Document:

EMPLOYMENT AGREEMENT

         This  Agreement,  made and dated as of January 16, 2001, by and between
Lincoln Federal Savings Bank, a federal savings bank  ("Employer"),  and John M.
Baer, a resident of Hendricks County, Indiana ("Employee").

                               W I T N E S S E T H

         WHEREAS,  Employee is employed by Employer as its  Treasurer  and Chief
Financial  Officer 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 Treasurer and Chief Financial Officer,  Employer and
Employee, each intending to be legally bound, covenant and agree as follows:

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         1. Upon the  terms  and  subject  to the  conditions  set forth in this
Agreement, Employer employs Employee as Employer's Treasurer and Chief Financial
Officer, and Employee accepts such employment.

         2. Employee agrees to serve as Employer's Treasurer and Chief Financial
Officer 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
Plainfield,  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 not be required to be absent from the location of the  principal
executive offices of Employer on travel status or otherwise more than 45 days in
any calendar year.  Employer shall not, without the written consent of Employee,
relocate or transfer  Employee to a location more than 30 miles from  Employer's
primary  office.  Employee  shall render  services to Employer as Treasurer  and
Chief Financial  Officer in  substantially  the same manner and to substantially
the same extent as Employee  rendered his  services to Employer  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").

         4.  Employee  shall  receive  an  annual  salary  of  $115,609   ("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, 1997, 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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         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 generally  available to
employees of Employer, consistent with his Base Compensation and his position as
Treasurer  and  Chief  Financial   Officer  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,  1997,  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.

         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 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

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            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 Treasurer
            and Chief Financial Officer of Employer, 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 Treasurer and Chief
            Financial  Officer of  Employer,  (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; or (iv) 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.

         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 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

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<PAGE>

            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 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 if
            the  termination  does not follow a Change of Control.  In addition,
            during such periods, 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
            Regulatory Bulletin 27a of the Office of Thrift  Supervision,  as in
            effect on the Effective Date.

        (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 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

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<PAGE>

            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 for reasons other than
            those  set  forth  in  subsections  7(B) or (C) of  this  Agreement,
            Employee  shall not divulge or furnish any trade secrets (as defined
            in  IND.   CODEss.   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
            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

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<PAGE>

            banking or  bank-related  services to or solicit any such customer's
            banking or bank-related business in any such place.

        (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
            within a radius of twenty-five (25) miles of Employer's main office.

        (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  noncompetition
under this section 9.

         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.

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<PAGE>

         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
any  regulations  promulgated  thereunder,  to the  extent  applicable  to  such
parties.

         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

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<PAGE>

United States  registered or certified mail, return receipt  requested,  postage
prepaid, addressed as follows:

         If to Employee:            John M. Baer
                                    7609 Meadow Violet Drive
                                    Avon, Indiana   46168

         If to Employer:            Lincoln Federal Savings 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.

         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 representation,  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.

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<PAGE>

         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 FEDERAL SAVINGS BANK

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

                                                         "Employer"

                                         /s/ John M. Baer
                                         ---------------------------------------
                                         John M. Baer

                                                         "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.

                                         LINCOLN BANCORP

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

<PAGE>EMPLOYMENT AGREEMENT

         This  Agreement,  made and dated as of January 16, 2001, by and between
Lincoln Federal Savings Bank, a federal savings bank  ("Employer"),  and Rebecca
J. Morgan, a resident of Hendricks County, Indiana ("Employee").

                                  W I T N E S S E T H

         WHEREAS,  Employee is employed by Employer as its Retail Sales  Manager
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 her 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 her 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 her  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 Retail Sales  Manager,  Employer and Employee,  each
intending to be legally bound, covenant and agree as follows:

                                          -1-

<PAGE>

         1. Upon the  terms  and  subject  to the  conditions  set forth in this
Agreement,  Employer  employs Employee as Employer's  Retail Sales Manager,  and
Employee accepts such employment.

         2. Employee  agrees to serve as Employer's  Retail Sales Manager and to
perform  such  duties in that  office as may  reasonably  be  assigned to her by
Employer's  Board of  Directors;  provided,  however,  that such duties shall be
performed in or from the offices of Employer  currently  located at  Plainfield,
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 not be required to be absent from the location of the principal  executive
offices  of  Employer  on travel  status or  otherwise  more than 45 days in any
calendar  year.  Employer  shall not,  without the written  consent of Employee,
relocate or transfer  Employee to a location more than 30 miles from  Employer's
primary  office.  Employee  shall  render  services to Employer as Retail  Sales
Manager in substantially the same manner and to substantially the same extent as
Employee  rendered  her  services  to  Employer  before the date  hereof.  While
employed by Employer,  Employee shall devote substantially all her 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").

         4.  Employee   shall   receive  an  annual   salary of  $85,000  ("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 her 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, 1997, 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

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

                                          -2-

<PAGE>

         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,  she shall be  included  as a  participant  in all present and future
employee  benefit,  retirement,  and compensation  plans generally  available to
employees of Employer, consistent with her Base Compensation and her position as
Retail Sales Manager 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,  1997,  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.

         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 her  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 her 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 her on the date
hereof.

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

                                          -3-

<PAGE>

        (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  her
            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 Retail Sales
            Manager of Employer,  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 Retail  Sales  Manager  of
            Employer,  (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;  or (iv) 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 her 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 her 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 her of the performance of such duties.

         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 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.

                                          -4-

<PAGE>

        (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 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  her 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 if
            the  termination  does not follow a Change of Control.  In addition,
            during such periods, 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  her  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 she 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
            Regulatory Bulletin 27a of the Office of Thrift  Supervision,  as in
            effect on the Effective Date.

        (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 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 her personal  representative(s)  or
            heirs,  during  a  period  of  three  months  following   Employee's
            termination of employment by

                                          -5-

<PAGE>

            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 for reasons other than
            those  set  forth  in  subsections  7(B) or (C) of  this  Agreement,
            Employee  shall not divulge or furnish any trade secrets (as defined
            in  IND.   CODEss.   24-2-3-2)  of  Employer  or  any   confidential
            information  acquired by her 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  three  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
            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.

        (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

                                          -6-

<PAGE>

            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 within a radius of twenty-five  (25) miles of Employer's
            main office.

        (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  noncompetition
under this section 9.

         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.

                                          -7-

<PAGE>

         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
any  regulations  promulgated  thereunder,  to the  extent  applicable  to  such
parties.

         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 her  favor in a court of  competent
jurisdiction  or her 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 her claim shall be paid by Employer, to the extent permitted by law.

         17.  Should  Employee  die after  termination  of her  employment  with
Employer  while any amounts are payable to her 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 her 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:            Rebecca J. Morgan

                                          -8-

<PAGE>

         If to Employer:            Lincoln Federal Savings 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 her
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.

         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 representation,  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 her will or by the
laws of descent or

                                          -9-

<PAGE>

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 FEDERAL SAVINGS BANK

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

                                                            "Employer"

                                          /s/ Rebecca J. Morgan
                                          --------------------------------------
                                          Rebecca J. Morgan

                                                            "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.

                                          LINCOLN BANCORP

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

                                         -10-

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