Document:

lsb_8k0226ex101.htm

    Exhibit
10.1

     

     

    Amended and
Restated

    Employment
Agreement

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of this 27 day of February, 2008 (the “Commencement Date”), by and
between LSB Financial Corp. (the "Company") and Randolph F. Williams (the
"Employee"), but effective as of January 1, 2005 (the “Effective
Date”).

     

    This
Agreement amends and restates the prior Employment Agreement between the Company
and the Executive dated February 9, 2006 (the “Prior Agreement”).  It
has been amended and restated for compliance with the final regulations under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
effective as of January 1, 2005.

     

    WHEREAS,
the Employee currently serves as the President and Chief Executive Officer of
the Company and of the Company's wholly-owned subsidiary, Lafayette Savings
Bank, FSB (the "Bank");

     

    WHEREAS,
the board of directors of the Company (the "Board of Directors" or the "Board")
believes it is in the best interests of the Company and its subsidiaries for the
Company to enter into this Agreement with the Employee in order to assure
continuity of management of the Company and its subsidiaries; and

     

    WHEREAS,
the Board of Directors has approved and authorized the execution of this
Agreement with the Employee to take effect on the Commencement
Date;

     

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

     

    1.           Definitions.

     

    (a)           The
term “Change in Control” means any of the following:

     

    (i)           a
change in the ownership of the Bank or the Company which shall occur on the date
that any one person, or more than one person acting as a group, acquires
ownership of stock of the Bank or the Company that, together with stock held by
such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Bank or the
Company.  However, if any one person, or more than one person acting
as a group, is considered to own more than fifty percent (50%) of the total fair
market value or total voting power of the stock of the Bank or the Company, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in the ownership of the Bank or the Company (or to cause a
change in the effective control of the Bank or the Company (within the meaning
of subsection (ii)).  An increase in the percentage of stock owned by
any one person, or persons acting as a group, as a result of a transaction in
which the Bank or the Company acquires its stock in exchange for property will
be treated as an acquisition of stock for purposes of this
subsection.  This subsection applies only when there is a transfer of
stock of the Bank or the Company (or issuance of stock of the Bank or the
Company) and stock in the Bank or the Company remains outstanding after the
transaction.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (ii)           a
change in the effective control of the Bank or the Company, which shall occur
only on either of the following dates:

     

    
      	
               
      

            	
              (1)

            	
              the
      date any one person, or more than one person acting as a group, acquires
      (or has acquired during the 12 month period ending on the date of the most
      recent acquisition by such person or persons) ownership of stock of the
      Bank or the Company possessing thirty percent (30%) or more of the total
      voting power of the stock of the Bank or the
  Company.

            

    

     

    
      	
               
      

            	
              (2)

            	
              the
      date a majority of members of the Company’s board of directors is replaced
      during any 12 month period by directors whose appointment or election is
      not endorsed by a majority of the members of the Company’s board of
      directors before the date of the appointment or election; provided,
      however, that this provision shall not apply if another corporation is a
      majority shareholder of the
Company.

            

    

     

    If any
one person, or more than one person acting as a group, is considered to
effectively control the Bank or the Company, the acquisition of additional
control of the Bank or the Company by the same person or persons is not
considered to cause a change in the effective control of the Bank or the Company
(or to cause a change in the ownership of the Bank or the Company within the
meaning of subsection (i) of this section).

     

    (iii)           a
change in the ownership of a substantial portion of the Bank’s assets, which
shall occur on the date that any one person, or more than one person acting as a
group, acquires (or has acquired during the 12 month period ending on the date
of the most recent acquisition by such person or persons) assets from the Bank
that have a total gross fair market value equal to or more than forty percent
(40%) of the total gross fair market value of all of the assets of the Bank
immediately before such acquisition or acquisitions.  For this
purpose, gross fair market value means the value of the assets of the Bank, or
the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.  No change in control occurs
under this subsection (iii) when there is a transfer to an entity that is
controlled by the shareholders of the Bank immediately after the
transfer.  A transfer of assets by the Bank is not treated as a change
in the ownership of such assets if the assets are transferred to –

     

    
      	
               
      

            	
              (1)

            	
              a
      shareholder of the Bank (immediately before the asset transfer) in
      exchange for or with respect to its
stock;

            

    

     

    
      	
               
      

            	
              (2)

            	
              an
      entity, 50 percent or more of the total value or voting power of which is
      owned, directly or indirectly, by the
Bank.

            

    

     

    
      	
               
      

            	
              (3)

            	
              a
      person, or more than one person acting as a group, that owns, directly or
      indirectly, 50 percent or more of the total value or voting power of all
      the outstanding stock of the Bank;
or

            

    

     

    
      	
               
      

            	
              (4)

            	
              an
      entity, at least 50 percent of the total value or voting power of which is
      owned, directly or indirectly, by a person described in paragraph
      (3).

            

    

     

    For
purposes of this subsection (iii) and except as otherwise provided in paragraph
1)

     

    
      
         

      

      
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    above, a
person’s status is determined immediately after the transfer of the
assets.

     

    (iv)           For
purposes of this section, persons will not be considered to be acting as a group
solely because they purchase or own stock of the same corporation at the same
time, or as a result of the same public offering.  Persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Bank or the Company; provided, however,
that they will not be considered to be acting as a group if they are owners of
an entity that merges into the Bank or the Company where the Bank or the Company
is the surviving corporation.

     

    (b)           The
term "Consolidated Subsidiaries" means any subsidiary or subsidiaries of the
Company (or its successors) that are part of the consolidated group of the
Company (or its successors) for federal income tax reporting.

     

    (c)           The
term "Date of Termination" means the date upon which the Employee's employment
with the Company or the Bank or both ceases, as specified in a notice of
termination pursuant to Section 8 of this Agreement.

     

    (d)           The
term "Involuntary Termination" means the termination of the employment of the
Employee (i) by either the Company or the Bank or both without his express
written consent; or (ii) by the Employee within 120 days following the earlier
of the date the Employee becomes aware of or the date the Employee reasonably
should have become aware of a material diminution of or interference with his
duties, responsibilities or benefits, including (without limitation) any of the
following actions unless consented to in writing by the Employee that remains
uncontested for at least 30 days after the Employee provides the Company notice
of such occurrence (which notice must be provided not less than 90 days after
such occurrence): (1) a requirement that the Employee be based at any place
other than Lafayette, Indiana, or within 35 miles thereof, except for reasonable
travel on Company or Bank business; (2) a material demotion of the Employee; (3)
a material reduction in the number or seniority of personnel reporting to the
Employee or a material 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 Company-wide reduction in staff; (4)
a reduction in the Employee's salary or a material adverse change in the
Employee's perquisites, benefits, contingent benefits or vacation, other than
prior to a Change in Control as part of an overall program applied uniformly and
with equitable effect to all members of the senior management of the Bank or the
Company; (5) a material permanent increase in the required hours of work or the
workload of the Employee; or (6) the failure of the Board of Directors ( or a
board of directors of a successor of the Company) to elect him as President and
Chief Executive Officer of the Company ( or a successor of the Company) or any
action by the Board of Directors ( or a board of directors of a successor of the
Company) removing him from any of such offices, or the failure of the board of
directors of the Bank (or any successor of the Bank) to elect him as President
and Chief Executive Officer of the Bank (or any successor of the Bank) or any
action by such board ( or board of a successor of the Bank) removing him from
any of such offices. The term "Involuntary Termination" does not include
Termination for Cause or termination of employment due to retirement, death,
disability or suspension or temporary or permanent prohibition from
participation in the conduct of the Bank's affairs under Section 8 of the
Federal Deposit Insurance Act ("FDIA ").

     

    (e)           The
terms "Termination for Cause" and "Terminated for Cause" mean termination of the
employment of the Employee with either the Company or the Bank, as the case may
be, because of the Employee's dishonesty, incompetence, willful misconduct,
breach of a fiduciary

     

    
      
         

      

      
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    duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (excluding traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. No act or failure to act by the Employee shall be
considered willful unless the Employee acted or failed to act with an absence of
good faith and without a reasonable belief that his action or failure to act was
in the best interest of the Company. 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 entire membership of the Board of Directors at a
meeting of the Board duly 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 of Directors the Employee has engaged in conduct
described in the preceding sentence and specifying the particulars thereof in
detail. The opportunity of the Employee to be heard before the Board shall not
affect the right of the Employee to arbitration as set forth in paragraph
19.

     

    2.           Term.  The
initial term of this Agreement shall commence on the Effective Date and end on
December 31, 2008, subject to earlier termination as provided herein. Beginning
on December 31, 2008, and on each anniversary thereafter, the term of this
Agreement shall be extended for a period of one year, provided that the Company
has not given notice to the Employee in writing at least 90 days prior to such
anniversary that the term of this Agreement shall not be extended further, and
provided further that the Employee has not received an unsatisfactory
performance review by either the Board of Directors or the board of directors of
the Bank.

     

    3.           Employment. The
Employee is employed as the President and Chief Executive Officer of the Company
and the Bank effective as of the Commencement Date. As such, the Employee shall
render administrative and management services as are customarily performed by
persons situated in similar executive capacities, and shall have such other
powers and duties as the Board of Directors or the board of directors of the
Bank may prescribe from time to time. The Employee shall also render services to
any subsidiary or subsidiaries of the Company or the Bank as requested by the
Company or the Bank from time to time consistent with his executive position.
The Employee shall devote his best efforts and full time and attention to the
business and affairs of the Company and the Bank to the extent necessary to
discharge his responsibilities hereunder. The Employee may (i) serve on
corporate or charitable boards or committees, and (ii) manage personal
investments, so long as such activities do not interfere materially with
performance of his responsibilities hereunder.

     

    4.           Compensation.

     

    (a)           Salary. The
Company agrees to pay the Employee during the term of this Agreement the annual
salary established by the Board of Directors, which during 2008 shall be
$204,366 per year (the "Company Salary"); provided that any amounts of salary
actually paid to the Employee by any Consolidated Subsidiaries shall reduce the
amount to be paid by the Company to the Employee. The Company Salary shall be
paid no less frequently than monthly and shall be subject to customary tax
withholding. The amount of the Employee's Company Salary shall be increased (but
shall not be decreased) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after December 31, 2007. Adjustments in salary or
other compensation shall not limit or reduce any other obligation of the Company
under this Agreement.

     

    
      
         

      

      
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    (b)           Discretionary: Bonuses. The
Employee shall be entitled to participate in an equitable manner with all other
executive officers of the Company and the Bank in such performance-based and
discretionary bonuses, if any, as are authorized and declared by the Board of
Directors for executive officers of the Company and by the board of directors of
the Bank for executive officers of the Bank.

     

    (c)           Expenses. The
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive officers
of the Company and the Bank, provided that the Employee accounts for such
expenses as required under such policies and procedures.

     

    (d)           Deferral of Non-Deductible
Compensation. In
the event that the Employee's aggregate compensation (including compensatory
benefits which are deemed remuneration for purposes of Section 162(m) of the
Internal Revenue Code of 1986 as amended (the "Code'.')) from the Company and
the Consolidated Subsidiaries for any calendar year exceeds the greater of (i)
$1,000,000 or (ii) the maximum amount of compensation deductible by the Company
or any of the Consolidated Subsidiaries in any calendar year under Section
162(m) of the Code (the "maximum allowable amount"), then any such amount in
excess of the maximum allowable amount shall be mandatorily deferred with
interest thereon at 8% per annum, compounded annually, to a calendar year such
that the amount to be paid to the Employee in such calendar year, including
deferred amounts and interest thereon, does not exceed the maximum allowable
amount. Subject to the foregoing, deferred amounts including interest thereon
shall be payable at the earliest time permissible. All unpaid deferred amounts
shall be paid to the Employee not later than his Date of Termination unless his
Date of Termination is on a December 31st, in which case, the unpaid deferred
amounts shall be paid to the Employee on the first business day of the next
succeeding calendar year. The provisions of this subsection shall survive any
termination of the Employee's employment and any termination of this
Agreement.

     

    5.           Benefits.

     

    (a)           Participation in Benefit
Plans. The
Employee shall be entitled to participate, to the same extent as executive
officers of the Company and the Bank generally, in all plans of the Company and
the Bank relating to pension, retirement, thrift, profit-sharing, savings, group
or other life insurance, hospitalization, medical and dental coverage, travel
and accident insurance, education, cash bonuses, and other retirement or
employee benefits or combinations thereof. In addition, the Employee shall be
entitled to be considered for benefits under all of the stock and stock
option  related plans in which the Company's or the Bank's executive
officers are eligible or become eligible to participate.

     

    (b)           Fringe
Benefits. The
Employee shall be eligible to participate in, and receive benefits under, any
other fringe benefit plans or perquisites which are or may become generally
available to the Company's or the Bank's executive officers, including but not
limited to supplemental retirement, incentive compensation, supplemental medical
or life insurance plans, company cars, club dues, physical examinations,
financial planning and tax preparation services.

     

    (c)           Automobile. The
Company shall lease an automobile of the Company's choosing for the sole use of
the Employee, at no cost to the Employee for lease terms of no more than four
years.

     

    
      
         

      

      
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    (d)           Country Club Dues.  The
Company shall pay for the Employee any initiation fees, monthly dues and
assessments for a membership interest which shall include golf privileges, and
any other business related charges at a local country club.

     

    (e)           Salary and Benefits Provided
by the Bank. To
the extent that the Bank pays salary and pays or provides other compensation and
benefits of any kind provided for in this Agreement, the Company's obligation do
so under this Agreement shall be excused.

     

    6.           Vacations;
Leave. The
Employee shall be entitled to annual paid vacation, in accordance with the
policies established by the Board of Directors and the board of directors of the
Bank for executive officers, in no event less than 23 days per year, and to
voluntary leaves of absence, with or without pay, from time to time at such
times and upon such conditions as the Board of Directors may determine in its
discretion.

     

    7.           Termination of
Employment. The
Board of Directors may terminate the Employee's employment at any time and such
termination of employment, except in the case of Termination for Cause, shall
not prejudice the Employee's right to compensation or other benefits under this
Agreement.

     

    (a)           Termination for
Cause.  
In the event of Termination for Cause, the Company shall pay the Employee the
Employee's salary through the Date of Termination, and the Company shall have no
further obligation to the Employee under this Agreement.

     

    (b)           Voluntary
Termination. The
Employee's employment may be voluntarily terminated by the Employee at any time
upon 90 days' written notice to the Company or such shorter period as may be
agreed upon between the Employee and the Board of Directors, for reasons other
than reasons that constitute Involuntary Termination. In the event of such
voluntary termination, the Bank shall be obligated to continue to pay to the
Employee the Employee's salary and benefits only through the Date of
Termination, at the time such payments are due, and the Company shall have no
further obligation to the Employee under this Agreement.

     

    (c)           Involuntary Termination Not
Related to a Change in Control. In
the event the Employee experiences an Involuntary Termination not related to a
Change in Control, (1) the Company shall pay to the Employee during the
remaining term of this Agreement the Employee's salary at the rate in effect
immediately prior to the Date of Termination, payable in such manner and at such
times as such salary would have been payable to the Employee under Section 4(a)
if the Employee had continued to be employed by the Company, and (2) the Company
shall provide to the Employee during the remaining term of this Agreement health
insurance benefits as maintained for the benefit of its Senior Executives from
time to time during the remaining term of the Agreement on substantially the
same terms as would apply if he had continued to be employed.

     

    (d)           Involuntary Termination
Related to a Change in Control. In
the event the Employee experiences an Involuntary Termination at the time of, or
within 12 months following a Change in Control, the Company shall (1) pay to the
Employee in a lump sum in cash within 25 business days after the Date of
Termination an amount equal to 299% of the Employee's "base amount" as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code");
and (2) provide to the Employee during the remaining term of this Agreement, at
no cost to Employee, health benefits as are maintained for Senior Executives
from time to time during the remaining term of this Agreement on substantially
the same terms as would apply if he had continued to be
employed.  Anything in this Agreement to the contrary
notwithstanding,

     

    
      
         

      

      
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    in the
event that the Company's independent public accountants determine that any
payment by the Company 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
Company or the Bank for federal income tax purposes because of Section 280G of
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 7(d), the “Reduced Amount” shall
be the amount which maximizes the amount payable without causing the payment to
be non-deductible by the Company or the Bank 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.
§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.

     

    (e)           Death;
Disability.  In
the event of the death of the Employee while employed under this Agreement and
prior to any termination of employment, the Employee's estate, or such person as
the Employee may have previously designated in writing, shall be entitled to
receive from the Company the salary of the Employee through the last day of the
calendar month in which the Employee died. If the Employee becomes "permanently
disabled" while employed under this Agreement, the Board of Directors shall be
entitled to terminate this Agreement and the employment of the Employee at any
time at its discretion. For purposes of this Agreement, the term "permanently
disabled" means any medically determinable physical or mental impairment which
can be expected to result in death or to last for a continuous period of not
less than 12 months and which (i) renders Executive unable to engage in any
substantial gainful activity or (ii) entitles Executive to income replacement
benefits for a period of not less than three months under an accident and
benefit plan covering employees of the Company, as reasonably determined by a
duly licensed physician selected in good faith by the Company.

     

    (f)           Temporary Suspension or
Prohibition. If
the Employee is suspended 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)(l) of the FDIA, 12 U.S.C. § 1818(e)(3) and (g)(l), the Company'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, the
Company may in its discretion (i) pay the 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.

     

    (g)           Permanent Suspension or
Prohibition. If
the Employee is removed 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)(l)
of the FDIA, 12 U.S.C. § 1818(e)(4) and (g)(l), all obligations of the Company
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.

     

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

     

    (i)           Termination by
Regulators. All
obligations of the Company 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 (the "Director") or his or her designee, at the time the Federal
Deposit Insurance

     

    
      
         

      

      
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    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; or (ii) by the Director or
his or her designee, at the time the Director 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 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.

     

    8.           Limits on Payments to
Specified Executives.  To
the extent the Employee is a “specified employee” (as defined below), payments
due to the Employee under this Agreement that represent payment of deferred
compensation that is subject to Section 409A of the Code shall begin no sooner
than six months after the Employee’s separation from service; provided, however,
that any payments not made during the six month period described in this Section
9 shall be made in a single lump sum as soon as administratively practicable
after the expiration of such six month period; provided, further, that, to the
extent this Agreement provides for payment of deferred compensation only upon an
involuntary separation from service or pursuant to a window program, the six
month delay required under this Section 9 shall not apply to the portion of any
payment resulting from the Employee’s “involuntary separation from service” (as
defined in Treasury Reg. Section 1.409A-1(n) and including a “separation from
service for good reason,” as defined in Treasury Reg. Section 1.409A 1(n)(2))
that (i) is payable no later than the last day of the second year following the
year in which the separation from service occurs, and (ii) does not exceed two
times the lesser of (1) the Employee’s annualized compensation for the year
prior to the year in which the separation from service occurs, or (2) the dollar
limit described in Section 401(a)(17) of the Code.  It is expressly
intended and understood that payments made under Section 7(d) do not represent
payments of deferred compensation subject to Section 409A of the Code and are
not subject to the six month delay required by this Section
8.  Further, it is expected that payments made under Section 7(c)(1)
will satisfy the requirements set forth in (i) and (ii) above and will,
therefore, not be subject to the six month delay required by this Section
8.

     

    To the
extent any life, health, disability or other welfare benefit coverage provided
to the Employee under this Agreement would be taxable to the Employee, the
taxable amount of such coverage shall not exceed the applicable dollar amount
under Section 402(g)(1)(B) of the Code determined as of the year in which the
Employee’s separation from service occurs.  The intent of the
foregoing sentence is to permit the Company and the Bank to treat the provision
of such benefits as a limited payment under Treasury Reg. Section
1.409A-1(a)(9)(v)(D) so as to avoid application of the six month delay rule for
specified employees.  For purposes of this Agreement, any reference to
severance of employment or termination of employment shall mean a “separation
from service” as defined in Treasury Reg. Section 1.409A-1(h).

     

    For
purposes of this Agreement, the term “specified employee” shall have the meaning
set forth in Treasury Reg. Section 1.409A-1(i) and shall include, without
limitation, (1) an officer of the Bank or the Company having annual compensation
greater than $130,000 (as adjusted for inflation under the Code), (2) a five
percent owner of the Bank or the Company, or (3) a one percent owner of the Bank
or the Company having annual compensation of more than $150,000.  The
determination of whether the Employee is a “specified employee” shall be made by
the Company in good faith applying the applicable Treasury
regulations.

     

    9.           Notice of
Termination. In
the event that the Company or the Bank, or both, desire to terminate the
employment of the Employee during the term of this Agreement, the Company or the
Bank, or both, shall deliver to the Employee a written notice of termination,
stating

     

    
      
         

      

      
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    whether
such termination constitutes Termination for Cause or Involuntary Termination,
setting forth in reasonable detail the facts and circumstances that are the
basis for the termination, and specifying the date upon which employment shall
terminate, which date shall be at least 30 days after the date upon which the
notice is delivered, except in the case of Termination for Cause. In the event
that the Employee determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such involuntary termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Employee desires to effect a voluntary
termination as described in Section 7(b) above, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 90 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.

     

    10.           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.

     

    11.           Attorneys
Fees. The
Company shall pay all legal fees and related expenses (including the costs of
experts, evidence and counsel) incurred by the Employee as. a result of (i) the
Employee's contesting or disputing any termination of employment, or (ii) the
Employee's seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company (or its
successors) or the Consolidated Subsidiaries under which the Employee is or may
be entitled to receive benefits; provided that the Company's obligation to pay
such fees and expenses is subject to the Employee's prevailing with respect to
the matters in dispute in any action initiated by the Employee or the Employee's
having been determined to have acted reasonably and in good faith with respect
to any action initiated by the Company or the Bank.

     

    12.           Non-Disclosure and
Non-Solicitation.

     

    (a)           Non-Disclosure. The
Employee acknowledges that he has acquired, and will continue to acquire while
employed by the Company and/or any Consolidated Subsidiary, special knowledge of
the business, affairs, strategies and plans of the Company and the consolidated
Subsidiaries which has not been disclosed to the public and which constitutes
confidential and proprietary business information owned by the Company and the
Consolidated Subsidiaries, including but not limited to, information about the
customers, customer lists, software, data, formulae, processes, inventions,
trade secrets, marketing information and plans, and business strategies of the
Company and the Consolidated Subsidiaries, and other information about the
products and services offered or developed or planned to be offered or developed
by the Company and/or the Consolidated Subsidiaries ("Confidential
Information"). The Employee agrees that, without the prior written consent of
the Company, he shall not, during the term of his employment or at any time
thereafter, in any manner directly or indirectly disclose any Confidential
Information to any person or entity other than the Company and the Consolidated
Subsidiaries. Notwithstanding the foregoing, if the Employee is requested or
required (including but not limited to by oral questions, interrogatories,
requests for information or documents in legal proceeding, subpoena, civil
investigative demand or other similar process) to disclose any Confidential
Information the Employee shall provide the Company with prompt written notice of
any such request or requirement so that the Company and/or a Consolidated
Subsidiary may seek

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 12(a). If, in the absence of a protective order or
other remedy or the receipt of a waiver from the Company, the Employee is
nonetheless legally compelled to disclose Confidential Information to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
the Employee may, without liability hereunder, disclose to such tribunal only
that portion of the Confidential Information which is legally required to be
disclosed, provided that the Employee exercise his best efforts to preserve the
confidentiality of the Confidential Information, including without limitation by
cooperating with the Company and/or a Consolidated Subsidiary to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information by such tribunal. On the
Date of Termination, the Employee shall promptly deliver to the Company all
copies of documents or other records (including without limitation electronic
records) containing any Confidential Information that is in his possession or
under his control, and shall retain no written or electronic record of any
Confidential Information.

     

    (b)           Non-Solicitation. During
the three year period next following the Date of Termination, the Employee shall
not directly or indirectly solicit, encourage, or induce any person while
employed by the Company or any Consolidated Subsidiary to (i) leave the Company
or any Consolidated Subsidiary, (ii) cease his or her employment with the
Company or any Consolidated Subsidiary or (iii) accept employment with another
entity or person.

     

    The
provisions of this Section 12 shall survive any termination of the Employee's
employment and any termination of this Agreement.

     

    13.           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
Company shall require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) 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
Company would be required to perform it if no such succession or assignment had
taken place. Failure of the 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 and benefits from
the Company in the same amount and on the same terms as provided for an
Involuntary Termination under Section 7 hereof. For purposes of implementing the
provisions of this Section 13(a), the date on which any such succession becomes
effective shall be deemed the Date of Termination.

     

    (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.

     

    14.           Prior
Agreements/Amendments.  Upon
the Effective Date of this Agreement, all prior employment agreements, still in
effect, between the parties related to the employment of the Employee shall be
deemed null and void and without effect, including, without limitation, the
Employment Agreement dated February 9, 2006, between the parties.

     

    15.           Notice. For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    when
personally delivered or sent by certified mail, return receipt requested,
postage prepaid, to the Company at its home office, to the attention of the
Board of Directors with a copy to the Secretary of the Company, or, if to the
Employee, to such home or other address as the Employee has most recently
provided in writing to the Company.

     

    16.           Amendments. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties, except as herein otherwise provided.

     

    17.           Headings. The
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.

     

    18.           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.

     

    19.           Governing
Law. This
Agreement shall be governed by the laws of the State of Indiana.

     

    20.           Arbitration. Any
dispute or controversy arising under or in connection with this Agreement (other
than relating to the enforcement of the provisions of Section 12) 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.

     

    21.           Equitable and Other Judicial
Relief. In
the event of an actual or threatened breach by the Employee of any of the
provisions of Section 12, the Company shall be entitled to equitable relief in
the form of an injunction from a court of competent jurisdiction and such other
equitable and legal relief as such court deems appropriate under the
circumstances. The parties agree that the Company shall not be required to post
any bond in connection with the grant or issuance of an injunction (preliminary,
temporary and/or permanent) by a court of competent jurisdiction, and if a bond
is nevertheless required, the parties agree that it shall be in a nominal
amount. The parties further agree that in the event of a breach by the Employee
of any of the provisions of Section 12, the Company will suffer irreparable
damage and its remedy at law against the Employee is inadequate to compensate it
for such damage.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have executed this Amended and Restated Employment
Agreement as of the day and year first above written.

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

    
 

    
      
        	
                Attest:

              	 
      	
                LSB
      FINANCIAL CORP.

                 

              
	 
      	 
      	 
      	 
      	 
      
	
                By:

              	/s/
      Mary Jo David	 
      	
                By:

              	/s/
      Mariellen M. Neudeck
	 
      	
                Mary
      Jo David

              	 
      	 
      	
                Mariellen
      M. Neudeck

              
	 
      	 
      	 
      	
                Its:

              	
                Chairman
      of the Board

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                EMPLOYEE

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	/s/
      Randolph F. Williams
	 
      	 
      	 
      	
                Randolph
      F. Williams

              

      

       

       

       

      12lsb_8k0226ex102.htm

    Exhibit
10.2

     

     

    Amended and
Restated

    Employment
Agreement

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered
into as of this 27 day of February, 2008 (the “Commencement Date”), by and
between LSB Financial Corp. (the “Company”) and Mary Jo David (the “Employee”),
but effective as of January 1, 2005 (the “Effective Date”).

     

    This
Agreement amends and restates the prior Employment Agreement between the Company
and the Executive dated February 9, 2006 (the “Prior Agreement”).  It
has been amended and restated for compliance with the final regulations under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
effective as of January 1, 2005.

     

    WHEREAS,
the Employee currently serves as the Vice President and Chief Financial Officer
of the Company and of the Company's wholly-owned subsidiary, Lafayette Savings
Bank, FSB (the “Bank”);

     

    WHEREAS,
the board of directors of the Company (the “Board of Directors” or the “Board”)
believes it is in the best interests of the Company and its subsidiaries for the
Company to enter into this Agreement with the Employee in order to assure
continuity of management of the Company and its subsidiaries; and

     

    WHEREAS,
the Board of Directors has approved and authorized the execution of this
Agreement with the Employee to take effect on the Commencement
Date;

     

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

     

    1.           Definitions.

     

    (a)           The
term “Change in Control” means any of the following:

     

    (i)           a
change in the ownership of the Bank or the Company which shall occur on the date
that any one person, or more than one person acting as a group, acquires
ownership of stock of the Bank or the Company that, together with stock held by
such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Bank or the
Company.  However, if any one person, or more than one person acting
as a group, is considered to own more than fifty percent (50%) of the total fair
market value or total voting power of the stock of the Bank or the Company, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in the ownership of the Bank or the Company (or to cause a
change in the effective control of the Bank or the Company (within the meaning
of subsection (ii)).  An increase in the percentage of stock owned by
any one person, or persons acting as a group, as a result of a transaction in
which the Bank or the Company acquires its stock in exchange for property will
be treated as an acquisition of stock for purposes of this
subsection.  This subsection applies only when there is a transfer of
stock of the Bank or the Company (or issuance of stock of the Bank or the
Company) and stock in the Bank or the Company remains outstanding after the
transaction.

     

    (ii)           a
change in the effective control of the Bank or the Company, which shall occur
only on either of the following dates:

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (1)

            	
              the
      date any one person, or more than one person acting as a group, acquires
      (or has acquired during the 12 month period ending on the date of the most
      recent acquisition by such person or persons) ownership of stock of the
      Bank or the Company possessing thirty percent (30%) or more of the total
      voting power of the stock of the Bank or the
  Company.

            

    

     

    
      	
               
      

            	
              (2)

            	
              the
      date a majority of members of the Company’s board of directors is replaced
      during any 12 month period by directors whose appointment or election is
      not endorsed by a majority of the members of the Company’s board of
      directors before the date of the appointment or election; provided,
      however, that this provision shall not apply if another corporation is a
      majority shareholder of the
Company.

            

    

     

    If any
one person, or more than one person acting as a group, is considered to
effectively control the Bank or the Company, the acquisition of additional
control of the Bank or the Company by the same person or persons is not
considered to cause a change in the effective control of the Bank or the Company
(or to cause a change in the ownership of the Bank or the Company within the
meaning of subsection (i) of this section).

     

    (iii)           a
change in the ownership of a substantial portion of the Bank’s assets, which
shall occur on the date that any one person, or more than one person acting as a
group, acquires (or has acquired during the 12 month period ending on the date
of the most recent acquisition by such person or persons) assets from the Bank
that have a total gross fair market value equal to or more than forty percent
(40%) of the total gross fair market value of all of the assets of the Bank
immediately before such acquisition or acquisitions.  For this
purpose, gross fair market value means the value of the assets of the Bank, or
the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.  No change in control occurs
under this subsection (iii) when there is a transfer to an entity that is
controlled by the shareholders of the Bank immediately after the
transfer.  A transfer of assets by the Bank is not treated as a change
in the ownership of such assets if the assets are transferred to –

     

    
      	
               
      

            	
              (1)

            	
              a
      shareholder of the Bank (immediately before the asset transfer) in
      exchange for or with respect to its
stock;

            

    

     

    
      	
               
      

            	
              (2)

            	
              an
      entity, 50 percent or more of the total value or voting power of which is
      owned, directly or indirectly, by the
Bank.

            

    

     

    
      	
               
      

            	
              (3)

            	
              a
      person, or more than one person acting as a group, that owns, directly or
      indirectly, 50 percent or more of the total value or voting power of all
      the outstanding stock of the Bank;
or

            

    

     

    
      	
               
      

            	
              (4)

            	
              an
      entity, at least 50 percent of the total value or voting power of which is
      owned, directly or indirectly, by a person described in paragraph
      (3).

            

    

     

    For
purposes of this subsection (iii) and except as otherwise provided in paragraph
1) above, a person’s status is determined immediately after the transfer of the
assets.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (iv)           For
purposes of this section, persons will not be considered to be acting as a group
solely because they purchase or own stock of the same corporation at the same
time, or as a result of the same public offering.  Persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Bank or the Company; provided, however,
that they will not be considered to be acting as a group if they are owners of
an entity that merges into the Bank or the Company where the Bank or the Company
is the surviving corporation..

     

    (b)           The
term “Consolidated Subsidiaries” means any subsidiary or subsidiaries of the
Company (or its successors) that are part of the consolidated group of the
Company (or its successors) for federal income tax reporting.

     

    (c)           The
term “Date of Termination” means the date upon which the Employee's employment
with the Company or the Bank or both ceases, as specified in a notice of
termination pursuant to Section 8 of this Agreement.

     

    (d)           The
term “Involuntary Termination” means the termination of the employment of the
Employee (i) by either the Company or the Bank or both without her express
written consent; or (ii) by the Employee within 120 days following the earlier
of the date the Employee becomes aware of or the date the Employee reasonably
should have become aware of a material diminution of or interference with her
duties, responsibilities or benefits, including (without limitation) any of the
following actions unless consented to in writing by the Employee: that remains
uncontested for at least 30 days after the Employee provides the Company notice
of such occurrence (which notice must be provided not less than 90 days after
such occurrence): (1) a requirement that the Employee be based at any place
other than Lafayette, Indiana, or within 35 miles thereof, except for reasonable
travel on Company or Bank business; (2) a material demotion of the Employee; (3)
a material reduction in the number or seniority of personnel reporting to the
Employee or a material 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 Company-wide reduction in staff; (4)
a reduction in the Employee's salary or a material adverse change in the
Employee's perquisites, benefits, contingent benefits or vacation, other than
prior to a Change in Control as part of an overall program applied uniformly and
with equitable effect to all members of the senior management of the Bank or the
Company; (5) a material permanent increase in the required hours of work or the
workload of the Employee; or (6) the failure of the Board of Directors ( or a
board of directors of a successor of the Company) to elect her as Vice President
and Chief Financial Officer of the Company ( or a successor of the Company) or
any action by the Board of Directors ( or a board of directors of a successor of
the Company) removing her from any of such offices, or the failure of the board
of directors of the Bank (or any successor of the Bank) to elect her as Vice
President and Chief Financial Officer of the Bank (or any successor of the Bank)
or any action by such board ( or board of a successor of the Bank) removing her
from any of such offices. The term “Involuntary Termination” does not include
Termination for Cause or termination of employment due to retirement, death,
disability or suspension or temporary or permanent prohibition from
participation in the conduct of the Bank's affairs under Section 8 of the
Federal Deposit Insurance Act (“FDIA “).

     

    (e)           The
terms “Termination for Cause” and “Terminated for Cause” mean termination of the
employment of the Employee with either the Company or the Bank, as the case may
be, because of the Employee's 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
(excluding traffic violations or similar offenses) or final

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    cease-and-desist
order, or material breach of any provision of this Agreement. No act or failure
to act by the Employee shall be considered willful unless the Employee acted or
failed to act with an absence of good faith and without a reasonable belief that
her action or failure to act was in the best interest of the Company. 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 entire
membership of the Board of Directors at a meeting of the Board duly 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 of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail. The opportunity of
the Employee to be heard before the Board shall not affect the right of the
Employee to arbitration as set forth in paragraph 19.

     

    2.           Term.  The
initial term of this Agreement shall commence on the Effective Date and end on
December 31, 2008, subject to earlier termination as provided herein. Beginning
on December 31, 2008, and on each anniversary thereafter, the term of this
Agreement shall be extended for a period of one year, provided that the Company
has not given notice to the Employee in writing at least 90 days prior to such
anniversary that the term of this Agreement shall not be extended further, and
provided further that the Employee has not received an unsatisfactory
performance review by either the Board of Directors or the board of directors of
the Bank.

     

    3.           Employment. The
Employee is employed as the Vice President and Chief Financial Officer of the
Company and the Bank effective as of the Commencement Date. As such, the
Employee shall render administrative and management services as are customarily
performed by persons situated in similar executive capacities, and shall have
such other powers and duties as the Board of Directors or the board of directors
of the Bank may prescribe from time to time. The Employee shall also render
services to any subsidiary or subsidiaries of the Company or the Bank as
requested by the Company or the Bank from time to time consistent with her
executive position. The Employee shall devote her best efforts and full time and
attention to the business and affairs of the Company and the Bank to the extent
necessary to discharge her responsibilities hereunder. The Employee may (i)
serve on corporate or charitable boards or committees, and (ii) manage personal
investments, so long as such activities do not interfere materially with
performance of her responsibilities hereunder.

     

    4.           Compensation.

     

    (a)           Salary. The
Company agrees to pay the Employee during the term of this Agreement the annual
salary established by the Board of Directors, which during 2008 shall be
$109,585 per year (the “Company Salary”); provided that any amounts of salary
actually paid to the Employee by any Consolidated Subsidiaries shall reduce the
amount to be paid by the Company to the Employee. The Company Salary shall be
paid no less frequently than monthly and shall be subject to customary tax
withholding. The amount of the Employee's Company Salary shall be increased (but
shall not be decreased) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after December 31, 2007. Adjustments in salary or
other compensation shall not limit or reduce any other obligation of the Company
under this Agreement.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b)           Discretionary:
Bonuses. The
Employee shall be entitled to participate in an equitable manner with all other
executive officers of the Company and the Bank in such performance based and
discretionary bonuses, if any, as are authorized and declared by the Board of
Directors for executive officers of the Company and by the board of directors of
the Bank for executive officers of the Bank.

     

    (c)           Expenses. The
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive officers
of the Company and the Bank, provided that the Employee accounts for such
expenses as required under such policies and procedures.

     

    (d)           Deferral of Non-Deductible
Compensation. In
the event that the Employee's aggregate compensation (including compensatory
benefits which are deemed remuneration for purposes of Section 162(m) of the
Internal Revenue Code of 1986 as amended (the “Code'.')) from the Company and
the Consolidated Subsidiaries for any calendar year exceeds the greater of (i)
$1,000,000 or (ii) the maximum amount of compensation deductible by the Company
or any of the Consolidated Subsidiaries in any calendar year under Section
162(m) of the Code (the “maximum allowable amount”), then any such amount in
excess of the maximum allowable amount shall be mandatorily deferred with
interest thereon at 8% per annum, compounded annually, to a calendar year such
that the amount to be paid to the Employee in such calendar year, including
deferred amounts and interest thereon, does not exceed the maximum allowable
amount. Subject to the foregoing, deferred amounts including interest thereon
shall be payable at the earliest time permissible. All unpaid deferred amounts
shall be paid to the Employee not later than her Date of Termination unless her
Date of Termination is on a December 31st, in which case, the unpaid deferred
amounts shall be paid to the Employee on the first business day of the next
succeeding calendar year. The provisions of this subsection shall survive any
termination of the Employee's employment and any termination of this
Agreement.

     

    5.           Benefits.

     

    (a)           Participation in Benefit
Plans. The
Employee shall be entitled to participate, to the same extent as executive
officers of the Company and the Bank generally, in all plans of the Company and
the Bank relating to pension, retirement, thrift, profit-sharing, savings, group
or other life insurance, hospitalization, medical and dental coverage, travel
and accident insurance, education, cash bonuses, and other retirement or
employee benefits or combinations thereof. In addition, the Employee shall be
entitled to be considered for benefits under all of the stock and stock
option  related plans in which the Company's or the Bank's executive
officers are eligible or become eligible to participate.

     

    (b)           Fringe
Benefits. The
Employee shall be eligible to participate in, and receive benefits under, any
other fringe benefit plans or perquisites which are or may become generally
available to the Company's or the Bank's executive officers, including but not
limited to supplemental retirement, incentive compensation, supplemental medical
or life insurance plans, company cars, club dues, physical examinations,
financial planning and tax preparation services.

     

    (c)           Salary and Benefits Provided
by the Bank. To
the extent that the Bank pays salary and pays or provides other compensation and
benefits of any kind provided for in this Agreement, the Company's obligation do
so under this Agreement shall be excused.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    6.           Vacations;
Leave. The
Employee shall be entitled to annual paid vacation, in accordance with the
policies established by the Board of Directors and the board of directors of the
Bank for executive officers, in no event less than 28 days per year, and to
voluntary leaves of absence, with or without pay, from time to time at such
times and upon such conditions as the Board of Directors may determine in its
discretion.

     

    7.           Termination of
Employment. The
Board of Directors may terminate the Employee's employment at any time and such
termination of employment, except in the case of Termination for Cause, shall
not prejudice the Employee's right to compensation or other benefits under this
Agreement.

     

    (a)           Termination for
Cause. In
the event of Termination for Cause, the Company shall pay the Employee the
Employee's salary through the Date of Termination, and the Company shall have no
further obligation to the Employee under this Agreement.

     

    (b)           Voluntary
Termination. The
Employee's employment may be voluntarily terminated by the Employee at any time
upon 90 days' written notice to the Company or such shorter period as may be
agreed upon between the Employee and the Board of Directors, for reasons other
than reasons that constitute Involuntary Termination. In the event of such
voluntary termination, the Bank shall be obligated to continue to pay to the
Employee the Employee's salary and benefits only through the Date of
Termination, at the time such payments are due, and the Company shall have no
further obligation to the Employee under this Agreement.

     

    (c)           Involuntary Termination Not
Related to a Change in Control. In
the event the Employee experiences an Involuntary Termination not related to a
Change in Control, (1) the Company shall pay to the Employee during the
remaining term of this Agreement the Employee's salary at the rate in effect
immediately prior to the Date of Termination, payable in such manner and at such
times as such salary would have been payable to the Employee under Section 4(a)
if the Employee had continued to be employed by the Company, and (2) the Company
shall provide to the Employee during the remaining term of this Agreement health
insurance benefits as maintained for the benefit of its Senior Executives from
time to time during the remaining term of the Agreement on substantially the
same terms as would apply if she had continued to be employed.

     

    (d)           Involuntary Termination
Related to a Change in Control. In
the event the Employee experiences an Involuntary Termination at the time of, or
within 12 months following a Change in Control, the Company shall (1) pay to the
Employee in a lump sum in cash within 25 business days after the Date of
Termination an amount equal to 299% of the Employee's “base amount” as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”);
and (2) provide to the Employee during the remaining term of this Agreement, at
no cost to Employee, health benefits as are maintained for Senior Executives
from time to time during the remaining term of this Agreement on substantially
the same terms as would apply if she had continued to be
employed.  Anything in this Agreement to the contrary notwithstanding,
in the event that the Company's independent public accountants determine that
any payment by the Company 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 Company or the Bank for federal income tax purposes because of Section 280G
of 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 7(d), the “Reduced Amount” shall
be the amount which maximizes the amount payable without causing the payment to
be non-deductible by the

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Company
or the Bank 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. §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.

     

    (e)           Death;
Disability.  In
the event of the death of the Employee while employed under this Agreement and
prior to any termination of employment, the Employee's estate, or such person as
the Employee may have previously designated in writing, shall be entitled to
receive from the Company the salary of the Employee through the last day of the
calendar month in which the Employee died. If the Employee becomes “permanently
disabled” while employed under this Agreement, the Board of Directors shall be
entitled to terminate this Agreement and the employment of the Employee at any
time at its discretion. For purposes of this Agreement, the term “permanently
disabled” means any medically determinable physical or mental impairment which
can be expected to result in death or to last for a continuous period of not
less than 12 months and which (i) renders Executive unable to engage in any
substantial gainful activity or (ii) entitles Executive to income replacement
benefits for a period of not less than three months under an accident and
benefit plan covering employees of the Company, as reasonably determined by a
duly licensed physician selected in good faith by the Company.

     

    (f)           Temporary Suspension or
Prohibition. If
the Employee is suspended 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)(l) of the FDIA, 12 U.S.C. § 1818(e)(3) and (g)(l), the Company'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, the
Company may in its discretion (i) pay the 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.

     

    (g)           Permanent Suspension or
Prohibition. If
the Employee is removed 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)(l)
of the FDIA, 12 U.S.C. § 1818(e)(4) and (g)(l), all obligations of the Company
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.

     

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

     

    (i)           Termination by
Regulators. All
obligations of the Company 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 (the “Director”) or her or her designee, at the time the Federal
Deposit Insurance 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; or (ii) by the Director or her or her designee, at the time the Director
or her 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 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.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    8.           Limits on Payments to
Specified Executives.  To
the extent the Employee is a “specified employee” (as defined below), payments
due to the Employee under this Agreement that represent payment of deferred
compensation that is subject to Section 409A of the Code shall begin no sooner
than six months after the Employee’s separation from service; provided, however,
that any payments not made during the six month period described in this Section
9 shall be made in a single lump sum as soon as administratively practicable
after the expiration of such six month period; provided, further, that, to the
extent this Agreement provides for payment of deferred compensation only upon an
involuntary separation from service or pursuant to a window program, the six
month delay required under this Section 9 shall not apply to the portion of any
payment resulting from the Employee’s “involuntary separation from service” (as
defined in Treasury Reg. Section 1.409A-1(n) and including a “separation from
service for good reason,” as defined in Treasury Reg. Section 1.409A 1(n)(2))
that (i) is payable no later than the last day of the second year following the
year in which the separation from service occurs, and (ii) does not exceed two
times the lesser of (1) the Employee’s annualized compensation for the year
prior to the year in which the separation from service occurs, or (2) the dollar
limit described in Section 401(a)(17) of the Code.  It is expressly
intended and understood that payments made under Section 7(d) do not represent
payments of deferred compensation subject to Section 409A of the Code and are
not subject to the six month delay required by this Section
8.  Further, it is expected that payments made under Section 7(c)(1)
will satisfy the requirements set forth in (i) and (ii) above and will,
therefore, not be subject to the six month delay required by this Section
8.

     

    To the
extent any life, health, disability or other welfare benefit coverage provided
to the Employee under this Agreement would be taxable to the Employee, the
taxable amount of such coverage shall not exceed the applicable dollar amount
under Section 402(g)(1)(B) of the Code determined as of the year in which the
Employee’s separation from service occurs.  The intent of the
foregoing sentence is to permit the Company and the Bank to treat the provision
of such benefits as a limited payment under Treasury Reg. Section
1.409A-1(a)(9)(v)(D) so as to avoid application of the six month delay rule for
specified employees.  For purposes of this Agreement, any reference to
severance of employment or termination of employment shall mean a “separation
from service” as defined in Treasury Reg. Section 1.409A-1(h).

     

    For
purposes of this Agreement, the term “specified employee” shall have the meaning
set forth in Treasury Reg. Section 1.409A-1(i) and shall include, without
limitation, (1) an officer of the Bank or the Company having annual compensation
greater than $130,000 (as adjusted for inflation under the Code), (2) a five
percent owner of the Bank or the Company, or (3) a one percent owner of the Bank
or the Company having annual compensation of more than $150,000.  The
determination of whether the Employee is a “specified employee” shall be made by
the Company in good faith applying the applicable Treasury
regulations.

     

    9.           Notice of
Termination. In
the event that the Company or the Bank, or both, desire to terminate the
employment of the Employee during the term of this Agreement, the Company or the
Bank, or both, shall deliver to the Employee a written notice of termination,
stating whether such termination constitutes Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, except in the case of
Termination for Cause. In the event that the Employee determines in good faith
that she has experienced an Involuntary Termination of her employment, she shall
send a written notice to the Company stating the circumstances that constitute
such involuntary termination and the date upon which her

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    employment
shall have ceased due to such Involuntary Termination. In the event that the
Employee desires to effect a voluntary termination as described in Section 7(b)
above, she shall deliver a written notice to the Company, stating the date upon
which employment shallterminate, which date shall be at least 90 days after the
date upon which the notice is delivered, unless the parties agree to a date
sooner.

     

    10.           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.

     

    11.           Attorneys
Fees. The
Company shall pay all legal fees and related expenses (including the costs of
experts, evidence and counsel) incurred by the Employee as. a result of (i) the
Employee's contesting or disputing any termination of employment, or (ii) the
Employee's seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company (or its
successors) or the Consolidated Subsidiaries under which the Employee is or may
be entitled to receive benefits; provided that the Company's obligation to pay
such fees and expenses is subject to the Employee's prevailing with respect to
the matters in dispute in any action initiated by the Employee or the Employee's
having been determined to have acted reasonably and in good faith with respect
to any action initiated by the Company or the Bank.

     

    12.           Non-Disclosure and
Non-Solicitation.

     

    (a)           Non-Disclosure. The
Employee acknowledges that she has acquired, and will continue to acquire while
employed by the Company and/or any Consolidated Subsidiary, special knowledge of
the business, affairs, strategies and plans of the Company and the consolidated
Subsidiaries which has not been disclosed to the public and which constitutes
confidential and proprietary business information owned by the Company and the
Consolidated Subsidiaries, including but not limited to, information about the
customers, customer lists, software, data, formulae, processes, inventions,
trade secrets, marketing information and plans, and business strategies of the
Company and the Consolidated Subsidiaries, and other information about the
products and services offered or developed or planned to be offered or developed
by the Company and/or the Consolidated Subsidiaries (“Confidential
Information”). The Employee agrees that, without the prior written consent of
the Company, she shall not, during the term of her employment or at any time
thereafter, in any manner directly or indirectly disclose any Confidential
Information to any person or entity other than the Company and the Consolidated
Subsidiaries. Notwithstanding the foregoing, if the Employee is requested or
required (including but not limited to by oral questions, interrogatories,
requests for information or documents in legal proceeding, subpoena, civil
investigative demand or other similar process) to disclose any Confidential
Information the Employee shall provide the Company with prompt written notice of
any such request or requirement so that the Company and/or a Consolidated
Subsidiary may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 12(a). If, in the absence of a
protective order or other remedy or the receipt of a waiver from the Company,
the Employee is nonetheless legally compelled to disclose Confidential
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, the Employee may, without liability hereunder, disclose to
such tribunal only that portion of the Confidential Information which is legally
required to be disclosed, provided that the Employee exercise her best efforts
to preserve the confidentiality of the Confidential

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Information,
including without limitation by cooperating with the Company and/or a
Consolidated Subsidiary to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the Confidential
Information by such tribunal. On the Date of Termination, the Employee shall
promptly deliver to the Company all copies of documents or other records
(including without limitation electronic records) containing any Confidential
Information that is in her possession or under her control, and shall retain no
written or electronic record of any Confidential Information.

     

    (b)           Non-Solicitation. During
the three year period next following the Date of Termination, the Employee shall
not directly or indirectly solicit, encourage, or induce any person while
employed by the Company or any Consolidated Subsidiary to (i) leave the Company
or any Consolidated Subsidiary, (ii) cease her or her employment with the
Company or any Consolidated Subsidiary or (iii) accept employment with another
entity or person.

     

    The
provisions of this Section 12 shall survive any termination of the Employee's
employment and any termination of this Agreement.

     

    13.           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
Company shall require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) 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
Company would be required to perform it if no such succession or assignment had
taken place. Failure of the 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 and benefits from
the Company in the same amount and on the same terms as provided for an
Involuntary Termination under Section 7 hereof. For purposes of implementing the
provisions of this Section 13(a), the date on which any such succession becomes
effective shall be deemed the Date of Termination.

     

    (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.

     

    14.           Prior
Agreements/Amendments.  Upon
the Effective Date of this Agreement, all prior employment agreements, still in
effect, between the parties related to the employment of the Employee shall be
deemed null and void and without effect, including, without limitation, the
Employment Agreement dated February 9, 2006, between the parties.

     

    15.           Notice. For
the purposes of this Agreement, notices and all other communications provided
for in this 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, to the Company at its home office, to the attention
of the Board of Directors with a copy to the Secretary of the Company, or, if to
the Employee, to such home or other address as the Employee has most recently
provided in writing to the Company.

     

    16.           Amendments. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties, except as herein otherwise provided.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    17.           Headings. The
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.

     

    18.           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.

     

    19.           Governing
Law. This
Agreement shall be governed by the laws of the State of Indiana.

     

    20.           Arbitration. Any
dispute or controversy arising under or in connection with this Agreement (other
than relating to the enforcement of the provisions of Section 12) 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.

     

    21.           Equitable and Other Judicial
Relief. In
the event of an actual or threatened breach by the Employee of any of the
provisions of Section 12, the Company shall be entitled to equitable relief in
the form of an injunction from a court of competent jurisdiction and such other
equitable and legal relief as such court deems appropriate under the
circumstances. The parties agree that the Company shall not be required to post
any bond in connection with the grant or issuance of an injunction (preliminary,
temporary and/or permanent) by a court of competent jurisdiction, and if a bond
is nevertheless required, the parties agree that it shall be in a nominal
amount. The parties further agree that in the event of a breach by the Employee
of any of the provisions of Section 12, the Company will suffer irreparable
damage and its remedy at law against the Employee is inadequate to compensate it
for such damage.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have executed this Amended and Restated Employment
Agreement as of the day and year first above written.

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BENFORCED BY THE PARTIES.

     

    
      	
              Attest:

            	 
      	
              LSB
      FINANCIAL CORP.

               

            
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	/s/
      Randolph
      F. Williams	 
      	
              By:

            	/s/
      Mariellen
      M. Neudeck
	 
      	
              Randolph
      F. Williams

            	 
      	 
      	
              Mariellen
      M. Neudeck

            
	 
      	 
      	 
      	
              Its:

            	
              Chairman
      of the Board

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              EMPLOYEE

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	/s/
      Mary Jo David
	 
      	 
      	 
      	
              Mary
      Jo David

            

    

    

     

     

     

     

    12

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