Plainfield, Indiana   46168-0510

or to such address as either party hereto may have  furnished to the other party
in writing in  accordance  herewith,  except  that  notices of change of address
shall be effective only upon receipt.

     19. The validity,  interpretation,  and performance of this Agreement shall
be governed by the laws of the State of Indiana, except as otherwise required by
mandatory operation of federal law.

     20. Employer shall require any successor  (whether  direct or indirect,  by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Employer, by agreement in form and substance  satisfactory
to Employee to expressly  assume and agree to perform this Agreement in the same
manner and same extent that Employer  would be required to perform it if no such
succession had taken place.  Failure of Employer to obtain such agreement  prior
to the  effectiveness  of any such  succession  shall be a material  intentional
breach of this Agreement and shall entitle  Employee to terminate his employment
with Employer  pursuant to subsection  7(C) hereof.  As used in this  Agreement,
"Employer" shall mean Employer as hereinbefore  defined and any successor to its
business or assets as aforesaid.

                                       9
<PAGE>

     21. No provision of this  Agreement  may be modified,  waived or discharged
unless such waiver,  modification or discharge is agreed to in writing signed by
Employee  and  Employer.  No waiver by  either  party  hereto at any time of any
breach by the other  party  hereto of, or  compliance  with,  any  condition  or
provision of this  Agreement to be performed by such other party shall be deemed
a waiver  of  dissimilar  provisions  or  conditions  at the  same or any  prior
subsequent time. No agreements or representations, oral or otherwise, express or
implied,  with  respect to the  subject  matter  hereof have been made by either
party which are not set forth expressly in this Agreement.

     22. The invalidity or  unenforceability of any provisions of this Agreement
shall not affect the validity or  enforceability of any other provisions of this
Agreement which shall remain in full force and effect.

     23. This  Agreement  may be executed in one or more  counterparts,  each of
which shall be deemed an original but all of which together shall constitute one
and the same agreement.

     24. This  Agreement is personal in nature and neither  party hereto  shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations  hereunder  except as  provided  in Section 17 and Section 20 above.
Without  limiting  the  foregoing,  Employee's  right  to  receive  compensation
hereunder shall not be assignable or transferable,  whether by pledge,  creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or  distribution  as set forth in Section 17 hereof,  and in the
event of any  attempted  assignment  or  transfer  contrary  to this  paragraph,
Employer  shall have no liability to pay any amounts so attempted to be assigned
or transferred.

     IN WITNESS  WHEREOF,  the parties have caused the  Agreement to be executed
and delivered as of the day and year first above set forth.

                                      LINCOLN BANK

                                      By: /s/ T. Tim Unger
                                         ---------------------------------------
                                          T. Tim Unger, President

                                      "Employer"

                                      /s/ John B. Ditmars
                                      ------------------------------------------
                                      John B. Ditmars

                                      "Employee"

     The undersigned, Lincoln Bancorp, sole shareholder of Employer, agrees that
if it shall be  determined  for any reason that any  obligations  on the part of
Employer to continue to make any payments  due under this  Agreement to Employee
is unenforceable for any reason,  Lincoln Bancorp,  agrees to honor the terms of
this  Agreement and continue to make any such payments due hereunder to Employee
pursuant to the terms of this Agreement.

                                       10
<PAGE>

                                      LINCOLN BANCORP

                                      By: /s/ T. Tim Unger
                                         ---------------------------------------
                                          T. Tim Unger, PresidentExhibit 10(16)

                                                        --------------, -------

                        INCENTIVE STOCK OPTION AGREEMENT
                   UNDER THE LINCOLN BANCORP STOCK OPTION PLAN

--------------:

     You are hereby granted the option to purchase a total of __________  shares
of the Common Stock,  without par value  ("Common  Stock"),  of Lincoln  Bancorp
("LB") over the next ten years  pursuant to LB's Stock Option Plan (the "Plan"),
on the following terms and conditions:

     1. The purchase  price of the shares of Common Stock subject to this option
is $________  per share.  You must pay this  purchase  price in cash at the time
this option is  exercised;  provided,  however  that,  with the approval of LB's
Stock Compensation Committee (the "Committee"),  beginning on and after December
30, 2001,  you may exercise  your option by tendering to LB whole shares of LB's
Common  Stock owned by you, or any  combination  of whole  shares of LB's Common
Stock  owned by you and  cash,  having  a fair  market  value  equal to the cash
exercise  price of the shares with  respect to which the option is  exercised by
you.  For this  purpose,  any shares so tendered  shall be deemed to have a fair
market  value equal to the mean  between the highest and lowest  quoted  selling
prices for the shares on the date of exercise of the option (or if there were no
sales on such date the  weighted  average of the means  between  the highest and
lowest  quoted  selling  prices on the nearest  date before and the nearest date
after the date of  exercise  of the  option),  as  reported  in The Wall  Street
Journal or a similar  publication  selected by the  Committee.  To exercise this
option,  you must send written notice to the LB's Secretary at the address noted
in Section 12 hereof. Such notice shall state the number of shares in respect of
which the option is being  exercised,  shall identify the option exercised as an
incentive  stock  option,  and  shall be  signed by the  person  or  persons  so
exercising  the option.  Such notice shall be accompanied by payment of the full
cash option price for such shares or, if the Committee has authorized the use of
the stock swap feature provided for above, such notice shall be followed as soon
as practicable by the delivery of the option price for such shares. Certificates
evidencing shares of Common Stock will not be delivered to you until payment has
been made. Under certain circumstances, the Plan permits you to deliver a notice
to your  broker to deliver the cash to LB upon the receipt of such cash from the
sale of LB Common  Stock.  Contact the  Secretary of LB for further  information
about this procedure if you are interested in it.

     2. The term of this option (the "Option Term") shall be for a period of ten
years from the date of this letter,  subject to earlier  termination as provided
in paragraphs 3 and 4 hereof.  When the option becomes  exercisable with respect
to any shares of Common  Stock,  those shares may be  purchased at any time,  or
from time to time, in whole or in part, until the Option Term expires, but in no
case may fewer  than 100 such  shares be  purchased  at any one time,  except to

<PAGE>

purchase a residue of fewer than 100 shares.  Notwithstanding  the  foregoing or
any other provision herein, the option may not be exercised during the first six
months of the Option Term.

     3. If you cease to be an employee of LB or any of its  subsidiaries for any
reason other than retirement,  permanent and total  disability,  or death,  this
option  shall  forthwith  terminate.  If  your  employment  by LB or  any of its
subsidiaries is terminated by reason of retirement (which means such termination
of employment as shall entitle you to early or normal retirement  benefits under
any  then  existing  pension  plan  of LB or one of its  subsidiaries),  you may
exercise  this  option  to the  extent  it was  exercisable  at the date of your
retirement in whole or in part within three years after such retirement, but not
later than the date upon which this option  would  otherwise  expire;  provided,
however,  that if you are a director or a director  emeritus at the time of your
retirement,  you may exercise this option in whole or in part until the later of
(a) three  years  after your date of  retirement  or (b) six  months  after your
service as a director and/or director  emeritus  terminates,  but not later than
the date upon which this option would  otherwise  expire.  If you cease to be an
employee of LB or any of its  subsidiaries  because of your  permanent and total
disability,  you may exercise this option in whole or in part at any time within
one year after such termination of employment by reason of such disability,  but
not later than the date upon which this option would otherwise expire.

     4. If you die while employed by LB or any of its subsidiaries, within three
years after the  termination of your  employment  because of retirement  (or, if
later,  six months  following  your  termination  of  service  as a director  or
director  emeritus  of LB),  or within  one year after the  termination  of your
employment  because  of  permanent  and total  disability,  this  option  may be
exercised  in  whole  or in part  by your  executor,  administrator,  or  estate
beneficiaries  at any time  within one (1) year after the date of your death but
not later than the date upon which this option would otherwise expire.

     5. This option is  non-transferable  otherwise  than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order. It
may be exercised only by you or your  guardian,  if any, or, if you die, by your
executor,  administrator,  or  beneficiaries  of your estate who are entitled to
your option.

     6. All rights to exercise this option will expire,  in any event, ten years
from the date of this letter.

     7.  Certificates  evidencing shares issued upon exercise of this option may
bear a  legend  setting  forth  among  other  things  such  restrictions  on the
disposition  or  transfer  of the  shares of LB as LB may deem  consistent  with
applicable federal and state laws.

     8.  Nothing  in  this  option  shall  restrict  the  right  of  LB  or  its
subsidiaries to terminate your employment at any time with or without cause.

     9. This option is subject to all the terms,  provisions  and  conditions of
the Plan, which is incorporated herein by reference,  and to such regulations as
may from time to time be adopted by the  Committee.  A copy of the Plan has been
furnished to you and an additional copy may be obtained from LB. In the event of
any  conflict  between the  provisions  of the Plan and

<PAGE>

the provisions of this letter, the terms,  conditions and provisions of the Plan
shall control, and this letter shall be deemed to be modified accordingly.

     10. This Stock Option  Agreement is intended to grant an option which meets
all of the requirements of incentive stock options as defined in Section 422A of
the  Internal  Revenue  Code.  Subject  to and upon the  terms,  conditions  and
provisions  of the Plan,  each and every  provision of this  Agreement  shall be
administered,  construed and interpreted so that the option granted herein shall
so qualify as an incentive  stock  option.  Each  provision of this Stock Option
Agreement  which would prevent this option from qualifying as an incentive stock
option, if any, shall be void.

     11. You agree to advise LB  immediately  upon any sale or  transfer  of any
shares of Common Stock  received upon exercise of this option to the extent such
sale or  transfer  takes place prior to the later of (a) two years from the date
of grant or (b) one year from the date of exercise of this option.

     12.  All  notices  by you to LB and  your  exercise  of the  option  herein
granted,  shall be addressed to Lincoln  Bancorp,  P.O. Box 510,  1121 East Main
Street, Plainfield,  Indiana 46168, Attention:  Secretary, or such other address
as LB may, from time to time, specify.

     13. This option may not be  exercised  until LB has been advised by counsel
that all other applicable legal requirements have been met.

                                        Very truly yours,

                                        LINCOLN BANCORP

                                        By:
                                           -------------------------------------
                                           T. Tim Unger, President and
                                           Chief Executive Officer

Accepted on the date above written

----------------------------------

Printed:
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