Document:

Employment Agreement dated February 9, 2006, between LSB Financial Corp. and
      Randolph F. Williams

    

      Exhibit
        10.1

       

      EMPLOYMENT
        AGREEMENT

       

       

      THIS
        EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this
        9th
        day of February, 2006 (the “Commencement Date”), by and between LSB Financial
        Corp. (the "Company") and Randolph F. Williams (the "Employee").

       

      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 (1) an acquisition of securities of the Company
        or the
        Bank that is determined by the Board of Directors to constitute an acquisition
        of control of the Company or the Bank within the meaning of the Change in
        Bank
        Control Act (12 U.S.C. § 18170)) and the Savings and Loan Holding Company Act
        (12 U.S.C. §1467aff), and any successor sections and the applicable regulations
        thereunder; (2) an event that would be required to be reported in response
        to
        Item 1 of the current report on Form 8-K, as in effect on the Commencement
        Date,
        pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
        "Exchange Act"); (3) any person (as the term is used in Sections 13(d) and
        14(d)
        of the Exchange Act) is or becomes the beneficial owner (as defined in Rule
        13d-3 under the Exchange Act) directly or indirectly of securities of the
        Company or the Bank representing 25% or more of the combined voting power
        of the
        Company's or the Bank's outstanding securities; (4) individuals who are members
        of the Board of Directors on the Commencement Date (the "Incumbent Board")
        cease
        for any reason to constitute at least a majority thereof, provided that any
        person becoming a director subsequent to the Commencement Date whose election
        was approved by a vote of at least three-quarters of the directors comprising
        the Incumbent Board, or whose nomination for election by the Company's
        stockholders was approved by a nominating committee serving under an Incumbent
        Board, shall be considered a member of the Incumbent Board; or (5) consummation
        of a plan of reorganization, merger or consolidation of the Company, sale
        of all
        or substantially all of the assets of the Company, a similar transaction
        in
        which the Company is not the resulting entity; provided that the term "change
        in
        control" shall not include an acquisition of 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      securities
        by an employee benefit plan of the Bank or the Company. In the application
        of
        regulations under the Change in Bank Control Act or the Savings and Loan
        Holding
        Company Act, determinations to be made by the applicable federal banking
        regulator shall be made by the Board of Directors.

       

      (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: ( 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 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 

       

      
        
          
          

        

        
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      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 be for the period commencing on the
        Commencement Date and terminating on December 31, 2006, subject to earlier
        termination as provided herein. Beginning on December 31, 2006, 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
        an
        annualized base salary of at least $186,000 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 the
        Commencement Date. 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.

      
        
          
          

        

        
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      (c) Automobile.
        The Company shall either purchase or lease an automobile of the Company's
        choosing for the sole use of the Employee, at no cost to the
        Employee.

       

      (d) Country
        Club Dues. The Company shall pay for the Employee any initiation fees, monthly
        dues and assessments, 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
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      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, 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 that the Employee has a mental or physical
        infirmity which permanently impairs his ability to perform substantially
        his
        duties and responsibilities under this Agreement and which results in (i)
        eligibility of the Employee under the long-term disability plan of the Company
        or the Bank, if any; or (ii) inability of the Employee to perform substantially
        his duties and responsibilities under this Agreement for a period of 180
        consecutive days.

       

      (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 

      
        
          
          

        

        
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      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 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. 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 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.
        

       

      9. 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.

       

      10. 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

       

      
        
          
          

        

        
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      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.

       

      11. 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 a protective order or other appropriate
        remedy
        and/or waive compliance with the provisions of this Section 11(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. 

      
        
          
          

        

        
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      The
        provisions of this Section 11 shall survive any termination of the Employee's
        employment and any termination of this Agreement.

       

      12. No
        Assignments.

       

      (a) This
        Agreement is personal to each of the parties hereto, and neither party may
        assign or delegate any of its rights or obligations hereunder without first
        obtaining the written consent of the other party; provided, however, that
        the
        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 12(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.

       

      13. 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.

       

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

       

      15. 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.

       

      16. Severability.
        The provisions of this Agreement shall be deemed severable and the invalidity
        or
        unenforceability of any provision shall not affect the validity or
        enforceability of the other provisions hereof. 

       

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

       

      18. Arbitration.
        Any dispute or controversy arising under or in connection with this Agreement
        (other than relating to the enforcement of the provisions of Section 11)
        shall
        be settled exclusively by arbitration in accordance with the rules of the
        American Arbitration 

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Association
        then in effect. Judgment may be entered on the arbitrator's award in any
        court
        having jurisdiction.

       

      19. Equitable
        and Other Judicial Relief. In the event of an actual or threatened breach
        by the
        Employee of any of the provisions of Section 11, 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 11, the Company
        will
        suffer irreparable damage and its remedy at law against the Employee is
        inadequate to compensate it for such damage.

       

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

       

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

       

      
        	
                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

              

      

      
 

       

       

      10Employment Agreement dated February 9, 2006, between LSB Financial Corp. and
      Mary Jo David

    Exhibit
      10.2

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this
      9th
      day of February, 2006 (the “Commencement Date”), by and between LSB Financial
      Corp. (the "Company") and Mary Jo David (the "Employee").

     

    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 (1) an acquisition of securities of the Company or
      the
      Bank that is determined by the Board of Directors to constitute an acquisition
      of control of the Company or the Bank within the meaning of the Change in Bank
      Control Act (12 U.S.C. § 18170)) and the Savings and Loan Holding Company Act
      (12 U.S.C. §1467aff), and any successor sections and the applicable regulations
      thereunder; (2) an event that would be required to be reported in response
      to
      Item 1 of the current report on Form 8-K, as in effect on the Commencement
      Date,
      pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
      "Exchange Act"); (3) any person (as the term is used in Sections 13(d) and
      14(d)
      of the Exchange Act) is or becomes the beneficial owner (as defined in Rule
      13d-3 under the Exchange Act) directly or indirectly of securities of the
      Company or the Bank representing 25% or more of the combined voting power of
      the
      Company's or the Bank's outstanding securities; (4) individuals who are members
      of the Board of Directors on the Commencement Date (the "Incumbent Board")
      cease
      for any reason to constitute at least a majority thereof, provided that any
      person becoming a director subsequent to the Commencement Date whose election
      was approved by a vote of at least three-quarters of the directors comprising
      the Incumbent Board, or whose nomination for election by the Company's
      stockholders was approved by a nominating committee serving under an Incumbent
      Board, shall be considered a member of the Incumbent Board; or (5) consummation
      of a plan of reorganization, merger or consolidation of the Company, sale of
      all
      or substantially all of the assets of the Company, a similar transaction in
      which the Company is not the resulting entity; provided that the term "change
      in
      control" shall not include an acquisition of securities by an employee benefit
      plan of the Bank or the Company. In the application of regulations under the
      Change in Bank Control Act or the Savings and Loan Holding Company

     

    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    Act,
      determinations to be made by the applicable federal banking regulator shall
      be
      made by the Board of Directors.

     

    (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: ( 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 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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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 be for the period commencing on the
      Commencement Date and terminating on December 31, 2006, subject to earlier
      termination as provided herein. Beginning on December 31, 2006, 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 an
      annualized base salary of at least $100,000 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 the
      Commencement Date. Adjustments in salary or other compensation shall not limit
      or reduce any other obligation of the Company under this Agreement.

     

    (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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (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.

     

    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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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 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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (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 that the Employee has a mental or physical
      infirmity which permanently impairs her ability to perform substantially her
      duties and responsibilities under this Agreement and which results in (i)
      eligibility of the Employee under the long-term disability plan of the Company
      or the Bank, if any; or (ii) inability of the Employee to perform substantially
      her duties and responsibilities under this Agreement for a period of 180
      consecutive days.

     

    (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.

     

    8. 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 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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 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 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.
      

     

    9. 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.

     

    10. 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.

     

    11. 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 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    this
      Section 11(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 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 11 shall survive any termination of the Employee's
      employment and any termination of this Agreement.

     

    12. No
      Assignments.

     

    (a) This
      Agreement is personal to each of the parties hereto, and neither party may
      assign or delegate any of its rights or obligations hereunder without first
      obtaining the written consent of the other party; provided, however, that the
      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 12(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.

     

    13. 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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

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

     

    15. 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.

     

    16. Severability.
      The provisions of this Agreement shall be deemed severable and the invalidity
      or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof. 

     

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

     

    18. Arbitration.
      Any dispute or controversy arising under or in connection with this Agreement
      (other than relating to the enforcement of the provisions of Section 11) 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.

     

    19. Equitable
      and Other Judicial Relief. In the event of an actual or threatened breach by
      the
      Employee of any of the provisions of Section 11, 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 11, the Company
      will
      suffer irreparable damage and its remedy at law against the Employee is
      inadequate to compensate it for such damage.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

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

     

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

     

    

     

    
      	
              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

            

    

    

     

    

     

    

     

    

     

    10

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