10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20529

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the quarterly period ended June 30, 2006

o Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from ___ to ___

Commission File Number 000-32955

LSB Corporation

(Exact name of Registrant as specified in its Charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	04-3557612 (I.R.S. Employer Identification Number)
30 Massachusetts Avenue, North Andover, MA (Address of principal executive offices)	01845 (Zip Code)

(978) 725-7500
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of August 2, 2006
Common Stock, par value $.10 per share	4,548,867 shares

LSB CORPORATION AND SUBSIDIARY

INDEX

		Page:
	PART I — FINANCIAL INFORMATION
ITEM 1	FINANCIAL STATEMENTS
	Consolidated Balance Sheets		3
	Consolidated Statements of Income		4
	Consolidated Statements of Changes in Stockholders’ Equity		5
	Consolidated Statements of Cash Flows		6
	Notes to Consolidated Financial Statements		7-10
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		10-22
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK		22
ITEM 4	CONTROLS AND PROCEDURES		22
	PART II – OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS		23
ITEM 1A	RISK FACTORS		23
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		23
ITEM 3	DEFAULTS UPON SENIOR SECURITIES		23
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		23
ITEM 5	OTHER INFORMATION		23
ITEM 6	EXHIBITS		24
SIGNATURES			25
EXHIBIT INDEX			26
Ex-10.1 Special Speration Plan as of August 10, 2006
Ex-10.2 Special Termination Agreement / Gerald T. Mulligan
Ex-10.3 Special Termination Agreement / Michael J. Ecker
Ex-10.4 Special Termination Agreement / Stephen B. Jones
Ex-10.5 Special Termination Agreement / Diane L. Walker
Ex-31.1 Section 302 Certification of CEO
Ex-31.2 Section 302 Certification of CFO
Ex-32.1 Section 906 Certification of CEO
Ex-32.2 Section 906 Certification of CFO

2

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LSB CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,			December 31,
	2006			2005
	(In thousands, except share data)
ASSETS
Assets:
Cash and due from banks	$	9,073		$	10,489
Federal funds sold		7,559			198
Total cash and cash equivalents		16,632			10,687
Investment securities held to maturity (market value of $208,615 in 2005)		—			213,683
Investment securities available for sale (amortized cost of $239,500 in 2006 and $47,554 in 2005)		232,305			46,363
Federal Home Loan Bank stock, at cost		9,359			10,097
Loans, net of allowance for loan losses		243,819			230,485
Bank premises and equipment		3,370			3,251
Accrued interest receivable		2,022			2,458
Current income tax receivable		536			—
Deferred income tax asset		6,401			3,446
Other assets		1,441			1,330
Total assets	$	515,885		$	521,800
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	304,882		$	303,087
Borrowed funds		150,856			153,380
Advance payments by borrowers for taxes and insurance		497			506
Other liabilities		5,467			4,905
Total liabilities		461,702			461,878
Stockholders’ equity:
Preferred stock, $.10 par value per share: 5,000,000 shares authorized, none issued		—			—
Common stock, $.10 par value per share; 20,000,000 shares authorized; 4,548,867 and 4,464,033 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively		455			446
Additional paid-in capital		60,807			59,856
Retained earnings (accumulated deficit)		(2,620	)		326
Accumulated other comprehensive loss, net of tax		(4,459	)		(706	)
Total stockholders’ equity		54,183			59,922
Total liabilities and stockholders’ equity	$	515,885		$	521,800

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

3

LSB CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three months ended					Six months ended
	June 30,					June 30,
	2006			2005		2006			2005
				(In thousands, except share data)
Interest and dividend income:
Loans	$	4,277		$	3,705	$	8,226		$	7,277
Investment securities held to maturity		—			2,144		—			4,058
Investment securities available for sale		2,661			516		5,100			1,040
Federal Home Loan Bank stock		8			107		131			191
Short term interest income		101			23		126			38
Total interest and dividend income		7,047			6,495		13,583			12,604
Interest expense:
Deposits		1,702			1,190		3,248			2,256
Borrowed funds		2,042			1,774		3,737			3,263
Total interest expense		3,744			2,964		6,985			5,519
Net interest income		3,303			3,531		6,598			7,085
Provision for loan losses		30			—		30			—
Net interest income after provision for loan losses		3,273			3,531		6,568			7,085
Non-interest income (loss):
Loan servicing fees		34			38		41			76
Deposit account fees		189			212		398			419
Gain on sales of mortgage loans, net		3			11		7			22
Loss on sales of investment securities		(2,417	)		—		(2,417	)		—
Other income		117			126		227			235
Total non-interest income (loss)		(2,074	)		387		(1,744	)		752
Non-interest expense:
Salaries and employee benefits		1,936			1,608		4,004			3,184
Occupancy and equipment expenses		494			224		823			479
Data processing expenses		263			217		496			438
Marketing expenses		417			89		455			160
Professional expenses		201			192		364			296
Other expenses		838			430		1,231			784
Total non-interest expenses		4,149			2,760		7,373			5,341
Income (loss) before income tax expense (benefit)		(2,950	)		1,158		(2,549	)		2,496
Income tax expense (benefit)		(1,008	)		400		(867	)		879
Net income (loss)	$	(1,942	)	$	758	$	(1,682	)	$	1,617
Average shares outstanding		4,539,834			4,423,467		4,518,045			4,394,673
Common stock equivalents		50,449			82,011		54,959			124,442
Average diluted shares outstanding		4,590,283			4,505,478		4,573,004			4,519,115
Basic earnings (loss) per share	$	(0.43	)	$	0.17	$	(0.37	)	$	0.37
Diluted earnings (loss) per share	$	(0.42	)	$	0.17	$	(0.37	)	$	0.36

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements

4

LSB CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2005 AND THE

SIX MONTHS ENDED JUNE 30, 2006

(UNAUDITED)

					(Accumulated			Accumulated
			Additional		Deficit)/			Other			Total
	Common		Paid-In		Retained			Comprehensive			Stockholders’
	Stock		Capital		Earnings			Loss			Equity
	(In thousands, except per share data)
Balance at December 31, 2004	$	434	$	59,145	$	(1,347	)	$	(394	)	$	57,838
Net income		—		—		4,157			—			4,157
Other comprehensive income:
Unrealized loss on securities available for sale, net (tax effect $211)		—		—		—			(312	)		(312	)
Total comprehensive income												3,845
Exercise of stock options		12		500		—			—			512
Tax benefit of stock options exercised		—		211		—			—			211
Dividends declared and paid ($0.56 per share)		—		—		(2,484	)		—			(2,484	)
Balance at December 31, 2005	$	446	$	59,856	$	326		$	(706	)	$	59,922

					(Accumulated			Accumulated
			Additional		Deficit)/			Other			Total
	Common		Paid-In		Retained			Comprehensive			Stockholders’
	Stock		Capital		Earnings			Loss			Equity
			(In thousands, except per share data)
Balance at December 31, 2005	$	446	$	59,856	$	326		$	(706	)	$	59,922
Net income (loss)		—		—		(1,682	)		—			(1,682	)
Other comprehensive income:
Unrealized loss on securities available for sale, net (tax effect $2,251)		—		—		—			(3,753	)		(3,753	)
Total comprehensive loss												(5,435	)
Stock-based compensation		—		64		—			—			64
Exercise of stock options		9		830		—			—			839
Tax benefit of stock options exercised		—		57		—			—			57
Dividends declared and paid ($0.28 per share)		—		—		(1,264	)		—			(1,264	)
Balance at June 30, 2006	$	455	$	60,807	$	(2,620	)	$	(4,459	)	$	54,183

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

5

LSB CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2006			2005
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	(1,682	)	$	1,617
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan loss		30			—
Gains on sales of mortgage loans		(7	)		(22	)
Losses on sales of investment securities available for sale		2,417			—
Net amortization of investment securities		562			804
Depreciation of premises and equipment		402			222
Loans originated for sale		(1,042	)		(2,930	)
Proceeds from sales of mortgage loans		1,521			2,340
Decrease in accrued interest receivable		436			454
Deferred income tax benefit		(704	)		(221	)
Stock-based compensation		64			—
(Increase) decrease in other assets		(647	)		455
Decrease in advance payments by borrowers		(9	)		(30	)
Increase (decrease) in other liabilities		562			(215	)
Net cash provided by operating activities		1,903			2,474
Cash flows from investing activities:
Proceeds from maturities of investment securities held to maturity		2,900			36,970
Proceeds from maturities of investment securities available for sale		10,000			25,000
Sales of investment securities available for sale		78,457			—
Purchases of investment securities held to maturity		—			(55,494	)
Purchases of mortgage-backed securities held to maturity		—			(22,654	)
Purchases of investment securities available for sale		(20,265	)		(14,199	)
Purchases of mortgage-backed securities available for sale		(63,545	)		—
Purchase of other equity securities available for sale		(107	)		(72	)
Purchases of Federal Home Loan Bank stock		—			(2,210	)
Redemption of FHLB stock		738			—
Principal payments of securities held to maturity		4,680			11,633
Principal payments of securities available for sale		6,638			2,346
Tax benefit from exercise of stock options		—			211
Increase in loans, net		(13,836	)		(5,480	)
Purchases of Bank premises and equipment		(521	)		(95	)
Net cash used in investing activities		5,139			(24,044	)
Cash flows from financing activities:
Net (decrease) increase in deposits		1,795			8,036
Additions to Federal Home Loan Bank advances		20,000			43,900
Payments on Federal Home Loan Bank advances		(50,273	)		(32,067	)
Net increase (decrease) in agreements to repurchase securities		1,749			(275	)
Net increase in other borrowed funds		26,000			7,000
Dividends paid		(1,264	)		(1,235	)
Proceeds from exercise of stock options		839			94
Excess tax benefit from exercise of stock options		57			—
Net cash provided by financing activities		(1,097	)		25,453
Net increase in cash and cash equivalents		5,945			3,883
Cash and cash equivalents, beginning of period		10,687			7,402
Cash and cash equivalents, end of period	$	16,632		$	11,285
Cash paid during the period for:
Interest on deposits	$	3,247		$	2,263
Interest on borrowed funds		3,773			3,204
Income taxes		891			1,550
Supplemental schedule of non-cash activities:
Change in valuation of investment securities available for sale, net		(3,753	)		(50	)

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

6

LSB CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(UNAUDITED)

1. BASIS OF PRESENTATION

LSB Corporation (the “Corporation” or the “Company”) is a Massachusetts corporation and the holding company of its wholly-owned subsidiary River Bank (the “Bank”), a state-chartered Massachusetts savings bank. River Bank is the new name of the former Lawrence Savings Bank, a Massachusetts savings bank organized in 1868, which changed its name effective June 26, 2006. The Corporation was organized by the Bank on July 1, 2001 to be a bank holding company and to acquire all of the capital stock of the Bank.

The Corporation is supervised by the Board of Governors of the Federal Reserve System (“FRB”), and it is also subject to the jurisdiction of the Massachusetts Division of Banks, while the Bank is subject to the regulations of, and periodic examination by, the Federal Deposit Insurance Corporation (“FDIC”) and the Massachusetts Division of Banks. The Bank’s deposits are insured by the Deposit Insurance Fund of the FDIC up to $100,000 per account, as defined by the FDIC (except for certain retirement accounts which are insured up to $250,000), and the Depositors Insurance Fund (“DIF”) of Massachusetts, a private industry-sponsored insurer, for customer deposit amounts in excess of FDIC insurance limits. The Consolidated Financial Statements include the accounts of LSB Corporation and its wholly-owned consolidated subsidiary, River Bank, and its wholly-owned subsidiaries, Shawsheen Security Corporation, Shawsheen Security Corporation II, Pemberton Corporation, and Spruce Wood Realty Trust. All inter-company balances and transactions have been eliminated in consolidation. The Company has one reportable operating segment. In the opinion of management, the accompanying Consolidated Financial Statements reflect all necessary adjustments consisting of normal recurring accruals for fair presentation. Certain amounts in prior periods have been re-classified to conform to the current presentation.

The Corporation’s Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, management is required to make estimates and assumptions that affect amounts reported in the balance sheets and statements of income. Actual results could differ significantly from those estimates and judgments. A material estimate that is particularly susceptible to change relates to the allowance for loan losses.

The interim results of consolidated income are not necessarily indicative of the results for any future interim period or for the entire year. These interim Consolidated Financial Statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the annual Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2005 filed with the Securities and Exchange Commission.

2. STOCK OPTIONS

The following table presents the amount of cumulatively granted options and restricted stock awards, net of cancellations, through June 30, 2006:

					Cumulative
					Awards, Net of
	Authorized Option Awards		Stock Awards		Expirations
1986 Plan		720,500		N/A		430,250
1997 Plan		449,500		N/A		427,850
2006 Plan		400,000				—
		1,570,000				858,100

At June 30, 2006, there were no shares available for grant under either the 1986 Plan due to its expiration or the 1997 Plan due to all authorized awards being granted by December 31, 2005. Under all plans, the option exercise price equals the fair market value on the date of grant. All options granted under the 1986 and 1997 Plans vested over three years from the date of grant and have ten-year contractual terms. Options granted under these plans expire between 2006 and 2015. The Company issues shares for option exercises and restricted stock issuances from

7

its pool of authorized but unissued shares. The 2006 Stock Option Plan was approved by shareholders on May 2, 2006. No options were granted under the 2006 Plan during the second quarter of 2006.

Prior to January 1, 2006, the Company accounted for its stock-based plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations, as permitted by Statement of Financial Accounting Standard No. 123, Accounting for Stock-Based Compensation (“SFAS 123”). No compensation cost was recognized for stock options in the Consolidated Statement of Income for the periods ended on or prior to December 31, 2005, as options granted under those plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”) for all share-based payments, using the modified prospective transition method. Under this transition method, compensation cost recognized in the six months ended June 30, 2006 includes: (1) compensation expense recognized over the requisite service period for all share-based awards granted prior to, but not yet fully vested, as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (2) compensation cost for all share-based awards granted on or subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R, of which the Company has none to date. In accordance with the modified prospective transition method, the Company’s Consolidated Financial Statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123R or SFAS 123. Upon adoption of SFAS 123R, the Company elected to retain its method of valuation for share-based awards granted using the Black-Scholes option-pricing model which was also previously used for the Company’s pro forma information required under SFAS 123. The Company is recognizing compensation expense for its awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time.

The total compensation expense before tax recognized in earnings by the Company in the six months ended June 30, 2006 was approximately $64,000.

As required, prior to the adoption of SFAS 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Consolidated Statement of Cash Flows. SFAS 123R requires the cash flows resulting from the tax benefits from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. Therefore, the Company had $57,000 of excess tax benefits classified as a financing cash inflow during the six months ended June 30, 2006.

Cash received from stock option exercises for the six months ended June 30, 2006 and 2005 was approximately $839,000 and $94,000, respectively. The actual tax benefit realized for the tax deductions from option exercises under all plans totaled $57,000 and $211,000, respectively, for the six months ended June 30, 2006 and 2005. No cash was used by the Company to settle equity instruments granted under share-based compensation arrangements during the six months ended June 30, 2006 and 2005.

For purposes of pro forma disclosures for periods prior to January 1, 2006, the estimated fair value of the stock options is amortized to expense over the vesting period of the options. The Company’s net income and earnings per share for the quarter ended June 30, 2005, had the Company elected to recognize compensation expense for the granting of options under SFAS 123 using the Black-Scholes option pricing model would have been reduced to the following pro forma amounts:

8

	Three months ended			Six months ended
	6/30/05			6/30/05
	(In thousands, except share data)
Net income:
As Reported	$	758		$	1,617
Less: Pro forma stock based compensation cost (net of taxes)		(30	)		(60	)
Pro forma	$	728		$	1,557
Basic earnings per share:
As Reported	$	0.17		$	0.37
Pro forma		0.16			0.35
Diluted earnings per share:
As Reported	$	0.17		$	0.36
Pro forma		0.16			0.35

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2005: expected volatility of 23.8%, expected average life of 4.3 years, risk-free interest rate of 3.8% and expected dividend yield of 3.21%.

A summary of the status of the Company’s 2006 Plan, 1997 Plan and 1986 Plan for the six months ended June 30, 2006 is presented in the table below:

	2006
				Weighted		Wtd. Avg.		Aggregate
				Average		Remaining		Intrinsic
	Option			Exercise		Contractual		Value
	Shares			Price ($)		Term (years)		($000)
Balance, January 1		349,100		$	12.88		5.4
Granted		—			—		—
Exercised		(103,025	)	$	11.22		5.7
Forfeited		(6,675	)	$	16.77		7.7
Expired		—			—		—
Balance, June 30		239,400		$	13.48		5.2	$	948
Options exercisable at June 30		219,825		$	13.18		5.0	$	936
Weighted average grant date fair value of options granted		—			—		—

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the average of the high price and low price at which the Company’s common stock traded on June 30, 2006 of $17.44, which would have been received by the option holders had all option holders exercised their options as of that date.

A summary of the status of the Company’s nonvested options and restricted shares as of June 30, 2006 and changes during the six months then ended is presented in the table below:

	Nonvested Shares Issued Under the Plans
	Stock Options					Restricted Stock Awards
				Weighted				Weighted
				Average				Average
				Grant Date				Grant Date
	Shares			Fair Value		Shares		Fair Value
Nonvested at January 1, 2006		55,050		$	16.84		—	$	—
Granted		—			—		—		—
Vested		(28,800	)	$	16.88		—		—
Forfeited		(6,675	)	$	16.77		—		—
Nonvested at June 30, 2006		19,575		$	16.80		—	$	—

9

3. DEFINED BENEFIT PLAN

The Company provides pension benefits for its employees through membership in the Savings Bank Employees’ Retirement Association (the “Plan”). The Plan is a multiple-employer, non-contributory, defined benefit plan. Bank employees become eligible after attaining 21 years of age and completing one year of service. Benefits become fully vested after three years of eligible service. The Company’s annual contribution to the Plan is calculated according to standards established under the Employee Retirement Income Security Act (“ERISA”). The contribution is based on an actuarial method intended to provide not only for benefits attributable to service to date, but also for those expected to be earned in the future. The Company does expect to contribute to the Plan for the Plan year ending October 31, 2006.

Net pension cost components for the three months and six months ended June 30, 2006 and 2005, follow:

	Three months ended						Six months ended
	6/30/06			6/30/05			6/30/06			6/30/05
	(In thousands)
Service cost	$	89		$	86		$	177		$	173
Interest cost		120			108			240			215
Expected return on plan assets		(145	)		(135	)		(290	)		(271	)
Net amortization and deferrals		(1	)		(1	)		(2	)		(2	)
Net periodic pension cost	$	63		$	58		$	125		$	115

4. CONTINGENCIES

The Bank is involved in various legal proceedings incidental to its business. After review with legal counsel, management does not believe resolution of such litigation will have a material adverse effect on the financial condition and operating results of the Company.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

In this report, the Company has made forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 as amended) that are subject to risks and uncertainties. Such forward-looking statements are expressions of management’s expectations as of the date of this report regarding future events or trends and which do not relate to historical matters. Such expectations may or may not be realized, depending on a number of variable factors, including but not limited to, changes in interest rates, general economic conditions, regulatory considerations and competition. For more information about these factors, please see our 2005 Annual Report on Form 10-K on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. As a result of such risk factors and uncertainties, the Company’s actual results may differ materially from such forward-looking statements. The Company does not undertake and specifically disclaims any obligation to publicly release updates or revisions to any such forward-looking statements as a result of new information, future events or otherwise.

Critical Accounting Policies & Estimates

The Company has not changed its significant accounting and reporting policies from those disclosed in its 2005 Annual Report on Form 10-K. In applying these accounting policies, management is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. As discussed in the Company’s 2005 Annual Report on Form 10-K, the three most significant areas in which management applies critical assumptions and estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses, deferred tax asset valuation and impairment of the investment portfolio. Management’s estimates and assumptions affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from those estimates.

10

EXECUTIVE LEVEL OVERVIEW

The Company’s financial results are dependent on the following areas of the income statement: net interest income, provision for loan losses, non-interest income, non-interest expense and provision for income taxes. Net interest income is the primary earnings of the Company and the main focus of management. Management’s efforts are to increase the commercial loan portfolios, which include construction, commercial real estate and commercial loans. Management’s efforts for funding are to increase core deposit accounts, which are lower interest bearing accounts. Net interest income is the difference between interest earned on loans and investment securities and interest paid on deposits and borrowings. Deposits and borrowings have short durations and the costs of these funds do not necessarily rise and fall concurrent with earnings from loans and investment securities. There are many risks involved in managing net interest income including, but not limited to credit risk, interest rate risk and duration risk. These risks have a direct impact on the level of net interest income. The Company manages these risks through its internal credit and underwriting function and review at meetings of the Asset and Liability Management Committee (“ALCO”) on a regular basis. The credit review process reviews loans for underwriting and grading of loan quality while ALCO reviews the liquidity, interest rate risk, duration risk and allocation of capital resources. Loan quality has a direct impact on the amount of provisions for loan losses the Company reports.

The provision for loan losses was $30,000 for the six months ended June 30, 2006 based on management’s assessment of the adequacy of the allowance based on an evaluation of the Bank’s loan portfolio and the level of non-performing loans.

Non-interest income includes losses on sales of investment securities and various fees. Customers’ loan and deposit accounts generate various amounts of fee income depending on the product selected. The Company generates gains on sales of mortgage loans and receives fee income from servicing loans sold. Non-interest income is primarily impacted by the volume of customer transactions, which could change in response to changes in interest rates, pricing and competition.

Non-interest expenses include salaries and employee benefits, occupancy and equipment, professional, data processing and other expenses of the Company, which generally are directly related to business volume and are controlled by a budget process.

Provisions for income taxes are directly related to earnings of the Company. Changes in the statutory tax rates and the earnings of the Company, the Bank and its subsidiaries, would affect the amount of income tax expense reported.

FINANCIAL CONDITION

SUMMARY

The Company maintains its commitment to servicing the banking needs of the local community in the Merrimack Valley area of Massachusetts and southern New Hampshire. The Company had total assets of $515.9 million at June 30, 2006 compared to $521.8 million at December 31, 2005. The $5.9 million decrease in asset size at June 30, 2006 from December 31, 2005 is mainly attributable to a decrease of $27.7 million in investment securities offset by an increase of $7.2 million in federal funds sold, and $13.4 million in total loan growth.

Investments:

The investment securities portfolio totaled $232.3 million or 45.0% of total assets at June 30, 2006, compared to $260.0 million, or 49.8% of total assets at December 31, 2005, a decrease of $27.7 million from year-end.

During the second quarter of 2006, the Company restructured its balance sheet by selling approximately $80 million of fixed-rate investments securities available for sale. These investment securities had an average yield of 3.30%, an average life of 2.0 years and represented almost 30% of the investment portfolio. Approximately $50 million of the proceeds were reinvested in securities yielding 5.70% with an average life of 4.2 years.

During the first quarter of 2006, $205.8 million of investments held to maturity were reclassified into investments available for sale. The impact of the reclassification required the total unrealized loss on the entire investment portfolio to be reflected on the balance sheet in the “accumulated other comprehensive loss” portion of stockholders’

11

equity. The unrealized loss as of June 30, 2006 totaled $7.2 million, or $4.5 million net of taxes. The reclassification reflected the opinion of management that all investments may not be held until maturity and that the Company was considering strategic changes in the entire investment portfolio. The unrealized losses are attributable to changes in interest rates and a corresponding decline in market value and are not related to credit quality, nor are they deemed to be other than temporarily impaired.

The change in mix in the investment securities portfolio was due to the aforementioned balance sheet restructuring with most of the sales coming from federal agency bonds and collateralized mortgage obligations (“CMOs”), offset by purchases of mortgage-backed securities (“MBSs”) and, to a lesser extent, corporate bonds. In addition, the portfolio experienced maturities of its corporate obligations as well as maturities and prepayments on its asset-backed securities, CMOs and MBSs.

The following table reflects the components and carrying values of the investment securities portfolio at June 30, 2006 and December 31, 2005:

	6/30/06									12/31/05
	Amortized		Unrealized					Market		Amortized		Unrealized					Market
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
	(In thousands)									(In thousands)
Investment securities available for sale:
U.S. treasury bonds	$	5,112	$	—	$	(539	)	$	4,573	$	5,119	$	—	$	(350	)	$	4,769
Federal agency bonds		41,024		—		(987	)		40,037		9,932		—		(265	)		9,667
U.S. treasury & federal agency bonds		46,136		—		(1,526	)		44,610		15,051		—		(615	)		14,436
Corporate bonds		7,469		2		(68	)		7,403		3,181		—		(135	)		3,046
Municipal bonds		1,500		—		—			1,500		—		—		—			—
Mutual funds		1,000		—		(74	)		926		1,000		—		(45	)		955
Other investments/equity securities		284		63		—			347		240		—		(7	)		233
Other investment securities		10,253		65		(142	)		10,176		4,421		—		(187	)		4,234
Asset-backed securities/CMO		77,645		1		(2,511	)		75,135		24,662		9		(342	)		24,329
Mortgaged-backed securities		105,466		42		(3,124	)		102,384		3,420		10		(66	)		3,364
ABS/CMO/MBS		183,111		43		(5,635	)		177,519		28,082		19		(408	)		27,693
Total investment securities available for sale	$	239,500	$	108	$	(7,303	)	$	232,305	$	47,554	$	19	$	(1,210	)	$	46,363
Investment securities held to maturity:
U.S. treasury bonds	$	—	$	—	$	—		$	—	$	—	$	—	$	—		$	—
Federal agency bonds		—		—		—			—		87,017		56		(1,944	)		85,129
U.S. treasury & federal agency bonds		—		—		—			—		87,017		56		(1,944	)		85,129
Corporate bonds		—		—		—			—		8,143		11		(280	)		7,874
Commercial paper		—		—		—			—		2,881		—		—			2,881
Municipal bonds		—		—		—			—		1,526		—		(14	)		1,512
Mutual funds		—		—		—			—		—		—		—			—
Other investments/equity securities		—		—		—			—		—		—		—			—
Other investment securities		—		—		—			—		12,550		11		(294	)		12,267
Asset-backed securities/CMO		—		—		—			—		70,415		4		(1,679	)		68,740
Mortgage-backed securities		—		—		—			—		43,701		40		(1,262	)		42,479
ABS/CMO/MBS		—		—		—			—		114,116		44		(2,941	)		111,219
Total investment securities held to maturity	$	—	$	—	$	—		$	—	$	213,683	$	111	$	(5,179	)	$	208,615

Loans:

Total loans increased $13.4 million to $248.0 million at June 30, 2006 from $234.6 million at December 31, 2005. Retail loans, which are comprised primarily of residential mortgage loans, increased $4.5 million during the first six

12

months of 2006 while corporate loans, which are comprised mainly of construction and commercial real estate loans, increased $8.9 million during the same period.

The following table reflects the loan portfolio at June 30, 2006 and December 31, 2005:

	6/30/06			12/31/05
	(In thousands)
Residential mortgage loans	$	65,096		$	62,659
Equity loans		12,392			10,412
Consumer loans		558			468
Total retail loans		78,046			73,539
Construction loans		32,736			24,137
Commercial real estate loans		128,737			127,617
Commercial loans		8,484			9,318
Total corporate loans		169,957			161,072
Total loans		248,003			234,611
Allowance for loan losses		(4,184	)		(4,126	)
Total loans, net	$	243,819		$	230,485

Allowance For Loan Losses:

The following table summarizes changes in the allowance for loan losses for the three months and six months ended June 30, 2006 and 2005:

	Three months ended						Six months ended
	6/30/06			6/30/05			6/30/06			6/30/05
	(In thousands)
Beginning balance	$	4,160		$	4,139		$	4,126		$	4,140
Provision charged to operations		30			—			30			—
Recoveries on loans previously charged-off		2			2			40			5
Loans charged-off		(8	)		(6	)		(12	)		(10	)
Ending balance	$	4,184		$	4,135		$	4,184		$	4,135

The allowance for loan losses increased slightly to $4.2 million at June 30, 2006 as compared to December 31, 2005. However, the allowance for loan losses as a percent of total loans has decreased slightly to 1.69% at June 30, 2006 down from 1.76% at December 31, 2005, due to an increase in total loans outstanding at June 30, 2006 compared to December 31, 2005. As mentioned previously, the loan portfolio grew $13.4 million in the first six months of 2006 without a significant change in credit risk to the Company.

The balance of the allowance for loan losses reflects management’s assessment of estimated credit quality and is based on a review of the risk characteristics of the loan portfolio. The Company considers many factors in determining the adequacy of the allowance for loan losses. Collateral value on a loan by loan basis, trends of loan delinquencies on a portfolio segment level, risk classification identified in the Company’s regular review of individual loans, and economic conditions are primary factors in establishing allowance levels. Management believes the allowance level is adequate to absorb the estimated credit losses inherent in the loan portfolio. The allowance for loan losses reflects information available to management at the end of each period.

Risk Assets:

Risk assets consist of non-performing loans and other real estate owned. Non-performing loans consist of both a) loans 90 days or more past due, and b) loans placed on non-accrual because full collection of the principal balance is in doubt. Other real estate owned (OREO) is comprised of foreclosed properties where the Company has formally received title or has possession of the collateral.

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Total risk assets were $92,000 and $32,000, respectively, at June 30, 2006 and December 31, 2005. The Company had no impaired loans at June 30, 2006, December 31, 2005 or June 30, 2005.

The following table summarizes the Company’s risk assets at June 30, 2006, December 31, 2005 and June 30, 2005:

	6/30/06			12/31/05			6/30/05
	(Dollars in thousands)
Non-performing loans	$	92		$	32		$	33
Other real estate owned		—			—			—
Total risk assets	$	92		$	32		$	33
Risk assets as a percent of total loans		0.04	%		0.01	%		0.01	%
Risk assets as a percent of total assets		0.02	%		0.01	%		0.01	%

Deposits:

Total interest bearing deposits amounted to $286.6 million at June 30, 2006 compared to $284.2 million at December 31, 2005, an increase of $2.4 million. Offsetting this increase was a decline of $631,000 in non-interest bearing or demand deposit accounts. The largest change from December 31, 2005 was due primarily to an increase of $8.1 million in higher costing certificates of deposit. The increase in term certificates of deposit reflect the customers’ preference in achieving the highest yields possible as the rates paid on these accounts have increased in conjunction with the increases in interest rates.

The following table reflects the components of the deposit portfolio at June 30, 2006 and December 31, 2005:

	6/30/06		12/31/05
	(In thousands)
NOW and Super NOW accounts	$	36,487	$	38,349
Demand deposit accounts		18,281		18,912
Savings accounts		37,823		41,941
Money market investment accounts		76,888		76,594
Certificates of deposit		135,403		127,291
Total deposits	$	304,882	$	303,087

Borrowings:

Borrowings consist of Federal Home Loan Bank advances, other borrowed funds (short term FHLB advances under 90 days) and securities sold under agreements to repurchase. Total borrowings amounted to $150.9 million at June 30, 2006 compared to $153.4 million at December 31, 2005, a decrease of $2.5 million. While the decrease in total borrowings since year-end was only $2.5 million, the decrease in total borrowings from the first quarter of 2006 was $30.8 million and reflected the balance sheet restructuring whereby the proceeds from the investment sales paid down both the long-term FHLB advances coming due as well as reducing the Bank’s short-term borrowing position.

The following table reflects the components of borrowings at June 30, 2006 and December 31, 2005:

	6/30/06		12/31/05
	(In thousands)
Federal Home Loan Bank advances	$	91,588	$	121,861
FHLB short-term borrowings		53,000		27,000
Customer repurchase agreements		6,268		4,519
Total borrowings	$	150,856	$	153,380

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RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2006 AND 2005

SUMMARY

The Company reported a net loss of $1.9 million, or $(0.42) per diluted share, as compared to net income of $758,000, or $0.17 per diluted share, for the three months ended June 30, 2006 and 2005, respectively. The decline in net income for the period ending June 30, 2006 was primarily due to a previously announced balance sheet restructuring whereby $80.0 million on investments were sold at a pre-tax loss on $2.4 million (after-tax charge of $1.6 million, or $0.35 per diluted share). Other costs incurred in the second quarter of 2006 were related to the name change of the Company’s subsidiary bank to River Bank and former employee severance payments; the combination of which totaled approximately $800,000 on a pre-tax basis (after-tax charge of $525,000, or $0.11 per diluted share). In addition, the Company experienced costs associated with a flood in its corporate headquarters due to severe weather in May 2006, that will not be reimbursed by insurance proceeds in the amount of $71,000 and accelerated depreciation on its property and equipment that were damaged as a result of the flood.

Net Interest Income From Operations:

Net interest income for the three months ended June 30, 2006 decreased by $228,000, or 6.5%, to $3.3 million from $3.5 million for the same period of 2005. The net interest rate spread decreased to 2.16% for the three months ended June 30, 2006 versus 2.32% for the same period of 2005. Interest income for the three months ended June 30, 2006 increased $552,000 primarily due to higher loan rates and higher average loan balances from the same period of 2005. More than offsetting the increase in total interest income was a corresponding increase of $780,000 in total interest expense primarily due to higher rates paid on deposits and borrowings. Although the Company expects the balance sheet restructuring to have a positive impact on its net interest margin in the long-term, much of the restructuring was not completed until late in the second quarter, and as a result, the effect of the restructuring on the margin during the quarter ended June 30, 2006 was minimal. In addition, a change in the timing of the FHLB dividend resulted in no dividend income on that investment this quarter as compared to $106,000 in the second quarter of 2005.

15

The following table presents the Company’s average balance sheet, net interest income and average interest rates for the three months ended June 30, 2006 and 2005. Average loans include non-performing loans.

	Three months ended								Three months ended
	6/30/06								6/30/05
						Average								Average
	Average					Interest			Average					Interest
	Balance			Interest		Rate			Balance			Interest		Rate
	(Dollars in thousands)
ASSETS
Investment securities:
Short-term investments	$	7,971		$	101		5.08	%	$	2,963		$	22		2.98	%
U. S. Government and federal agency bonds		81,359			673		3.32			111,165			829		2.99
Corporate and municipal bonds and other securities		25,092			153		2.45			28,914			270		3.75
Collateralized mortgage obligations and mortgage-backed securities		161,109			1,843		4.59			163,137			1,669		4.10
Total investment securities		275,531			2,770		4.03			306,179			2,790		3.65
Loans:
Residential real estate		64,002			875		5.48			60,463			795		5.27
Equity		11,081			173		6.26			9,128			115		5.05
Consumer		550			9		6.56			662			10		6.06
Total retail loans		75,633			1,057		5.61			70,253			920		5.25
Construction		33,240			753		9.09			17,828			317		7.13
Commercial real estate		128,832			2,301		7.16			133,831			2,267		6.79
Commercial		8,259			166		8.06			12,439			201		6.48
Total corporate loans		170,331			3,220		7.58			164,098			2,785		6.81
Total loans		245,964			4,277		6.97			234,351			3,705		6.34
Total interest-earning assets		521,495			7,047		5.42	%		540,530			6,495		4.82	%
Allowance for loan losses		(4,174	)							(4,152	)
Other assets		22,190								18,375
Total assets	$	539,511							$	554,753
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
NOW and Super NOW accounts	$	35,544		$	11		0.12	%	$	38,812		$	12		0.12	%
Regular savings accounts		39,442			49		0.50			46,138			57		0.50
Money market investment accounts		79,102			443		2.25			79,748			325		1.63
Certificates of deposit and escrow		131,735			1,199		3.65			119,610			796		2.67
Total interest bearing deposits		285,823			1,702		2.39			284,308			1,190		1.68
Borrowed funds:
Other borrowed funds		58,341			711		4.89			75,349			552		2.94
FHLB Advances		116,874			1,331		4.57			115,573			1,222		4.24
Total borrowed funds		175,215			2,042		4.67			190,922			1,774		3.73
Total interest bearing liabilities		461,038			3,744		3.26	%		475,230			2,964		2.50	%
Non-interest bearing deposits		17,202								18,430
Other liabilities		4,512								3,064
Total liabilities		482,752								496,724
Stockholders’ equity		56,759								58,029
Total liabilities and stockholders’ equity	$	539,511							$	554,753
Net interest rate spread							2.16	%							2.32	%
Net interest income				$	3,303							$	3,531
Net interest margin on average earning assets							2.54	%							2.62	%

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Interest Income:

Interest income rose $552,000, or 8.5%, during the second quarter of 2006 versus the same quarter in 2005, primarily attributable to a rise in average loan interest rates.

Average loan interest rates increased 63 basis points from 6.34% to 6.97% during the second quarters of 2005 and 2006, respectively, contributing $332,000 to interest income. Average loan balances rose $11.6 million from $234.4 million in 2005 to $246.0 million in 2006 contributing $240,000 to interest income.

Average investment security interest rates increased 38 basis points during the second quarter of 2006 from 3.65% in 2005 to 4.03% in 2006 adding $217,000 to interest income. Average investment security balances declined $30.6 million from $306.2 million in 2005 to $275.5 million in 2006 reducing interest income by $237,000. As mentioned above, the full impact of the balance sheet restructuring was not recognized and no dividend income from the FHLB was received during the second quarter of 2006.

Interest Expense:

Interest expense increased $780,000, or 26.3%, during the second quarter of 2006 from $3.0 million in the second quarter of 2005 to $3.3 million in the second quarter of 2006 primarily due to the rise in overall market interest rates and experienced by both the deposit portfolio and borrowed funds position.

Average deposit interest rates rose 71 basis points from 1.68% to 2.39% in the second quarter of 2005 and 2006, respectively, contributing $437,000 to interest expense. Average interest-bearing deposit balances increased by $1.5 million from $284.3 million in 2005 to $285.8 million in 2006 increasing interest expense by $75,000.

Average borrowed funds interest rates increased 94 basis points from 3.73% in the second quarter of 2005 to 4.67% in the same quarter of 2006 resulting in a rise of $400,000 to interest expense, the majority of which, $305,000, related to short-term borrowed funding. Average borrowed fund balances declined $15.7 million or 8.2% from $190.9 million in 2005 to $175.2 million in 2006. This decline reduced interest expense by $132,000 primarily due to $146,000 reduction in short-term borrowed funds interest expense partially offset by an increase of $14,000 in long-term borrowed funds interest expense.

Provision for Loan Losses:

The provision for loan losses totaled $30,000 and zero for the three months ended June 30, 2006 and 2005, respectively. The provision of $30,000 in 2006 reflects management’s analysis of loan growth during the second quarter of 2006. The absence of a provision for loan losses in 2005 was based on management’s assessment of the adequacy of the allowance based on an evaluation of the Bank’s loan portfolio and the level of non-performing loans. The balance of the allowance for loan losses has remained fairly consistent at $4.2 million and $4.1 million at June 30, 2006 and June 30, 2005, respectively. The coverage of the allowance for loan losses has decreased slightly to 1.69% at June 30, 2006 from 1.73% at June 30, 2005 due to the loan growth experienced during 2006.

Non-Interest Income (Loss):

Non-interest income decreased $2.5 million for the three months ended June 30, 2006 compared to the same period in 2005 and totaled $(2.1) million and $387,000, respectively. The decrease was primarily attributable to a loss on sales of low yielding investments securities totaling $2.4 million due to the aforementioned balance sheet restructuring. Loan servicing fees remained stable at $34,000 and $38,000 for the three months ended June 30, 2006 and 2005, respectively. Deposit account fees declined to $189,000 from $212,000 for the three months ended June 30, 2006 and 2005, respectively, due to a reduction in NOW account fees. Gains on sales of mortgage loans declined to $3,000 in 2006 from $11,000 in 2005 due to a reduction in loan sale volume. Other income remained flat at $117,000 and $126,000 for the three months ended June 30, 2006 versus 2005, respectively.

17

Non-Interest Expense:

Non-interest expenses rose $1.4 million, or 50.3%, during 2006 to $4.1 million in the second quarter of 2006 versus $2.8 million for the same period of 2005. The majority of the increase was attributable to costs associated with the name change from Lawrence Savings Bank to River Bank during June 2006 in the amount of $585,000. There was an increase of $328,000, or 20.4%, in salaries and employee benefits from $1.6 million in the second quarter of 2005 to $1.9 million in the second quarter of 2006 primarily due to former employee severance payments in the amount of $209,000 and compensation expenses related to stock options of $32,000 in conjunction with the adoption of SFAS 123R.. Occupancy and equipment expense increased $270,000, or 120.5%, to $494,000 in the second quarter of 2006 from $217,000 in the same period of 2005. A significant increase in these costs were associated with the flood experienced in May 2006 to the corporate headquarters and the related accelerated depreciation on the damaged property and equipment, combined with obsolete equipment in the amount of $197,000. Data processing expenses increased $46,000, or 21.2%, to $263,000 in the second quarter of 2006 from $217,000 in 2005 due to an increase in computer software and license fees. Marketing expenses increased $328,000, or 368.5%, during the second quarter of 2006 to $417,000 from $89,000 in the second quarter of 2005 due to a charge of $335,000 in marketing and promotional expenses relating to the name change of the Company’s subsidiary bank to River Bank. Professional fees increased modestly to $201,000 in the second quarter of 2006 from $192,000 in 2005’s second quarter. Other expenses increased $408,000, or 94.9%, to $838,000 in the second quarter of 2006 from $430,000 in the same period of 2005. This increase resulted from costs associated with the name change for the Company’s subsidiary bank in the amount of $250,000 as well as costs associated with the flood experienced in May 2006 to the corporate headquarters that are not expected to be reimbursed by insurance proceeds in the amount of $71,000 and increases due to stockholder related costs associated with the adoption of the new 2006 Stock Option Plan in the amount of $30,000.

Income Taxes:

The Company reported an income tax benefit of $1.0 million for the three months ended June 30, 2006, for an effective income tax benefit rate of 34.2%. This compares to an income tax expense of $400,000 for the three months ended June 30, 2005 or effective income tax rate of 34.5%. Income tax expense decreased $1.4 million from quarter to quarter primarily due to a decrease in taxable earnings within the consolidated group. Subsidiaries within the consolidated group pay various state income tax rates and the mix of taxable income within the group can change.

SIX MONTHS ENDED JUNE 30, 2006 AND 2005

SUMMARY

The Company reported a net loss of $1.7 million, or $(0.37) per diluted share, versus net income of $1.6 million, or $0.36 per diluted share, for the six months ended June 30, 2006 and 2005, respectively. The decline in net income for the period ending June 30, 2006 was primarily due to the balance sheet restructuring previously mentioned, name change expenses relating to the Company’s subsidiary bank and former employee severance payments as well as the continued compression of the Company’s net interest margin from 2.70% in the first six months of 2005 to 2.57% in the same period of 2006.

Net Interest Income From Operations:

Net interest income for the six months ended June 30, 2006 and 2005 decreased by $487,000, or 6.9%, to $6.6 million from $7.1 million, respectively. The net interest rate spread decreased to 2.19% for the six months ended June 30, 2006 versus 2.41% for the same period of 2005. Interest income for the six months ended June 30, 2006 experienced an increase of $979,000 primarily due to higher interest rates on loan balances and higher loan balances from the same period of 2005. More than offsetting the increase in total interest income was a corresponding increase of $1.5 million in total interest expense primarily due to higher rates paid on deposits and borrowed funds.

18

The following table presents the Company’s average balance sheet, net interest income and average interest rates for the six months ended June 30, 2006 and 2005. Average loans include non-performing loans.

	Six months ended								Six months ended
	6/30/06								6/30/05
						Average								Average
	Average					Interest			Average					Interest
	Balance			Interest		Rate			Balance			Interest		Rate
	(Dollars in thousands)
ASSETS
Investment securities:
Short-term investments	$	5,173		$	126		4.91	%	$	2,722		$	38		2.82	%
U. S. Government and federal agency bonds		91,801			1,480		3.25			120,352			1,873		3.14
Corporate and municipal bonds and other securities		25,435			390		3.09			27,811			508		3.68
Collateralized mortgage obligations and mortgage-backed securities		153,141			3,361		4.43			144,853			2,908		4.05
Total investment securities		275,550			5,357		3.92			295,738			5,327		3.63
Loans:
Residential real estate		63,563			1,696		5.38			60,269			1,578		5.28
Equity		10,862			333		6.18			8,931			219		4.94
Consumer		541			17		6.34			684			20		5.90
Total retail loans		74,966			2,046		5.50			69,884			1,817		5.24
Construction		30,050			1,324		8.89			16,697			576		6.96
Commercial real estate		128,036			4,518		7.12			133,750			4,458		6.72
Commercial		8,656			338		7.87			13,703			426		6.27
Total corporate loans		166,742			6,180		7.47			164,150			5,460		6.71
Total loans		241,708			8,226		6.86			234,034			7,277		6.27
Total interest-earning assets		517,258			13,583		5.30	%		529,772			12,604		4.80	%
Allowance for loan losses		(4,160	)							(4,153	)
Other assets		19,686								17,827
Total assets	$	532,784							$	543,446
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
NOW and Super NOW accounts	$	35,963		$	22		0.12	%	$	38,490		$	23		0.12	%
Regular savings accounts		40,223			99		0.50			45,751			112		0.49
Money market investment accounts		79,473			873		2.22			80,829			569		1.42
Certificates of deposit and escrow		129,765			2,254		3.50			119,614			1,552		2.62
Total interest bearing deposits		285,424			3,248		2.29			284,684			2,256		1.60
Borrowed funds:
Other borrowed funds		45,962			1,076		4.72			63,792			868		2.74
FHLB Advances		121,300			2,661		4.42			116,487			2,395		4.15
Total borrowed funds		167,262			3,737		4.51			180,279			3,263		3.65
Total interest bearing liabilities		452,686			6,985		3.11	%		464,963			5,519		2.39	%
Non-interest bearing deposits		17,320								17,333
Other liabilities		4,494								3,214
Total liabilities		474,500								485,510
Stockholders’ equity		58,284								57,936
Total liabilities and stockholders’ equity	$	532,784							$	543,446
Net interest rate spread							2.19	%							2.41	%
Net interest income				$	6,598							$	7,085
Net interest margin on average earning assets							2.57	%							2.70	%

19

Interest Income:

Interest income rose $979,000, or 7.8%, during the six months ended June 30, 2006 versus the same period in 2005, mainly attributable to a rise in average loan interest rates.

Average loan interest rates increased 59 basis points from 6.27% to 6.84% during the six months ended June 30, 2005 and 2006, respectively, contributing $634,000 to interest income. Average loan balances rose $7.7 million from $234.0 million in 2005 to $241.7 million in 2006 contributing $315,000 to interest income.

Average investment security interest rates increased 29 basis points during the first six months of 2006 from 3.63% in 2005 to 3.92% in 2006 adding $309,000 to interest income. Average investment security balances declined $20.2 million from $295.7 million in 2005 to $275.6 million in 2006 reducing interest income by $279,000.

Interest Expense:

Interest expense increased $1.4 million, or 26.6%, to $6.6 million during the first six months of 2006 from $5.5 million in the same period of 2005 primarily due to the rise in interest rates paid on average deposits and borrowed funds.

Average deposit interest rates rose 69 basis points from 1.60% to 2.29% in the first six months of 2005 and 2006, respectively, contributing $877,000 to interest expense. Average interest-bearing deposit balances increased by $740,000 from $284.7 million in 2005 to $285.4 million in 2006 increasing interest expense by $115,000.

Average borrowed funds interest rates increased 86 basis points from 3.65% in the six months ended of 2005 to 4.51% in the same quarter of 2006 resulting in a rise of $664,000 to interest expense, the majority of which, $499,000, related to short-term borrowed funding. Average borrowed fund balances declined $13.0 million or 7.2% from $180.3 million in 2005 to $167.3 million in 2006. This decline reduced interest expense by $190,000 primarily due to $291,000 reduction in short-term borrowed funds interest expense which was partially offset by an increase of $101,000 in long-term borrowed funds interest expense.

Provision for Loan Losses:

The provision for loan losses was $30,000 and zero for the six months ended June 30, 2006 and 2005, respectively. The provision of $30,000 in 2006 reflects management’s analysis of loan growth during 2006. The absence of a provision for loan losses in 2005 was based on management’s assessment of the adequacy of the allowance based on an evaluation of the Bank’s loan portfolio and the level of non-performing loans. The balance of the allowance for loan losses has remained fairly consistent at $4.2 million and $4.1 million at June 30, 2006 and June 30, 2005, respectively. The coverage of the allowance for loan losses has decreased slightly to 1.69% at June 30, 2006 from 1.73% at June 30, 2005 due to the loan growth experienced during 2006.

Non-Interest Income:

Non-interest income decreased for the six months ended June 30, 2006 compared to the same period in 2005 totaling $(1.7) million and $752,000, respectively. The decrease was primarily attributable to a loss on sales of low yielding investments securities totaling $2.4 million due to the balance sheet restructuring. Loan servicing fees decreased from $76,000 in 2005 to $41,000 in 2006 primarily due to the acceleration of amortization of mortgage servicing rights (“MSR”). Deposit account fees remained stable at $398,000 and $419,000, respectively, in 2006 and 2005. Gains on sales of mortgage loans declined to $7,000 in 2006 from $22,000 in 2005 due to a reduction in loan sale volume. Other income remained flat at $227,000 and $235,000, respectively in 2006 versus 2005.

Non-Interest Expense:

Non-interest expenses rose $2.0 million, or 38.09%, during 2006 to $7.4 million in the first six months of 2006 versus $5.3 million for the same period of 2005. Contributing to this increase were costs associated with the name change of the Company’s subsidiary bank to River Bank and severance payments to former employees. There was an increase of $820,000, or 25.8%, in salaries and employee benefits to $4.0 million from $3.2 million primarily due

20

to costs of $582,000 incurred with former employee severance payments and $64,000 in conjunction with the adoption of SFAS 123R by the Company on stock options as well as increases in the medical insurance rates. Occupancy and equipment expenses increased $344,000, or 71.8%, to $823,000 in the first six months of 2006 from $479,000 in the same period of 2005 primarily due to accelerated deprecation of $197,000 on damaged property and equipment and obsolete fixed assets and an increase of $115,000 in repairs and maintenance. The majority of the repairs pertain to costs of $81,000 incurred in the remediation of a small environment issue at one of the Bank’s branch locations. Data processing expenses increased to $496,000 from $438,000 in 2005 due to an increase of $31,000 in computer software and license fees and $20,000 in computer repairs and maintenance. Marketing expenses increased $295,000, or 184.4%, during 2006 due to $335,000 in marketing and promotional expenses relating to the name change of the Company’s subsidiary bank offset by a decrease of $39,000 in direct mail advertising. Professional fees increased $68,000 to $364,000 in 2006 from $296,000 in 2005’s first six months due to an increase in consulting and tax preparation fees due to the Company changing its tax year end from October 31 to December 31. Other expenses increased $447,000, or 57.0%, to $1.2 million from $784,000, respectively, for the six months ended 2006 and 2005 due to costs associated with the subsidiary bank name change of $250,000, costs of $71,000 incurred as a result of the flood of the corporate headquarters in May 2006 that are not expected to be covered by insurance reimbursements and an increase of $80,000 in stockholder’s related expenses resulting from the adoption of the shareholder rights plan as well as the 2006 Stock Option Plan.

Income Taxes:

The Company reported an income tax benefit of $867,000 for the six months ended June 30, 2006 or an effective income tax benefit rate of 34.0%. This compares to an income tax expense of $879,000 for the six months ended June 30, 2005 or effective income tax rate of 35.2%. Income tax expense decreased $1.7 million from the first six months of 2006 versus the same period of 2005 primarily due to a decrease in taxable earnings within the consolidated group. Subsidiaries within the consolidated group pay various state income tax rates and the mix of taxable income within the group can change.

Liquidity and Capital Resources:

The Company’s primary source of funds is cash dividends from its wholly-owned subsidiary, River Bank. The Bank did not pay a dividend to the Company in the first six months of 2006. The Bank paid dividends to the Company in the amount of $1.2 million during the first six months of 2005. The Company made cash payments of dividends to shareholders in the amount of $1.3 million and $1.2 million in the first six months of 2006 and 2005, respectively.

The Bank’s primary sources of funds include collections of principal payments and repayments on outstanding loans, increases in deposits, advances from the Federal Home Loan Bank of Boston (“FHLB”) and securities sold under agreements to repurchase. The Bank has a line of credit of $6.8 million with the FHLB. The Bank currently has a $5 million unsecured Federal funds line of credit with another institution. At June 30, 2006, the entire $11.8 million in available lines of credit was available.

The FHLB requires member banks to maintain qualified collateral for its advances. Collateral is comprised of the Bank’s investments in FHLB stock, its residential mortgage portfolio and the portion of the investment portfolio which meets FHLB qualifying collateral requirements and has been designated as such. The Bank’s borrowing capacity at the FHLB at June 30, 2006 was $235.8 million, of which $144.6 million had been borrowed.

At June 30, 2006, the Company’s stockholders’ equity was $54.2 million as compared to $59.9 million at December 31, 2005. The change during the first six months of 2006 occurred due to a net loss of $1.7 million, a tax benefit associated with the exercise of stock options of $57,000, proceeds of $839,000 from the exercise of stock options and compensation expense relating to stock options of $64,000 in conjunction with the Company adopting SFAS 123R. Stockholders’ equity was reduced by the declaration of cash dividends to shareholders of $1.3 million and a $3.8 million decrease in the market value of investment securities available for sale, net of taxes due mainly to the transfer of securities previously held in the held to maturity portfolio to the available for sale portfolio.

The Company’s leverage ratio at June 30, 2006 and December 31, 2005 was 10.70% and 11.34%, respectively. The Company’s and the Bank’s total risk based capital ratios were 18.71% and 17.78% at June 30, 2006, respectively, compared with 20.34% and 19.54% at December 31, 2005, respectively. The Company exceeds all regulatory

21

minimum capital ratio requirements set forth by the FRB, and the Bank exceeds all minimum capital ratio requirements as defined by the FDIC.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The response is incorporated herein by reference to the discussion under the sub-caption “Interest Rate Sensitivity” of the caption “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of the Company’s 2005 Annual Report on Form 10-K.

ITEM 4: CONTROLS AND PROCEDURES

The Company’s chief executive officer and chief financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report (the “Evaluation Date”), have concluded that as of the Evaluation Date the Company’s disclosure controls and procedures were effective and designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

During the period covered by this quarterly report, there were no changes in the Company’s internal controls that have materially affected, or are reasonable likely to materially affect, the Company’s internal controls over financial reporting.

22

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Bank is involved in various legal proceedings incidental to its business. After review with legal counsel, management does not believe resolution of such litigation will have a material adverse effect on the financial condition and operating results of the Company.

ITEM 1A. RISK FACTORS

Management believes that there have been no material changes in the Company’s risk factors as reported in the Annual Report on Form 10-K for the year ended December 31, 2005.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The response is incorporated herein by reference to the information under the caption “SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS” of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2006.

ITEM 5. OTHER INFORMATION

Special Termination Agreements

The Company and the Bank have entered into special termination agreements, effective August 10, 2006, with Gerald T. Mulligan, Michael J. Ecker, Stephen B. Jones and Diane L. Walker. Each of these special termination agreements provides generally that if there is a “change in control” of the Company or the Bank, and if, at any time during the two-year period following the transaction, the officer’s employment is terminated for any reason (other than death or for cause, under certain circumstances), then the officer would be entitled to receive a lump-sum payment in an amount equal to approximately three times the officer’s average annual compensation over the five previous years of employment with the Company or the Bank (or such shorter period in which the officer was employed). The special termination agreements also provide for a continuation of life, medical and disability coverage for a three-year period after the termination of employment.

A change in control for purposes of the special termination agreements will generally be deemed to include (i) the acquisition by a person or group of persons of beneficial ownership of 25% or more of the common stock of the Company, (ii) a majority of the Board of Directors of the Company no longer being comprised of incumbent directors for any reason, including a tender offer, proxy contest, merger or similar transaction, or (iii) certain business combinations (including a merger of equals), liquidations, or sale or other transactions as described in the agreements.

The foregoing description of the special termination agreements is qualified in its entirety by the terms of the special termination agreement, the form of which is filed as Exhibit 10.2, 10.3, 10.4, and 10.5 to this report.

Special Separation Plan

The Company approved, effective August 10, 2006, the LSB Corporation Special Separation Plan, which provides eligible employees with certain severance benefits if they are terminated from employment with the Company and

23

the Bank in connection with a change in control. For purposes of the Special Separation Plan, the definition of a change in control is the same as that used in the special termination agreements. Under the plan, each eligible employee who, within one year after a change in control, is terminated by either the Company or the Bank from all employment for reasons other than cause shall be entitled to receive a special separation payment equal to two weeks’ compensation for each complete year of service credited to the employee, subject to a maximum of 60 weeks. The plan also provides for a minimum amount of severance based upon the employee’s position. For Senior Vice Presidents, the minimum amount is equal to 39 weeks of compensation; for Vice Presidents, the minimum amount is equal to 26 weeks of compensation. Eligible employees would be entitled to continue for up to one year their coverage (and that of their spouse and eligible dependents) under group medical, hospitalization, vision and dental care plans. The amount of separation benefits payable under the plan would be reduced by the amount of benefits payable to the employee under any written employment agreement with the Company or the Bank or any of their respective successors.

     The foregoing description of the Special Separation Plan is qualified in its entirety by the terms of the plan, which is filed as Exhibit 10.1 to this report.

ITEM 6. EXHIBITS

Number	Description
10.1	Special Separation Plan as of August 10, 2006.
10.2	Special Termination Agreement between LSB Corporation and Gerald T. Mulligan dated August 10, 2006.
10.3	Special Termination Agreement between LSB Corporation and Michael J. Ecker dated August 10, 2006.
10.4	Special Termination Agreement between LSB Corporation and Stephen B. Jones dated August 10, 2006.
10.5	Special Termination Agreement between LSB Corporation and Diane L. Walker dated August 10, 2006.
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LSB CORPORATION
August 11, 2006	/s/ Gerald T. Mulligan
	Gerald T. Mulligan
	President and
	Chief Executive Officer
August 11, 2006	/s/ Diane L. Walker
	Diane L. Walker
	Senior Vice President
	Chief Financial Officer

25

LSB CORPORATION AND SUBSIDIARY

Quarterly Report on Form 10-Q for the six months ended June 30, 2006

EXHIBIT INDEX

10.1	Special Separation Plan as of August 10, 2006.
10.2	Special Termination Agreement between LSB Corporation and Gerald T. Mulligan dated August 10, 2006.
10.3	Special Termination Agreement between LSB Corporation and Michael J. Ecker dated August 10, 2006.
10.4	Special Termination Agreement between LSB Corporation and Stephen B. Jones dated August 10, 2006.
10.5	Special Termination Agreement between LSB Corporation and Diane L. Walker dated August 10, 2006.
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002

26

EX-10.1

                                                                    EXHIBIT 10.1

                                 LSB CORPORATION
                             SPECIAL SEPARATION PLAN

1.   Purpose.

     The purpose of this LSB Corporation Special Separation Plan is to provide
eligible employees with certain severance benefits if they are terminated from
employment with LSB Corporation (the "Company") and its wholly-owned subsidiary,
River Bank (the "Bank") in connection with a Change in Control (as defined
below).

2.   Eligible Employees.

     The following classes of regular employees of the Company and the Bank
(collectively, the "Employers") are eligible to receive a benefit under this
Plan if they are terminated from employment under qualifying circumstances
described in Section 4:



 GROUP                           DESCRIPTION
 -----                           -----------
       
Group 1   Each officer employee classified at or above the Senior
          Vice President level

Group 2   Each officer employee classified as a Vice President

Group 3   Each employee classified as a Manager or Assistant Vice
          President

Group 4   Each full-time employee not described in Groups 1, 2 or 3

Group 5   Each part-time employee


     Employees engaged on a project, intermittent, fixed term of less than one
year, or other temporary basis are not regarded as regular employees for
purposes of the Plan and are ineligible to participate in the Plan. An
employee's classification will be determined as of the Employers' last business
day prior to the employee's termination (the "Determination Date"). Each regular
employee who is typically scheduled to work less than 37.5 hours per week for at
least six months during the twelve month period ending on the Determination Date
(or, in the case of regular employees hired less than six months before the
Determination Date, for the duration of their employment) will be deemed to be
employed on a part-time basis for purposes of this Plan.

3.   Change in Control.

     For purposes of this Plan, a "Change in Control" shall be deemed to have
occurred upon the occurrence of any of the following events:



     (i)  any circumstance that the Company or the Bank would be required to
          report as a change in control under Item 5.01 of the Current Report on
          Form 8-K as prescribed by applicable regulations promulgated under the
          Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
          successor provision; or

     (ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
          the 1934 Act) becomes a "beneficial owner" (as such term is defined in
          Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
          securities of the Company or the Bank representing twenty-five percent
          (25%) or more of the total number of votes that may be cast for the
          election of directors of the Company or the Bank (other than in the
          case of the Bank, for the Company's ownership of the capital stock of
          the Bank), and the Board of Directors of the Company or the Bank, as
          the case may be, has not consented to such event by a two-thirds (2/3)
          vote of all of the members of the Board of Directors adopted either
          prior to such event or within sixty (60) days thereafter, provided
          that if at the time such a consent vote is adopted after such event,
          the persons who were directors of the Company or the Bank, as the case
          may be, immediately prior to such event do not constitute a majority
          of the Board of Directors of the Company or the Bank, respectively, or
          of any successor institution, such vote shall not be deemed to
          constitute consent for the purposes of this provision; or

     (iii) any tender or exchange offer for the ordinary voting stock of the
          Company or the Bank, or any merger, consolidation, or other business
          combination involving the Company or the Bank, or any sale or other
          disposition of assets of the Company or the Bank constituting all or
          substantially all of the Company's assets (considered a consolidated
          basis), or any combination of the foregoing transactions has occurred,
          and as the result of, or in connection with, such transaction(s) (A)
          the individuals who were directors of the Company or the Bank
          immediately before the commencement of such transaction(s) cease to
          constitute a majority of the Board of Directors of the Company or the
          Bank, respectively, or of any successor institution or (B) persons,
          who, immediately prior to the commencement of such transaction(s),
          were the beneficial owners of ordinary voting stock of the Company or
          the Bank, beneficially own (within the meaning of Rule 13d-3),
          directly or indirectly, less than forty percent (40%) of the then
          outstanding shares of ordinary voting stock of the entity resulting
          from such transaction(s), including, without limitation, an entity
          which as a result of such transaction(s) owns the Company or the Bank
          or all or substantially all of the assets of the Company or the Bank
          either directly or through one or more subsidiaries; or

     (iv) during any period of two consecutive years, individuals who constitute
          the Board of Directors of the Company at the beginning of the two-year
          period cease for any reason to constitute at least a majority of the
          Company's directors; provided, however, that for purposes of this
          clause, an individual shall be deemed to have also been a director at
          the beginning of such period if such individual was elected by the
          Company's Board of Directors (or nominated by the Company's Board of
          Directors of the Company for election by the stockholders) by a vote
          of at least


                                       -2-



          two-thirds (2/3) of the directors who either were directors at the
          beginning of the two-year period or who were so elected or nominated
          by such directors.

4.   Special Separation Benefits.

     Each eligible employee who, within one (1) year after a Change in Control,
is terminated by the Company and/or Bank from all employment with the Employers
for reasons other than Cause shall be entitled to receive the special separation
payment described in Section 4(a) and the special benefit continuation rights
described in Section 4(b). Without limiting the foregoing, employees who
separate from service in connection with a voluntarily resignation, retirement
or death are ineligible for benefits under the Plan.

     (a)  Subject to subsection (c), (d) and (e) of this Section 4, the special
          separation payment is a gross amount, subject to applicable
          withholding, equal to two weeks' Compensation for each complete Year
          of Service credited to the employee as of the Determination Date. The
          special separation payment is to be distributed to eligible employees
          in a lump sum within thirty (30) days after the Determination Date.

          For purposes of the Plan, "Compensation" means an employee's regular,
          base weekly compensation from the Employers subject to tax withholding
          (but including any elective deferrals excluded from such employee's
          compensation subject to withholding based on Section 125, 129, 132(f)
          and/or 401(k) of the Internal Revenue Code of 1986, as amended
          ("IRC")), determined as of the Determination Date; provided, however
          that with respect to each non-salaried employee, such employee's
          regular, base weekly compensation shall be determined by dividing his
          or her aggregate regular, base weekly compensation earned during the
          six month period ending on the Determination Date by twenty-six (or,
          in the case of an individual employed for less than six months as of
          the Determination Date, his or her aggregate regular, base weekly
          compensation earned in all weeks (including partial weeks) of
          employment divided the number of such weeks (including partial weeks).

          For purposes of the Plan, "Year of Service" means each twelve month
          period commencing on an employee's effective date of employment (or
          any anniversary thereof) during which the employee is employed
          throughout the year. An eligible employee will be credited with a
          complete Year of Service for the year in which the Determination Date
          occurs if the Determination Date is at least nine months later than
          the employee's most recent employment anniversary.

     (b)  Each eligible employee entitled to receive a special separation
          payment under Section 4(a) may elect to continue for the maximum
          extension period (defined below) their coverage (and that of their
          spouse and eligible dependents) under each group medical,
          hospitalization, vision and dental care plan maintained by the
          Employers in which the employee participates as of the Determination
          Date; provided, however, that such continuation is permitted under the
          terms of such


                                      -3-



          plans, excluding coverage continuation rights required by IRC Section
          4980B ("COBRA").

          Employees who elect the special benefit continuation rights set forth
          in this Section 4(b) shall be required to pay the same portion of the
          applicable premium for such coverage paid by active employees for
          similar coverage. At the election of the Employers, eligible employees
          who continue coverage pursuant to this Section 4(b) may be allowed to
          apply a portion of the special separation payment to which they are
          entitled under Section 4(a) to pay their premium amounts on a pre-tax
          basis under an IRC Section 125 cafeteria plan, subject to terms of
          such plan.

          The maximum extension period is the period ending on the earlier of
          (i) the first anniversary of the Determination Date, and (ii) the date
          on which the employee becomes eligible to participate, as an employee
          or otherwise, in another group health plan provided such plan does not
          contain a pre-existing condition exclusion or limitation that affects
          the employee. To the extent permitted under the terms of the
          applicable plans and COBRA, an employee's maximum coverage period
          under COBRA shall be measured from the date of coverage loss due to
          the expiration of the special benefit continuation provided under this
          Section 4(b), rather than from the date of employment loss.

     (c)  Minimum Special Separation Payment. Subject to Section 4(e), in no
          event shall the gross amount to which an eligible employee is entitled
          under this Plan due to a qualifying termination be less than the
          amount specified in the following table:



 GROUP     MINIMUM SPECIAL SEPARATION PAYMENT
 -----    ------------------------------------
       
Group 5   Eight (8) weeks' Compensation

Group 4   Eight (8) weeks' Compensation

Group 3   Twelve (12) weeks' Compensation

Group 2   Twenty-six (26) weeks' Compensation

Group 1   Thirty-nine (39) weeks' Compensation


     (d)  Maximum Special Separation Payment. Notwithstanding Section 4(a), in
          no event shall an employee be eligible to receive a special separation
          payment in excess of sixty (60) weeks' Compensation.

     (e)  Special Separation Payment Offsets. The amount of the special
          separation payment to which an eligible employee is otherwise entitled
          shall be reduced by: (i) any payments to which such employee is
          entitled under the federal Worker Adjustment and Retraining
          Notification Act or similar federal, state or local law; (ii)
          separation benefits payable to the employee under any written
          employment


                                      -4-



          agreement with the Company or the Bank or any successor(s) in interest
          thereto; and (iii) the amount, if any, by which the special
          termination payment exceeds the amount that may be deducted by the
          payor based on IRC Section 162(m) or 280G.

     (f)  Cause means that (i) the conviction of any crime involving moral
          turpitude, or a plea of nolo contendere to such an offense; or (ii)
          gross negligence in the performance of, or a willful refusal to
          perform, any duty or responsibility as an employee of the Company
          and/or Bank after written notice is delivered to the employee with at
          least fifteen days to cure the subject activity; and provided that
          such activity does not result from sickness, accident, disability or
          similar cause beyond the control of the employee.

5.   Amendment and Termination.

     The Board of Directors of LSB Corporation reserves the right, in its sole
and absolute discretion, (i) at any time and from time to time, to modify or
amend the Plan in whole or in part; and (ii) to terminate the Plan in whole or
in part at any time; provided however that in no event may the Plan be amended
or terminated during the twelve month period commencing on the occurrence of a
Change of Control without the written consent of all employees affected by such
amendment or termination. In the event of the termination of the Plan, no
Participant will be deemed to have any vested benefit or non-forfeitable right
to receive any benefit under the Plan. This Plan shall be binding upon the
Company and the Bank and each of their respective successors and assigns.

6.   Administration.

     The Plan shall be administered by the Board of Directors of LSB
Corporation, or its designee. The administrator has complete authority, in its
sole and absolute discretion, to construe the terms of this Plan, including
determining the eligibility for, and amount of, severance benefits due under
this Plan. Except as otherwise provided herein, all decisions of the
administrator shall be final and binding on all parties affected thereby. It is
intended that the Plan will be administered in accordance with the applicable
requirements of IRC Section 409A.


                                       -5-



7.   Plan Not a Contract of Employment.

     Nothing contained in this Plan shall be held or construed to create any
liability upon the Employers' to retain any employee in its service. All
employees shall remain subject to discharge or discipline to the same extent as
if the Plan had not been put into effect.

8.   Source of Funds.

     All benefit payments required under this Plan shall be paid from the
Employer's general assets. The Plan is intended to be unfunded for purposes of
the IRC and the Employee Retirement Income Security Act, to the extent
applicable.

Approved: LSB Corporation Board of Directors: 8/10/06


                                       -6-

EX-10.2

                                                                    EXHIBIT 10.2

                          SPECIAL TERMINATION AGREEMENT

     THIS AGREEMENT, dated as of August 10, 2006 (the "Agreement"), is by and
among LSB CORPORATION, a Massachusetts corporation (the "Company") and its
wholly owned subsidiary, RIVER BANK, a Massachusetts savings bank with its
executive offices in North Andover, Massachusetts (the "Bank") (the Bank and the
Company shall be hereinafter collectively referred to as the "Employers"), and
Gerald T. Mulligan, (the "Executive"), an individual presently employed by the
Company and the Bank in the capacity of President and Chief Executive Officer.

     1. Purpose. In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Executive and the Employers,
the Employers are willing to provide, subject to the terms of this Agreement,
certain severance benefits to protect the Executive from the consequences of a
Terminating Event (as defined in Section 3) occurring subsequent to a Change in
Control.

     2. Change in Control. A "Change in Control" shall be deemed to have
occurred upon the occurrence of any of the following events:

     (i)  any circumstance that the Company or the Bank would be required to
          report as a change in control under Item 5.01 of the Current Report on
          Form 8-K as prescribed by applicable regulations promulgated under the
          Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
          successor provision; or

     (ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
          the 1934 Act) becomes a "beneficial owner" (as such term is defined in
          Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
          securities of the Company or the Bank representing twenty-five percent
          (25%) or more of the total number of votes that may be cast for the
          election of directors of the Company or the Bank (other than in the
          case of the Bank, for the Company's ownership of the capital stock of
          the Bank), and the Board of Directors of the Company or the Bank, as
          the case may be, has not consented to such event by a two-thirds (2/3)
          vote of all of the members of the Board of Directors adopted either
          prior to such event or within sixty (60) days thereafter, provided
          that if at the time such a consent vote is adopted after such event,
          the persons who were directors of the Company or the Bank, as the case
          may be, immediately prior to such event do not constitute a majority
          of the Board of Directors of the Company or the Bank, respectively, or
          of any successor institution, such vote shall not be deemed to
          constitute consent for the purposes of this provision; or

     (iii) any tender or exchange offer for the ordinary voting stock of the
          Company or the Bank, or any merger, consolidation, or other business
          combination involving the Company or the Bank, or any sale or other
          disposition of assets of the Company or the Bank constituting all or
          substantially all of the Company's assets



          (considered a consolidated basis), or any combination of the foregoing
          transactions has occurred, and as the result of, or in connection
          with, such transaction(s) (A) the individuals who were directors of
          the Company or the Bank immediately before the commencement of such
          transaction(s) cease to constitute a majority of the Board of
          Directors of the Company or the Bank, respectively, or of any
          successor institution or (B) persons, who, immediately prior to the
          commencement of such transaction(s), were the beneficial owners of
          ordinary voting stock of the Company or the Bank, beneficially own
          (within the meaning of Rule 13d-3), directly or indirectly, less than
          forty percent (40%) of the then outstanding shares of ordinary voting
          stock of the entity resulting from such transaction(s), including,
          without limitation, an entity which as a result of such transaction(s)
          owns the Company or the Bank or all or substantially all of the assets
          of the Company or the Bank either directly or through one or more
          subsidiaries; or

     (iv) during any period of two consecutive years, individuals who constitute
          the Board of Directors of the Company at the beginning of the two-year
          period cease for any reason to constitute at least a majority of the
          Company's directors; provided, however, that for purposes of this
          clause, an individual shall be deemed to have also been a director at
          the beginning of such period if such individual was elected by the
          Company's Board of Directors (or nominated by the Company's Board of
          Directors of the Company for election by the stockholders) by a vote
          of at least two-thirds (2/3) of the directors who either were
          directors at the beginning of the two-year period or who were so
          elected or nominated by such directors.

     3. Terminating Event; Cause; Good Reason; Disability.

          a. As used in this Agreement, the phrase "Terminating Event" shall
mean the occurrence, after a Change in Control, of (a) termination by either of
the Employers of the employment of the Executive with either of the Employers
for any reason other than (i) death, (ii) Disability (as defined in this
Section), or (iii) Cause (as defined in this Section), or (b) resignation of the
Executive from the employ of either of the Employers for Good Reason (as defined
in this Section), while the Executive is not receiving disability payments or
benefits from the Employers.

          b. As used in this Agreement, the term "Cause" shall mean the
Executive, after the date of this Agreement,

     (i)  has been convicted by a court of competent jurisdiction of any
          criminal offense involving dishonesty, breach of trust or
          misappropriation, or has entered a plea of nolo contendere to such an
          offense; or

     (ii) has committed an act of fraud, embezzlement, theft, or has committed
          any other act which has resulted in the termination of coverage under
          either Employer's Blanket Bond as to the Executive (as distinguished
          from termination of coverage as to the Employer as a whole); or


                                        2



     (iii) has committed a willful violation of the Bank's Code of Conduct or
          any law, rule or regulation governing the operation of the Company or
          the Bank or any of its affiliates or the insurance of deposits held by
          the Bank (A) which is a felony or misdemeanor, or (B) which the Board
          of Directors of either of the Employers determines in good faith, by
          the affirmative vote of at least two-thirds (2/3) of the then current
          directors, has had or will likely have a material adverse effect on
          the business, interests or reputation of the Employers or any of their
          affiliates; or

     (iv) has committed any act which the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, constitutes (A)
          a willful or reckless breach of fiduciary duty to the Company or the
          Bank or any of their affiliates involving personal profit to the
          Executive or any of the Executive's family members, associates or
          affiliates and (B) that such breach, together with all consequences
          related thereto, has had or will likely have a material adverse effect
          on the business, interests or reputation of the Employers or any of
          their affiliates or on the Executive's ability to perform the duties
          reasonably assigned to the Executive; or

     (v)  has been convicted of any crime, or has entered a plea of nolo
          contendere to such an offense, or has committed any other act, in each
          case which the Board of Directors of either of the Employers
          determines in good faith, by the affirmative vote of at least
          two-thirds (2/3) of the then current directors, is (A) abhorrent to
          the community and (B) will likely have a material adverse effect on
          the business, interests or reputation of the Employers or the
          Executive's ability to perform the duties reasonably assigned to the
          Executive; or

     (vi) has committed a willful and unauthorized disclosure of material
          confidential information regarding the Employers or any of their
          affiliates, which disclosure the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, has had or will
          likely have a material adverse effect on the business, interests or
          reputation of the Employers or any of their affiliates; or

     (vii) has been found by the Board of Directors of either of the Employers,
          acting in good faith by the affirmative vote of at least two-thirds
          (2/3) of the then current directors, after reasonable written notice
          to the Executive and an opportunity to cure, to have a dependency on
          alcohol or other drugs that substantially interferes with the
          Executive's performance of duties reasonably assigned to the
          Executive.

          c. As used in this Agreement, the term "Good Reason" shall mean

     (i)  A significant and, from the Executive's perspective, adverse change in
          the nature or scope of the Executive's responsibilities, authorities,
          powers, functions or duties from the responsibilities, authorities,
          powers, functions or duties exercised by the Executive immediately
          prior to the Change in Control (or at the Executive's election, prior
          to the earlier commencement of the Proposed Business Combination that
          results in such Change in Control); or


                                        3



     (ii) A reasonable determination by the Executive that, as a result of a
          Change in Control, the Executive is unable to exercise the
          responsibilities, authorities, powers, functions or duties exercised
          by the Executive immediately prior to such Change in Control (or at
          the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control);
          or

     (iii) Any decrease in the Executive's base salary or any decrease of five
          percent (5%) or more in the total annual compensation payable by the
          Employers to the Executive as compared to the Executive's base salary
          or total annual compensation target immediately prior to the Change in
          Control (or at the Executive's election, prior to the earlier
          commencement of the Proposed Business Combination that results in such
          Change in Control); provided, however, that a decrease in base salary
          or total compensation payable to the Executive and to all other
          executive officers of the Employers on a comparable basis as a result
          of the Employers' financial performance shall not constitute Good
          Reason; or

     (iv) The failure by the Employers to continue the Executive's participation
          in any material compensation, incentive, bonus or benefit plan,
          including life, medical and disability coverage, in which the
          Executive participates immediately prior to the Change in Control (or
          at the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control),
          or in any successor plan, or the taking of any action by the Employers
          that would reduce, directly or indirectly, in any material respect any
          of such benefits or deprive the Executive of any material fringe
          benefit enjoyed by the Executive under such plan at the time of the
          Change in Control (or at the Executive's election, prior to the
          earlier commencement of the Proposed Business Combination that results
          in such Change in Control), or any successor plan (except to the
          extent any benefits or coverage under such plans may be changed in its
          application to all of the employees of the Employers (or
          successors-in-interest) on a nondiscriminatory basis), or the failure
          of a successor-in-interest to make available its benefits plans to the
          Executive on a basis that is not substantially less favorable than the
          successor generally affords to its other employees holding similar
          positions; or

     (v)  The relocation of the Employers' offices at which the Executive is
          principally employed immediately prior to the Change in Control, or at
          the Executive's election, the earlier commencement of the Proposed
          Business Combination that results in such Change in Control, to a
          location more than 25 miles from such office or from North Andover,
          Massachusetts, or either of the Employers requiring the Executive to
          be based anywhere other than the Employers' executive offices, except
          for required travel on the Employers' business to an extent
          substantially consistent with customary business travel obligations;
          or

     (vi) The failure of either of the Employers to obtain a satisfactory
          agreement from any successor to assume and agree to perform this
          Agreement as required by Section


                                        4



          16 hereof, after written notice from the Executive that makes
          reference to this provision and provides a reasonable opportunity to
          cure.

     For purposes of this Agreement, the term "Business Combination" shall mean
any tender or exchange offer for the ordinary voting stock of the Company or the
Bank, or any merger, consolidation, or other business combination involving the
Company or the Bank, or any sale or other disposition of assets of the Company
or the Bank constituting all or substantially all of the Company's assets
(considered a consolidated basis). A "Proposed Business Combination" shall mean
the occurrence of the Company or the Bank entering into a definitive agreement
providing for a Business Combination that, as the result of or in connection
with such transaction or any combination of related transactions, will result in
a Change in Control.

          d. For purposes of this Agreement, the Executive shall be deemed to be
subject to a Disability if the Executive is permanently disabled within the
meaning of the Employers' long-term disability policy, or if there is no such
policy, if the Executive is unable, through physical or mental illness or other
cause, to perform normal and customary duties which the Executive reasonably is
required to perform for the Employers, for a total of six (6) months during any
one (1) year period. In determining whether the Executive is disabled, the
Employers may rely upon the written statement provided by a licensed physician
reasonably acceptable to the Employers and the Executive. The Executive shall
allow examination from time to time by any licensed physician selected by the
Employers and reasonably acceptable to the Executive. All such examinations will
be conducted at or in a reasonable place, time and manner.

     4. Severance Payment. Subject to the provisions of Section 6 below and the
Executive signing the Employers' standard separation agreement, which includes,
among other provisions, a General Release, in the event a Terminating Event
occurs within two (2) years after a Change in Control, the Employers shall pay
to the Executive an aggregate amount (the "Severance Payment") equal to (x)
three (3) times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) any other payment or benefit received by the Executive from
the Employers or either of them that is deemed to constitute a "parachute
payment" as defined in Section 280G of the Code, and less (z) One Dollar
($1.00). The Severance Payment shall be payable by the Employers in one lump sum
on the effective date of such Terminating Event.

     5. Benefit Continuation. If a Terminating Event occurs within two years
after a Change in Control, the Employers shall continue to provide to the
Executive, for three (3) years after the Terminating Event, the life, medical
and disability coverage in which the Executive participated, and at the level in
effect, and at the same out-of-pocket cost to the Executive, immediately prior
to the Change in Control, or at the Executive's election, the earlier
commencement of the Proposed Business Combination that results in such Change in
Control (except to the extent any benefit or coverage under such plans may be
changed in its application to all of the employees of the Employers (or
successors-in-interest) on a nondiscriminatory basis). If the Employers are
unable to provide the benefits set forth in this Section 5 due to the change in
Executive's status to that of a non-employee, the Employers shall instead pay to
the Executive a lump sum amount equal to the value of the benefits required to
be provided by this Section 5.


                                        5



     6. Limitation on Benefits.

          (a) It is the intention of the Executive and of the Employers that no
payment by the Employers to or for the benefit of the Executive under this
Agreement and/or any other agreement or plan pursuant to which the Executive is
entitled to receive payments or benefits shall be non-deductible to the
Employers by reason of the operation of Section 280G of the Code relating to
parachute payments. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of said
Section 280G, any such payments exceed the amount which can be deducted by the
Employers in the aggregate, such payments shall be reduced to the maximum amount
which can be deducted by the Employers. To the extent that payments exceeding
such maximum deductible amount have been made to or for the benefit of the
Executive, such excess payments shall be refunded to the Employers with interest
thereon at the applicable Federal Rate determined under Section 1274(d) of the
Code, compounded annually, or at such other rate as may be required in order
that no such payments shall be non-deductible to the Employers by reason of the
operation of said Section 280G. To the extent that there is more than one method
of reducing the payments to bring them within the limitations of said Section
280G, the Executive shall determine which method shall be followed, provided
that if the Executive fails to make such determination within forty-five days
(45) after the Employers have sent him written notice of the need for such
reduction, the Employers may determine the method of such reduction in their
sole discretion.

          (b) If any dispute between the Employers and the Executive as to any
of the amounts to be determined under Section 6(a), or the method of calculating
such amounts, cannot be resolved by the Employers and the Executive, either the
Employers or the Executive after giving three (3) days written notice to the
other, may refer the dispute to a partner in the Boston office of a firm of
nationally recognized independent certified public accountants selected jointly
by the Employers and the Executive, which firm shall not be the Employers'
independent registered public accounting firm. The determination of such partner
as to the amount to be determined under Section 6(a) and the method of
calculating such amounts shall be final and binding on both the Employers and
the Executive. The Employers shall bear the costs of any such determination.

          (c) This Agreement is intended to be construed in a manner to avoid
imposition on payments hereunder of interest and additional tax under Section
409A(a)(1)(B) of the Code. Without limiting the scope of the previous sentence,
with respect to any payment hereunder subject to Section 409A, distributions on
account of a separation from service may not be made to the Executive if he is a
"Specified Employee" within the meaning of Section 409A(a)(2)(B)(i) before the
date which is six (6) months after the date after separation from service (or,
if earlier, the date of death of the Executive).

     7. Employment Status. This Agreement is not an agreement for the employment
of the Executive and shall confer no rights on the Executive except as herein
expressly provided.

     8. Term. This Agreement shall take effect August 10, 2006, and shall
terminate upon the earlier of (a) the termination by the Employers of the
employment of the Executive because of death, Disability (as defined in Section
3(d) hereof) or Cause (as defined in Section 3(b) hereof), (b) the resignation
or termination by the Executive for any reason prior to a Change


                                        6



in Control, or (c) the resignation of the Executive after a Change in Control
other than for Good Reason (as defined in Section 3(c) hereof).

     9. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.

     10. Mitigation. The Executive shall have no obligation to mitigate the
consequences of a termination by the Employers of the Executive's employment
without Cause or the Executive's resignation for Good Reason, and neither the
Severance Payment nor benefits provided under Section 5 (or the lump sum payment
is lieu of some or all of such benefits) shall be reduced or otherwise modified
as a result of the Executive obtaining other employment after such a termination
or resignation.

     11. Confidentiality. The Executive understands and agrees (a) that the
Executive will maintain all proprietary and confidential information of the
Employers as proprietary and confidential at all times during and after his/her
employment, (b) that the Executive will not disclose or communicate such
information to any third party or make use of it on his/her own behalf or on
behalf of any third party, and (c) upon his/her termination, that the Executive
will deliver all tangible forms or media which the Executive may have containing
such information to the Employers. For purposes of this Section 11,
"information" includes trade secrets and all non-public records, practices,
letters, plans, drawings, computer programs and data, technical data, financial
and other business data pertaining to the Employers or either of them or any of
their affiliates, customers, vendors or other persons associated with the Bank.
The Executive acknowledges and further agrees that the disclosure of such
information would be a material breach of this Agreement for which the Bank
shall be entitled to any remedies available to it in law or in equity.

     12. Covenant Not to Disrupt Business. The Executive hereby covenants and
agrees that he or she will not now, or for a period of one (1) year after the
effective date of the Executive's termination of employment, whether or not
following a Change in Control, disrupt, damage, impair or interfere with the
business of the Employers or either of them or any of their affiliates, whether
by way of interfering with or soliciting its employees (other than a general
solicitation not targeted at the Employers' employees), or disrupting either of
the Employers' or any of their affiliates' relationships with any customer, loan
packager, representative, vendor, broker or similar party doing business with
the Employer. After termination of employment, whether or not following a Change
in Control, the Executive is not, however, restricted from being employed by or
engaged in a competing business, except as may be provided expressly in any
other written agreement to which the Executive and the Employers or either of
them is a party.

     13. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall


                                        7



be conducted in the City of Boston in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 13. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. This
provision shall not apply to Section 6(b), except in the event that the
Employers and the Executive cannot agree on the selection of the accounting
partner described in said section.

     14. Payment of Costs and Legal Fees. All reasonable costs and legal fees
paid or incurred by the Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Employers, plus interest on any delayed payment at the rate provided for in
Section 7872(f)(2)(A) of the Code or any successor provision, unless (A) the
Executive is wholly unsuccessful on the merits of such dispute or question of
interpretation, as determined pursuant to a legal judgment, arbitration award or
settlement (whether formal or informal) or (B) unless and to the extent the
arbitrators shall determine that under the circumstances recovery by the
Executive of all or a part of any such fees and costs and expenses would be
unjust.

     15. Cooperation Covenant. Both during and after the Executive's employment,
the Executive shall cooperate fully with the Employers and with any legal
counsel, expert or consultant the Employers or either of them may retain to
assist in connection with any judicial proceedings, arbitration, administrative
proceeding, governmental investigation, examination, inquiry or internal audit
in which the Employers or either of them or any of their affiliates, may be or
become involved, including full disclosure of all relevant information and
truthfully testifying on the Employers' behalf (or, at the request of the
Employers, on behalf of any such affiliate of the Employers) in connection with
any such proceeding or investigation.

     16. Assignment; Successors and Assigns.

     a. The Executive may not make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written
consent of the Employers.

     b. This Agreement shall inure to the benefit of and be binding upon the
Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Employers of all payments due to the
Executive under this Agreement, the Employers shall continue such payments to
the Executive's beneficiary designated in writing to the Employers prior to the
Executive's death (or to the Executive's estate, if the Executive fails to make
such designation).

     c. Each of the Employers shall require their respective successors (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of their business and/or assets to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Employers would be required to perform it if no such succession had taken place.
Failure by either of the Employers to obtain such assumption and agreement prior
to the effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 hereof shall apply. As used in this
Agreement, the term "Employers" shall mean any successor to the respective
business and/or assets of the


                                        8



Employers or either of them that assumes, by operation of law or otherwise, the
Employers' obligations under this Agreement.

     17. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. The agreements of the Executive contained in
Section 11 and Section 12 hereof are of a special, unique and extraordinary
character, and the obligations of the Executive set forth therein shall
therefore be enforceable both at law and in equity, by injunction or otherwise.
The rights and remedies of the parties hereunder shall be cumulative and not
alternative and shall not be exhausted by any one or more uses thereof

     18. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. Only the Chief Executive
Officer of the Company or the Bank, as applicable, is authorized by such entity
to sign a writing waiving a provision hereof. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

     19. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main offices, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.

     20. Election of Remedies. An election by the Executive to resign for Good
Reason after a Change in Control under the provisions of this Agreement shall
not constitute a breach by the Executive of any employment agreement between the
Employers and the Executive and shall be deemed a voluntary termination of
employment by the Executive for the purpose of interpreting the provisions of
any of the Employers' benefit plans, programs or policies.

     21. Time. Time is of the essence with respect to the performance of every
provision of this Agreement.

     22. Entire Agreement. This Agreement represents the entire and integrated
agreement among the Employers and the Executive regarding the subject matter
hereof and supersedes all prior negotiations, representations or agreements,
either written or oral. Notwithstanding the immediately preceding sentence,
except as expressly provided in this Agreement, nothing in this Agreement shall
affect in any way any benefit to which the Executive may be entitled under any
prior written agreement or previously adopted plan.

     23. Construction. Headings at the beginning of each paragraph are solely
for the convenience of the parties and are not a part of this Agreement.
Whenever required by the context of this Agreement, the singular shall include
the plural and the masculine shall include the feminine and vice versa. This
Agreement shall not be construed as if it had been prepared by


                                        9



one of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to sections are to this Agreement.

     24. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by duly authorized representatives of
each of the Employers.

     25. Allocation of Obligations Between Employers. The obligations of the
Employers under this Agreement are intended to be the joint and several
obligations of the Bank and the Company and the Employers shall, as between
themselves, allocate these obligations in a manner agreed upon by them.
Notwithstanding any other provision of this Agreement, neither the Company nor
the Bank shall have any obligation to pay the Severance Payment or to provide
any other benefit hereunder if and to the extent such Severance Payment or other
benefit is prohibited by applicable federal or state law, including without
limitation Part 359 of the regulations of the Federal Deposit Insurance
Corporation (12 CFR Section 359 et seq.) or any successor provision.

     26. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.

                  [Remainder of Page Intentionally Left Blank]


                                       10



     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Bank, the Executive and the Company as of the date first above written.

                                        RIVER BANK


                                        By: /s/ Diane L. Walker
                                            ------------------------------------
                                            Diane L. Walker
                                            Executive Vice President
                                            Treasurer and CFO


                                        LSB CORPORATION


                                        By: /s/ Diane L. Walker
                                            ------------------------------------
                                            Diane L. Walker
                                            Executive Vice President
                                            Treasurer and CFO


                                        EXECUTIVE


                                        /s/ Gerald T. Mulligan
                                        ----------------------------------------
                                        Gerald T. Mulligan


                                       11

EX-10.3

                                                                    EXHIBIT 10.3

                          SPECIAL TERMINATION AGREEMENT

     THIS AGREEMENT, dated as of August 10, 2006 (the "Agreement"), is by and
among LSB CORPORATION, a Massachusetts corporation (the "Company") and its
wholly owned subsidiary, RIVER BANK, a Massachusetts savings bank with its
executive offices in North Andover, Massachusetts (the "Bank") (the Bank and the
Company shall be hereinafter collectively referred to as the "Employers"), and
Michael J. Ecker, (the "Executive"), an individual presently employed by the
Company and the Bank in the capacity of Executive Vice President and Chief
Lending Officer.

     1. Purpose. In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Executive and the Employers,
the Employers are willing to provide, subject to the terms of this Agreement,
certain severance benefits to protect the Executive from the consequences of a
Terminating Event (as defined in Section 3) occurring subsequent to a Change in
Control.

     2. Change in Control. A "Change in Control" shall be deemed to have
occurred upon the occurrence of any of the following events:

     (i)  any circumstance that the Company or the Bank would be required to
          report as a change in control under Item 5.01 of the Current Report on
          Form 8-K as prescribed by applicable regulations promulgated under the
          Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
          successor provision; or

     (ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
          the 1934 Act) becomes a "beneficial owner" (as such term is defined in
          Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
          securities of the Company or the Bank representing twenty-five percent
          (25%) or more of the total number of votes that may be cast for the
          election of directors of the Company or the Bank (other than in the
          case of the Bank, for the Company's ownership of the capital stock of
          the Bank), and the Board of Directors of the Company or the Bank, as
          the case may be, has not consented to such event by a two-thirds (2/3)
          vote of all of the members of the Board of Directors adopted either
          prior to such event or within sixty (60) days thereafter, provided
          that if at the time such a consent vote is adopted after such event,
          the persons who were directors of the Company or the Bank, as the case
          may be, immediately prior to such event do not constitute a majority
          of the Board of Directors of the Company or the Bank, respectively, or
          of any successor institution, such vote shall not be deemed to
          constitute consent for the purposes of this provision; or

     (iii) any tender or exchange offer for the ordinary voting stock of the
          Company or the Bank, or any merger, consolidation, or other business
          combination involving the Company or the Bank, or any sale or other
          disposition of assets of the Company or the Bank constituting all or
          substantially all of the Company's assets



          (considered a consolidated basis), or any combination of the foregoing
          transactions has occurred, and as the result of, or in connection
          with, such transaction(s) (A) the individuals who were directors of
          the Company or the Bank immediately before the commencement of such
          transaction(s) cease to constitute a majority of the Board of
          Directors of the Company or the Bank, respectively, or of any
          successor institution or (B) persons, who, immediately prior to the
          commencement of such transaction(s), were the beneficial owners of
          ordinary voting stock of the Company or the Bank, beneficially own
          (within the meaning of Rule 13d-3), directly or indirectly, less than
          forty percent (40%) of the then outstanding shares of ordinary voting
          stock of the entity resulting from such transaction(s), including,
          without limitation, an entity which as a result of such transaction(s)
          owns the Company or the Bank or all or substantially all of the assets
          of the Company or the Bank either directly or through one or more
          subsidiaries; or

     (iv) during any period of two consecutive years, individuals who constitute
          the Board of Directors of the Company at the beginning of the two-year
          period cease for any reason to constitute at least a majority of the
          Company's directors; provided, however, that for purposes of this
          clause, an individual shall be deemed to have also been a director at
          the beginning of such period if such individual was elected by the
          Company's Board of Directors (or nominated by the Company's Board of
          Directors of the Company for election by the stockholders) by a vote
          of at least two-thirds (2/3) of the directors who either were
          directors at the beginning of the two-year period or who were so
          elected or nominated by such directors.

     3. Terminating Event; Cause; Good Reason; Disability.

          a. As used in this Agreement, the phrase "Terminating Event" shall
mean the occurrence, after a Change in Control, of (a) termination by either of
the Employers of the employment of the Executive with either of the Employers
for any reason other than (i) death, (ii) Disability (as defined in this
Section), or (iii) Cause (as defined in this Section), or (b) resignation of the
Executive from the employ of either of the Employers for Good Reason (as defined
in this Section), while the Executive is not receiving disability payments or
benefits from the Employers.

          b. As used in this Agreement, the term "Cause" shall mean the
Executive, after the date of this Agreement,

     (i)  has been convicted by a court of competent jurisdiction of any
          criminal offense involving dishonesty, breach of trust or
          misappropriation, or has entered a plea of nolo contendere to such an
          offense; or

     (ii) has committed an act of fraud, embezzlement, theft, or has committed
          any other act which has resulted in the termination of coverage under
          either Employer's Blanket Bond as to the Executive (as distinguished
          from termination of coverage as to the Employer as a whole); or


                                       2



     (iii) has committed a willful violation of the Bank's Code of Conduct or
          any law, rule or regulation governing the operation of the Company or
          the Bank or any of its affiliates or the insurance of deposits held by
          the Bank (A) which is a felony or misdemeanor, or (B) which the Board
          of Directors of either of the Employers determines in good faith, by
          the affirmative vote of at least two-thirds (2/3) of the then current
          directors, has had or will likely have a material adverse effect on
          the business, interests or reputation of the Employers or any of their
          affiliates; or

     (iv) has committed any act which the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, constitutes (A)
          a willful or reckless breach of fiduciary duty to the Company or the
          Bank or any of their affiliates involving personal profit to the
          Executive or any of the Executive's family members, associates or
          affiliates and (B) that such breach, together with all consequences
          related thereto, has had or will likely have a material adverse effect
          on the business, interests or reputation of the Employers or any of
          their affiliates or on the Executive's ability to perform the duties
          reasonably assigned to the Executive; or

     (v)  has been convicted of any crime, or has entered a plea of nolo
          contendere to such an offense, or has committed any other act, in each
          case which the Board of Directors of either of the Employers
          determines in good faith, by the affirmative vote of at least
          two-thirds (2/3) of the then current directors, is (A) abhorrent to
          the community and (B) will likely have a material adverse effect on
          the business, interests or reputation of the Employers or the
          Executive's ability to perform the duties reasonably assigned to the
          Executive; or

     (vi) has committed a willful and unauthorized disclosure of material
          confidential information regarding the Employers or any of their
          affiliates, which disclosure the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, has had or will
          likely have a material adverse effect on the business, interests or
          reputation of the Employers or any of their affiliates; or

     (vii) has been found by the Board of Directors of either of the Employers,
          acting in good faith by the affirmative vote of at least two-thirds
          (2/3) of the then current directors, after reasonable written notice
          to the Executive and an opportunity to cure, to have a dependency on
          alcohol or other drugs that substantially interferes with the
          Executive's performance of duties reasonably assigned to the
          Executive.

          c.  As used in this Agreement, the term "Good Reason" shall mean

     (i)  A significant and, from the Executive's perspective, adverse change in
          the nature or scope of the Executive's responsibilities, authorities,
          powers, functions or duties from the responsibilities, authorities,
          powers, functions or duties exercised by the Executive immediately
          prior to the Change in Control (or at the Executive's election, prior
          to the earlier commencement of the Proposed Business Combination that
          results in such Change in Control); or


                                       3



     (ii) A reasonable determination by the Executive that, as a result of a
          Change in Control, the Executive is unable to exercise the
          responsibilities, authorities, powers, functions or duties exercised
          by the Executive immediately prior to such Change in Control (or at
          the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control);
          or

     (iii) Any decrease in the Executive's base salary or any decrease of five
          percent (5%) or more in the total annual compensation payable by the
          Employers to the Executive as compared to the Executive's base salary
          or total annual compensation target immediately prior to the Change in
          Control (or at the Executive's election, prior to the earlier
          commencement of the Proposed Business Combination that results in such
          Change in Control); provided, however, that a decrease in base salary
          or total compensation payable to the Executive and to all other
          executive officers of the Employers on a comparable basis as a result
          of the Employers' financial performance shall not constitute Good
          Reason; or

     (iv) The failure by the Employers to continue the Executive's participation
          in any material compensation, incentive, bonus or benefit plan,
          including life, medical and disability coverage, in which the
          Executive participates immediately prior to the Change in Control (or
          at the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control),
          or in any successor plan, or the taking of any action by the Employers
          that would reduce, directly or indirectly, in any material respect any
          of such benefits or deprive the Executive of any material fringe
          benefit enjoyed by the Executive under such plan at the time of the
          Change in Control (or at the Executive's election, prior to the
          earlier commencement of the Proposed Business Combination that results
          in such Change in Control), or any successor plan (except to the
          extent any benefits or coverage under such plans may be changed in its
          application to all of the employees of the Employers (or
          successors-in-interest) on a nondiscriminatory basis), or the failure
          of a successor-in-interest to make available its benefits plans to the
          Executive on a basis that is not substantially less favorable than the
          successor generally affords to its other employees holding similar
          positions; or

     (v)  The relocation of the Employers' offices at which the Executive is
          principally employed immediately prior to the Change in Control, or at
          the Executive's election, the earlier commencement of the Proposed
          Business Combination that results in such Change in Control, to a
          location more than 25 miles from such office or from North Andover,
          Massachusetts, or either of the Employers requiring the Executive to
          be based anywhere other than the Employers' executive offices, except
          for required travel on the Employers' business to an extent
          substantially consistent with customary business travel obligations;
          or

     (vi) The failure of either of the Employers to obtain a satisfactory
          agreement from any successor to assume and agree to perform this
          Agreement as required by Section


                                       4



          16 hereof, after written notice from the Executive that makes
          reference to this provision and provides a reasonable opportunity to
          cure.

     For purposes of this Agreement, the term "Business Combination" shall mean
any tender or exchange offer for the ordinary voting stock of the Company or the
Bank, or any merger, consolidation, or other business combination involving the
Company or the Bank, or any sale or other disposition of assets of the Company
or the Bank constituting all or substantially all of the Company's assets
(considered a consolidated basis). A "Proposed Business Combination" shall mean
the occurrence of the Company or the Bank entering into a definitive agreement
providing for a Business Combination that, as the result of or in connection
with such transaction or any combination of related transactions, will result in
a Change in Control.

          d. For purposes of this Agreement, the Executive shall be deemed to be
subject to a Disability if the Executive is permanently disabled within the
meaning of the Employers' long-term disability policy, or if there is no such
policy, if the Executive is unable, through physical or mental illness or other
cause, to perform normal and customary duties which the Executive reasonably is
required to perform for the Employers, for a total of six (6) months during any
one (1) year period. In determining whether the Executive is disabled, the
Employers may rely upon the written statement provided by a licensed physician
reasonably acceptable to the Employers and the Executive. The Executive shall
allow examination from time to time by any licensed physician selected by the
Employers and reasonably acceptable to the Executive. All such examinations will
be conducted at or in a reasonable place, time and manner.

     4. Severance Payment. Subject to the provisions of Section 6 below and the
Executive signing the Employers' standard separation agreement, which includes,
among other provisions, a General Release, in the event a Terminating Event
occurs within two (2) years after a Change in Control, the Employers shall pay
to the Executive an aggregate amount (the "Severance Payment") equal to (x)
three (3) times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) any other payment or benefit received by the Executive from
the Employers or either of them that is deemed to constitute a "parachute
payment" as defined in Section 280G of the Code, and less (z) One Dollar
($1.00). The Severance Payment shall be payable by the Employers in one lump sum
on the effective date of such Terminating Event.

     5. Benefit Continuation. If a Terminating Event occurs within two years
after a Change in Control, the Employers shall continue to provide to the
Executive, for three (3) years after the Terminating Event, the life, medical
and disability coverage in which the Executive participated, and at the level in
effect, and at the same out-of-pocket cost to the Executive, immediately prior
to the Change in Control, or at the Executive's election, the earlier
commencement of the Proposed Business Combination that results in such Change in
Control (except to the extent any benefit or coverage under such plans may be
changed in its application to all of the employees of the Employers (or
successors-in-interest) on a nondiscriminatory basis). If the Employers are
unable to provide the benefits set forth in this Section 5 due to the change in
Executive's status to that of a non-employee, the Employers shall instead pay to
the Executive a lump sum amount equal to the value of the benefits required to
be provided by this Section 5.


                                       5



     6. Limitation on Benefits.

          (a) It is the intention of the Executive and of the Employers that no
payment by the Employers to or for the benefit of the Executive under this
Agreement and/or any other agreement or plan pursuant to which the Executive is
entitled to receive payments or benefits shall be non-deductible to the
Employers by reason of the operation of Section 280G of the Code relating to
parachute payments. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of said
Section 280G, any such payments exceed the amount which can be deducted by the
Employers in the aggregate, such payments shall be reduced to the maximum amount
which can be deducted by the Employers. To the extent that payments exceeding
such maximum deductible amount have been made to or for the benefit of the
Executive, such excess payments shall be refunded to the Employers with interest
thereon at the applicable Federal Rate determined under Section 1274(d) of the
Code, compounded annually, or at such other rate as may be required in order
that no such payments shall be non-deductible to the Employers by reason of the
operation of said Section 280G. To the extent that there is more than one method
of reducing the payments to bring them within the limitations of said Section
280G, the Executive shall determine which method shall be followed, provided
that if the Executive fails to make such determination within forty-five days
(45) after the Employers have sent him written notice of the need for such
reduction, the Employers may determine the method of such reduction in their
sole discretion.

          (b) If any dispute between the Employers and the Executive as to any
of the amounts to be determined under Section 6(a), or the method of calculating
such amounts, cannot be resolved by the Employers and the Executive, either the
Employers or the Executive after giving three (3) days written notice to the
other, may refer the dispute to a partner in the Boston office of a firm of
nationally recognized independent certified public accountants selected jointly
by the Employers and the Executive, which firm shall not be the Employers'
independent registered public accounting firm. The determination of such partner
as to the amount to be determined under Section 6(a) and the method of
calculating such amounts shall be final and binding on both the Employers and
the Executive. The Employers shall bear the costs of any such determination.

          (c) This Agreement is intended to be construed in a manner to avoid
imposition on payments hereunder of interest and additional tax under Section
409A(a)(1)(B) of the Code. Without limiting the scope of the previous sentence,
with respect to any payment hereunder subject to Section 409A, distributions on
account of a separation from service may not be made to the Executive if he is a
"Specified Employee" within the meaning of Section 409A(a)(2)(B)(i) before the
date which is six (6) months after the date after separation from service (or,
if earlier, the date of death of the Executive).

     7. Employment Status. This Agreement is not an agreement for the employment
of the Executive and shall confer no rights on the Executive except as herein
expressly provided.

     8. Term. This Agreement shall take effect August 10, 2006, and shall
terminate upon the earlier of (a) the termination by the Employers of the
employment of the Executive because of death, Disability (as defined in Section
3(d) hereof) or Cause (as defined in Section 3(b) hereof), (b) the resignation
or termination by the Executive for any reason prior to a Change


                                       6



in Control, or (c) the resignation of the Executive after a Change in Control
other than for Good Reason (as defined in Section 3(c) hereof).

     9. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.

     10. Mitigation. The Executive shall have no obligation to mitigate the
consequences of a termination by the Employers of the Executive's employment
without Cause or the Executive's resignation for Good Reason, and neither the
Severance Payment nor benefits provided under Section 5 (or the lump sum payment
is lieu of some or all of such benefits) shall be reduced or otherwise modified
as a result of the Executive obtaining other employment after such a termination
or resignation.

     11. Confidentiality. The Executive understands and agrees (a) that the
Executive will maintain all proprietary and confidential information of the
Employers as proprietary and confidential at all times during and after his/her
employment, (b) that the Executive will not disclose or communicate such
information to any third party or make use of it on his/her own behalf or on
behalf of any third party, and (c) upon his/her termination, that the Executive
will deliver all tangible forms or media which the Executive may have containing
such information to the Employers. For purposes of this Section 11,
"information" includes trade secrets and all non-public records, practices,
letters, plans, drawings, computer programs and data, technical data, financial
and other business data pertaining to the Employers or either of them or any of
their affiliates, customers, vendors or other persons associated with the Bank.
The Executive acknowledges and further agrees that the disclosure of such
information would be a material breach of this Agreement for which the Bank
shall be entitled to any remedies available to it in law or in equity.

     12. Covenant Not to Disrupt Business. The Executive hereby covenants and
agrees that he or she will not now, or for a period of one (1) year after the
effective date of the Executive's termination of employment, whether or not
following a Change in Control, disrupt, damage, impair or interfere with the
business of the Employers or either of them or any of their affiliates, whether
by way of interfering with or soliciting its employees (other than a general
solicitation not targeted at the Employers' employees), or disrupting either of
the Employers' or any of their affiliates' relationships with any customer, loan
packager, representative, vendor, broker or similar party doing business with
the Employer. After termination of employment, whether or not following a Change
in Control, the Executive is not, however, restricted from being employed by or
engaged in a competing business, except as may be provided expressly in any
other written agreement to which the Executive and the Employers or either of
them is a party.

     13. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall


                                       7



be conducted in the City of Boston in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 13. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. This
provision shall not apply to Section 6(b), except in the event that the
Employers and the Executive cannot agree on the selection of the accounting
partner described in said section.

     14. Payment of Costs and Legal Fees. All reasonable costs and legal fees
paid or incurred by the Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Employers, plus interest on any delayed payment at the rate provided for in
Section 7872(f)(2)(A) of the Code or any successor provision, unless (A) the
Executive is wholly unsuccessful on the merits of such dispute or question of
interpretation, as determined pursuant to a legal judgment, arbitration award or
settlement (whether formal or informal) or (B) unless and to the extent the
arbitrators shall determine that under the circumstances recovery by the
Executive of all or a part of any such fees and costs and expenses would be
unjust.

     15. Cooperation Covenant. Both during and after the Executive's employment,
the Executive shall cooperate fully with the Employers and with any legal
counsel, expert or consultant the Employers or either of them may retain to
assist in connection with any judicial proceedings, arbitration, administrative
proceeding, governmental investigation, examination, inquiry or internal audit
in which the Employers or either of them or any of their affiliates, may be or
become involved, including full disclosure of all relevant information and
truthfully testifying on the Employers' behalf (or, at the request of the
Employers, on behalf of any such affiliate of the Employers) in connection with
any such proceeding or investigation.

     16. Assignment; Successors and Assigns.

     a. The Executive may not make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written
consent of the Employers.

     b. This Agreement shall inure to the benefit of and be binding upon the
Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Employers of all payments due to the
Executive under this Agreement, the Employers shall continue such payments to
the Executive's beneficiary designated in writing to the Employers prior to the
Executive's death (or to the Executive's estate, if the Executive fails to make
such designation).

     c. Each of the Employers shall require their respective successors (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of their business and/or assets to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Employers would be required to perform it if no such succession had taken place.
Failure by either of the Employers to obtain such assumption and agreement prior
to the effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 hereof shall apply. As used in this
Agreement, the term "Employers" shall mean any successor to the respective
business and/or assets of the


                                       8



Employers or either of them that assumes, by operation of law or otherwise, the
Employers' obligations under this Agreement.

     17. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. The agreements of the Executive contained in
Section 11 and Section 12 hereof are of a special, unique and extraordinary
character, and the obligations of the Executive set forth therein shall
therefore be enforceable both at law and in equity, by injunction or otherwise.
The rights and remedies of the parties hereunder shall be cumulative and not
alternative and shall not be exhausted by any one or more uses thereof

     18. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. Only the Chief Executive
Officer of the Company or the Bank, as applicable, is authorized by such entity
to sign a writing waiving a provision hereof. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

     19. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main offices, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.

     20. Election of Remedies. An election by the Executive to resign for Good
Reason after a Change in Control under the provisions of this Agreement shall
not constitute a breach by the Executive of any employment agreement between the
Employers and the Executive and shall be deemed a voluntary termination of
employment by the Executive for the purpose of interpreting the provisions of
any of the Employers' benefit plans, programs or policies.

     21. Time. Time is of the essence with respect to the performance of every
provision of this Agreement.

     22. Entire Agreement. This Agreement represents the entire and integrated
agreement among the Employers and the Executive regarding the subject matter
hereof and supersedes all prior negotiations, representations or agreements,
either written or oral. Notwithstanding the immediately preceding sentence,
except as expressly provided in this Agreement, nothing in this Agreement shall
affect in any way any benefit to which the Executive may be entitled under any
prior written agreement or previously adopted plan.

     23. Construction. Headings at the beginning of each paragraph are solely
for the convenience of the parties and are not a part of this Agreement.
Whenever required by the context of this Agreement, the singular shall include
the plural and the masculine shall include the feminine and vice versa. This
Agreement shall not be construed as if it had been prepared by


                                       9



one of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to sections are to this Agreement.

     24. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by duly authorized representatives of
each of the Employers.

     25. Allocation of Obligations Between Employers. The obligations of the
Employers under this Agreement are intended to be the joint and several
obligations of the Bank and the Company and the Employers shall, as between
themselves, allocate these obligations in a manner agreed upon by them.
Notwithstanding any other provision of this Agreement, neither the Company nor
the Bank shall have any obligation to pay the Severance Payment or to provide
any other benefit hereunder if and to the extent such Severance Payment or other
benefit is prohibited by applicable federal or state law, including without
limitation Part 359 of the regulations of the Federal Deposit Insurance
Corporation (12 CFR Section 359 et seq.) or any successor provision.

     26. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.

                  [Remainder of Page Intentionally Left Blank]


                                       10



     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Bank, the Executive and the Company as of the date first above written.

                                        RIVER BANK


                                        By: /s/ Gerald T. Mulligan
                                            ------------------------------------
                                            Gerald T. Mulligan
                                            President and Chief Executive
                                            Officer


                                        LSB CORPORATION


                                        By: /s/ Gerald T. Mulligan
                                            ------------------------------------
                                            Gerald T. Mulligan
                                            President and Chief Executive
                                            Officer


                                        EXECUTIVE


                                        /s/ Michael J. Ecker
                                        ----------------------------------------
                                        Michael J. Ecker


                                       11

EX-10.4

                                                                    EXHIBIT 10.4

                          SPECIAL TERMINATION AGREEMENT

     THIS AGREEMENT, dated as of August 10, 2006 (the "Agreement"), is by and
among LSB CORPORATION, a Massachusetts corporation (the "Company") and its
wholly owned subsidiary, RIVER BANK, a Massachusetts savings bank with its
executive offices in North Andover, Massachusetts (the "Bank") (the Bank and the
Company shall be hereinafter collectively referred to as the "Employers"), and
Stephen B. Jones, (the "Executive"), an individual presently employed by the
Company and the Bank in the capacity of Executive Vice President, Retail
Banking.

     1. Purpose. In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Executive and the Employers,
the Employers are willing to provide, subject to the terms of this Agreement,
certain severance benefits to protect the Executive from the consequences of a
Terminating Event (as defined in Section 3) occurring subsequent to a Change in
Control.

     2. Change in Control. A "Change in Control" shall be deemed to have
occurred upon the occurrence of any of the following events:

     (i)  any circumstance that the Company or the Bank would be required to
          report as a change in control under Item 5.01 of the Current Report on
          Form 8-K as prescribed by applicable regulations promulgated under the
          Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
          successor provision; or

     (ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
          the 1934 Act) becomes a "beneficial owner" (as such term is defined in
          Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
          securities of the Company or the Bank representing twenty-five percent
          (25%) or more of the total number of votes that may be cast for the
          election of directors of the Company or the Bank (other than in the
          case of the Bank, for the Company's ownership of the capital stock of
          the Bank), and the Board of Directors of the Company or the Bank, as
          the case may be, has not consented to such event by a two-thirds (2/3)
          vote of all of the members of the Board of Directors adopted either
          prior to such event or within sixty (60) days thereafter, provided
          that if at the time such a consent vote is adopted after such event,
          the persons who were directors of the Company or the Bank, as the case
          may be, immediately prior to such event do not constitute a majority
          of the Board of Directors of the Company or the Bank, respectively, or
          of any successor institution, such vote shall not be deemed to
          constitute consent for the purposes of this provision; or

     (iii) any tender or exchange offer for the ordinary voting stock of the
          Company or the Bank, or any merger, consolidation, or other business
          combination involving the Company or the Bank, or any sale or other
          disposition of assets of the Company or the Bank constituting all or
          substantially all of the Company's assets



          (considered a consolidated basis), or any combination of the foregoing
          transactions has occurred, and as the result of, or in connection
          with, such transaction(s) (A) the individuals who were directors of
          the Company or the Bank immediately before the commencement of such
          transaction(s) cease to constitute a majority of the Board of
          Directors of the Company or the Bank, respectively, or of any
          successor institution or (B) persons, who, immediately prior to the
          commencement of such transaction(s), were the beneficial owners of
          ordinary voting stock of the Company or the Bank, beneficially own
          (within the meaning of Rule 13d-3), directly or indirectly, less than
          forty percent (40%) of the then outstanding shares of ordinary voting
          stock of the entity resulting from such transaction(s), including,
          without limitation, an entity which as a result of such transaction(s)
          owns the Company or the Bank or all or substantially all of the assets
          of the Company or the Bank either directly or through one or more
          subsidiaries; or

     (iv) during any period of two consecutive years, individuals who constitute
          the Board of Directors of the Company at the beginning of the two-year
          period cease for any reason to constitute at least a majority of the
          Company's directors; provided, however, that for purposes of this
          clause, an individual shall be deemed to have also been a director at
          the beginning of such period if such individual was elected by the
          Company's Board of Directors (or nominated by the Company's Board of
          Directors of the Company for election by the stockholders) by a vote
          of at least two-thirds (2/3) of the directors who either were
          directors at the beginning of the two-year period or who were so
          elected or nominated by such directors.

     3. Terminating Event; Cause; Good Reason; Disability.

          a. As used in this Agreement, the phrase "Terminating Event" shall
mean the occurrence, after a Change in Control, of (a) termination by either of
the Employers of the employment of the Executive with either of the Employers
for any reason other than (i) death, (ii) Disability (as defined in this
Section), or (iii) Cause (as defined in this Section), or (b) resignation of the
Executive from the employ of either of the Employers for Good Reason (as defined
in this Section), while the Executive is not receiving disability payments or
benefits from the Employers.

          b. As used in this Agreement, the term "Cause" shall mean the
Executive, after the date of this Agreement,

     (i)  has been convicted by a court of competent jurisdiction of any
          criminal offense involving dishonesty, breach of trust or
          misappropriation, or has entered a plea of nolo contendere to such an
          offense; or

     (ii) has committed an act of fraud, embezzlement, theft, or has committed
          any other act which has resulted in the termination of coverage under
          either Employer's Blanket Bond as to the Executive (as distinguished
          from termination of coverage as to the Employer as a whole); or


                                       2



     (iii) has committed a willful violation of the Bank's Code of Conduct or
          any law, rule or regulation governing the operation of the Company or
          the Bank or any of its affiliates or the insurance of deposits held by
          the Bank (A) which is a felony or misdemeanor, or (B) which the Board
          of Directors of either of the Employers determines in good faith, by
          the affirmative vote of at least two-thirds (2/3) of the then current
          directors, has had or will likely have a material adverse effect on
          the business, interests or reputation of the Employers or any of their
          affiliates; or

     (iv) has committed any act which the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, constitutes (A)
          a willful or reckless breach of fiduciary duty to the Company or the
          Bank or any of their affiliates involving personal profit to the
          Executive or any of the Executive's family members, associates or
          affiliates and (B) that such breach, together with all consequences
          related thereto, has had or will likely have a material adverse effect
          on the business, interests or reputation of the Employers or any of
          their affiliates or on the Executive's ability to perform the duties
          reasonably assigned to the Executive; or

     (v)  has been convicted of any crime, or has entered a plea of nolo
          contendere to such an offense, or has committed any other act, in each
          case which the Board of Directors of either of the Employers
          determines in good faith, by the affirmative vote of at least
          two-thirds (2/3) of the then current directors, is (A) abhorrent to
          the community and (B) will likely have a material adverse effect on
          the business, interests or reputation of the Employers or the
          Executive's ability to perform the duties reasonably assigned to the
          Executive; or

     (vi) has committed a willful and unauthorized disclosure of material
          confidential information regarding the Employers or any of their
          affiliates, which disclosure the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, has had or will
          likely have a material adverse effect on the business, interests or
          reputation of the Employers or any of their affiliates; or

     (vii) has been found by the Board of Directors of either of the Employers,
          acting in good faith by the affirmative vote of at least two-thirds
          (2/3) of the then current directors, after reasonable written notice
          to the Executive and an opportunity to cure, to have a dependency on
          alcohol or other drugs that substantially interferes with the
          Executive's performance of duties reasonably assigned to the
          Executive.

          c. As used in this Agreement, the term "Good Reason" shall mean

     (i)  A significant and, from the Executive's perspective, adverse change in
          the nature or scope of the Executive's responsibilities, authorities,
          powers, functions or duties from the responsibilities, authorities,
          powers, functions or duties exercised by the Executive immediately
          prior to the Change in Control (or at the Executive's election, prior
          to the earlier commencement of the Proposed Business Combination that
          results in such Change in Control); or


                                       3



     (ii) A reasonable determination by the Executive that, as a result of a
          Change in Control, the Executive is unable to exercise the
          responsibilities, authorities, powers, functions or duties exercised
          by the Executive immediately prior to such Change in Control (or at
          the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control);
          or

     (iii) Any decrease in the Executive's base salary or any decrease of five
          percent (5%) or more in the total annual compensation payable by the
          Employers to the Executive as compared to the Executive's base salary
          or total annual compensation target immediately prior to the Change in
          Control (or at the Executive's election, prior to the earlier
          commencement of the Proposed Business Combination that results in such
          Change in Control); provided, however, that a decrease in base salary
          or total compensation payable to the Executive and to all other
          executive officers of the Employers on a comparable basis as a result
          of the Employers' financial performance shall not constitute Good
          Reason; or

     (iv) The failure by the Employers to continue the Executive's participation
          in any material compensation, incentive, bonus or benefit plan,
          including life, medical and disability coverage, in which the
          Executive participates immediately prior to the Change in Control (or
          at the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control),
          or in any successor plan, or the taking of any action by the Employers
          that would reduce, directly or indirectly, in any material respect any
          of such benefits or deprive the Executive of any material fringe
          benefit enjoyed by the Executive under such plan at the time of the
          Change in Control (or at the Executive's election, prior to the
          earlier commencement of the Proposed Business Combination that results
          in such Change in Control), or any successor plan (except to the
          extent any benefits or coverage under such plans may be changed in its
          application to all of the employees of the Employers (or
          successors-in-interest) on a nondiscriminatory basis), or the failure
          of a successor-in-interest to make available its benefits plans to the
          Executive on a basis that is not substantially less favorable than the
          successor generally affords to its other employees holding similar
          positions; or

     (v)  The relocation of the Employers' offices at which the Executive is
          principally employed immediately prior to the Change in Control, or at
          the Executive's election, the earlier commencement of the Proposed
          Business Combination that results in such Change in Control, to a
          location more than 25 miles from such office or from North Andover,
          Massachusetts, or either of the Employers requiring the Executive to
          be based anywhere other than the Employers' executive offices, except
          for required travel on the Employers' business to an extent
          substantially consistent with customary business travel obligations;
          or

     (vi) The failure of either of the Employers to obtain a satisfactory
          agreement from any successor to assume and agree to perform this
          Agreement as required by Section


                                       4



          16 hereof, after written notice from the Executive that makes
          reference to this provision and provides a reasonable opportunity to
          cure.

     For purposes of this Agreement, the term "Business Combination" shall mean
any tender or exchange offer for the ordinary voting stock of the Company or the
Bank, or any merger, consolidation, or other business combination involving the
Company or the Bank, or any sale or other disposition of assets of the Company
or the Bank constituting all or substantially all of the Company's assets
(considered a consolidated basis). A "Proposed Business Combination" shall mean
the occurrence of the Company or the Bank entering into a definitive agreement
providing for a Business Combination that, as the result of or in connection
with such transaction or any combination of related transactions, will result in
a Change in Control.

          d. For purposes of this Agreement, the Executive shall be deemed to be
subject to a Disability if the Executive is permanently disabled within the
meaning of the Employers' long-term disability policy, or if there is no such
policy, if the Executive is unable, through physical or mental illness or other
cause, to perform normal and customary duties which the Executive reasonably is
required to perform for the Employers, for a total of six (6) months during any
one (1) year period. In determining whether the Executive is disabled, the
Employers may rely upon the written statement provided by a licensed physician
reasonably acceptable to the Employers and the Executive. The Executive shall
allow examination from time to time by any licensed physician selected by the
Employers and reasonably acceptable to the Executive. All such examinations will
be conducted at or in a reasonable place, time and manner.

     4. Severance Payment. Subject to the provisions of Section 6 below and the
Executive signing the Employers' standard separation agreement, which includes,
among other provisions, a General Release, in the event a Terminating Event
occurs within two (2) years after a Change in Control, the Employers shall pay
to the Executive an aggregate amount (the "Severance Payment") equal to (x)
three (3) times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) any other payment or benefit received by the Executive from
the Employers or either of them that is deemed to constitute a "parachute
payment" as defined in Section 280G of the Code, and less (z) One Dollar
($1.00). The Severance Payment shall be payable by the Employers in one lump sum
on the effective date of such Terminating Event.

     5. Benefit Continuation. If a Terminating Event occurs within two years
after a Change in Control, the Employers shall continue to provide to the
Executive, for three (3) years after the Terminating Event, the life, medical
and disability coverage in which the Executive participated, and at the level in
effect, and at the same out-of-pocket cost to the Executive, immediately prior
to the Change in Control, or at the Executive's election, the earlier
commencement of the Proposed Business Combination that results in such Change in
Control (except to the extent any benefit or coverage under such plans may be
changed in its application to all of the employees of the Employers (or
successors-in-interest) on a nondiscriminatory basis). If the Employers are
unable to provide the benefits set forth in this Section 5 due to the change in
Executive's status to that of a non-employee, the Employers shall instead pay to
the Executive a lump sum amount equal to the value of the benefits required to
be provided by this Section 5.


                                       5



     6. Limitation on Benefits.

          (a) It is the intention of the Executive and of the Employers that no
payment by the Employers to or for the benefit of the Executive under this
Agreement and/or any other agreement or plan pursuant to which the Executive is
entitled to receive payments or benefits shall be non-deductible to the
Employers by reason of the operation of Section 280G of the Code relating to
parachute payments. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of said
Section 280G, any such payments exceed the amount which can be deducted by the
Employers in the aggregate, such payments shall be reduced to the maximum amount
which can be deducted by the Employers. To the extent that payments exceeding
such maximum deductible amount have been made to or for the benefit of the
Executive, such excess payments shall be refunded to the Employers with interest
thereon at the applicable Federal Rate determined under Section 1274(d) of the
Code, compounded annually, or at such other rate as may be required in order
that no such payments shall be non-deductible to the Employers by reason of the
operation of said Section 280G. To the extent that there is more than one method
of reducing the payments to bring them within the limitations of said Section
280G, the Executive shall determine which method shall be followed, provided
that if the Executive fails to make such determination within forty-five days
(45) after the Employers have sent him written notice of the need for such
reduction, the Employers may determine the method of such reduction in their
sole discretion.

          (b) If any dispute between the Employers and the Executive as to any
of the amounts to be determined under Section 6(a), or the method of calculating
such amounts, cannot be resolved by the Employers and the Executive, either the
Employers or the Executive after giving three (3) days written notice to the
other, may refer the dispute to a partner in the Boston office of a firm of
nationally recognized independent certified public accountants selected jointly
by the Employers and the Executive, which firm shall not be the Employers'
independent registered public accounting firm. The determination of such partner
as to the amount to be determined under Section 6(a) and the method of
calculating such amounts shall be final and binding on both the Employers and
the Executive. The Employers shall bear the costs of any such determination.

          (c) This Agreement is intended to be construed in a manner to avoid
imposition on payments hereunder of interest and additional tax under Section
409A(a)(1)(B) of the Code. Without limiting the scope of the previous sentence,
with respect to any payment hereunder subject to Section 409A, distributions on
account of a separation from service may not be made to the Executive if he is a
"Specified Employee" within the meaning of Section 409A(a)(2)(B)(i) before the
date which is six (6) months after the date after separation from service (or,
if earlier, the date of death of the Executive).

     7. Employment Status. This Agreement is not an agreement for the employment
of the Executive and shall confer no rights on the Executive except as herein
expressly provided.

     8. Term. This Agreement shall take effect August 10, 2006, and shall
terminate upon the earlier of (a) the termination by the Employers of the
employment of the Executive because of death, Disability (as defined in Section
3(d) hereof) or Cause (as defined in Section 3(b) hereof), (b) the resignation
or termination by the Executive for any reason prior to a Change


                                       6



in Control, or (c) the resignation of the Executive after a Change in Control
other than for Good Reason (as defined in Section 3(c) hereof).

     9. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.

     10. Mitigation. The Executive shall have no obligation to mitigate the
consequences of a termination by the Employers of the Executive's employment
without Cause or the Executive's resignation for Good Reason, and neither the
Severance Payment nor benefits provided under Section 5 (or the lump sum payment
is lieu of some or all of such benefits) shall be reduced or otherwise modified
as a result of the Executive obtaining other employment after such a termination
or resignation.

     11. Confidentiality. The Executive understands and agrees (a) that the
Executive will maintain all proprietary and confidential information of the
Employers as proprietary and confidential at all times during and after his/her
employment, (b) that the Executive will not disclose or communicate such
information to any third party or make use of it on his/her own behalf or on
behalf of any third party, and (c) upon his/her termination, that the Executive
will deliver all tangible forms or media which the Executive may have containing
such information to the Employers. For purposes of this Section 11,
"information" includes trade secrets and all non-public records, practices,
letters, plans, drawings, computer programs and data, technical data, financial
and other business data pertaining to the Employers or either of them or any of
their affiliates, customers, vendors or other persons associated with the Bank.
The Executive acknowledges and further agrees that the disclosure of such
information would be a material breach of this Agreement for which the Bank
shall be entitled to any remedies available to it in law or in equity.

     12. Covenant Not to Disrupt Business. The Executive hereby covenants and
agrees that he or she will not now, or for a period of one (1) year after the
effective date of the Executive's termination of employment, whether or not
following a Change in Control, disrupt, damage, impair or interfere with the
business of the Employers or either of them or any of their affiliates, whether
by way of interfering with or soliciting its employees (other than a general
solicitation not targeted at the Employers' employees), or disrupting either of
the Employers' or any of their affiliates' relationships with any customer, loan
packager, representative, vendor, broker or similar party doing business with
the Employer. After termination of employment, whether or not following a Change
in Control, the Executive is not, however, restricted from being employed by or
engaged in a competing business, except as may be provided expressly in any
other written agreement to which the Executive and the Employers or either of
them is a party.

     13. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall


                                       7



be conducted in the City of Boston in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 13. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. This
provision shall not apply to Section 6(b), except in the event that the
Employers and the Executive cannot agree on the selection of the accounting
partner described in said section.

     14. Payment of Costs and Legal Fees. All reasonable costs and legal fees
paid or incurred by the Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Employers, plus interest on any delayed payment at the rate provided for in
Section 7872(f)(2)(A) of the Code or any successor provision, unless (A) the
Executive is wholly unsuccessful on the merits of such dispute or question of
interpretation, as determined pursuant to a legal judgment, arbitration award or
settlement (whether formal or informal) or (B) unless and to the extent the
arbitrators shall determine that under the circumstances recovery by the
Executive of all or a part of any such fees and costs and expenses would be
unjust.

     15. Cooperation Covenant. Both during and after the Executive's employment,
the Executive shall cooperate fully with the Employers and with any legal
counsel, expert or consultant the Employers or either of them may retain to
assist in connection with any judicial proceedings, arbitration, administrative
proceeding, governmental investigation, examination, inquiry or internal audit
in which the Employers or either of them or any of their affiliates, may be or
become involved, including full disclosure of all relevant information and
truthfully testifying on the Employers' behalf (or, at the request of the
Employers, on behalf of any such affiliate of the Employers) in connection with
any such proceeding or investigation.

     16. Assignment; Successors and Assigns.

     a. The Executive may not make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written
consent of the Employers.

     b. This Agreement shall inure to the benefit of and be binding upon the
Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Employers of all payments due to the
Executive under this Agreement, the Employers shall continue such payments to
the Executive's beneficiary designated in writing to the Employers prior to the
Executive's death (or to the Executive's estate, if the Executive fails to make
such designation).

     c. Each of the Employers shall require their respective successors (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of their business and/or assets to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Employers would be required to perform it if no such succession had taken place.
Failure by either of the Employers to obtain such assumption and agreement prior
to the effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 hereof shall apply. As used in this
Agreement, the term "Employers" shall mean any successor to the respective
business and/or assets of the


                                       8



Employers or either of them that assumes, by operation of law or otherwise, the
Employers' obligations under this Agreement.

     17. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. The agreements of the Executive contained in
Section 11 and Section 12 hereof are of a special, unique and extraordinary
character, and the obligations of the Executive set forth therein shall
therefore be enforceable both at law and in equity, by injunction or otherwise.
The rights and remedies of the parties hereunder shall be cumulative and not
alternative and shall not be exhausted by any one or more uses thereof

     18. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. Only the Chief Executive
Officer of the Company or the Bank, as applicable, is authorized by such entity
to sign a writing waiving a provision hereof. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

     19. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main offices, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.

     20. Election of Remedies. An election by the Executive to resign for Good
Reason after a Change in Control under the provisions of this Agreement shall
not constitute a breach by the Executive of any employment agreement between the
Employers and the Executive and shall be deemed a voluntary termination of
employment by the Executive for the purpose of interpreting the provisions of
any of the Employers' benefit plans, programs or policies.

     21. Time. Time is of the essence with respect to the performance of every
provision of this Agreement.

     22. Entire Agreement. This Agreement represents the entire and integrated
agreement among the Employers and the Executive regarding the subject matter
hereof and supersedes all prior negotiations, representations or agreements,
either written or oral. Notwithstanding the immediately preceding sentence,
except as expressly provided in this Agreement, nothing in this Agreement shall
affect in any way any benefit to which the Executive may be entitled under any
prior written agreement or previously adopted plan.

     23. Construction. Headings at the beginning of each paragraph are solely
for the convenience of the parties and are not a part of this Agreement.
Whenever required by the context of this Agreement, the singular shall include
the plural and the masculine shall include the feminine and vice versa. This
Agreement shall not be construed as if it had been prepared by


                                       9



one of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to sections are to this Agreement.

     24. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by duly authorized representatives of
each of the Employers.

     25. Allocation of Obligations Between Employers. The obligations of the
Employers under this Agreement are intended to be the joint and several
obligations of the Bank and the Company and the Employers shall, as between
themselves, allocate these obligations in a manner agreed upon by them.
Notwithstanding any other provision of this Agreement, neither the Company nor
the Bank shall have any obligation to pay the Severance Payment or to provide
any other benefit hereunder if and to the extent such Severance Payment or other
benefit is prohibited by applicable federal or state law, including without
limitation Part 359 of the regulations of the Federal Deposit Insurance
Corporation (12 CFR Section 359 et seq.) or any successor provision.

     26. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.

                  [Remainder of Page Intentionally Left Blank]


                                       10



     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Bank, the Executive and the Company as of the date first above written.

                                        RIVER BANK


                                        By: /s/ Gerald T. Mulligan
                                            ------------------------------------
                                            Gerald T. Mulligan
                                            President and Chief Executive
                                            Officer


                                        LSB CORPORATION


                                        By: /s/ Gerald T. Mulligan
                                            ------------------------------------
                                            Gerald T. Mulligan
                                            President and Chief Executive
                                            Officer


                                        EXECUTIVE


                                        /s/ Stephen B. Jones
                                        ----------------------------------------
                                        Stephen B. Jones


                                       11

EX-10.5

                                                                    EXHIBIT 10.5

                          SPECIAL TERMINATION AGREEMENT

     THIS AGREEMENT, dated as of August 10, 2006 (the "Agreement"), is by and
among LSB CORPORATION, a Massachusetts corporation (the "Company") and its
wholly owned subsidiary, RIVER BANK, a Massachusetts savings bank with its
executive offices in North Andover, Massachusetts (the "Bank") (the Bank and the
Company shall be hereinafter collectively referred to as the "Employers"), and
Diane L. Walker, (the "Executive"), an individual presently employed by the
Company and the Bank in the capacity of Executive Vice President, Treasurer and
Chief Financial Officer.

     1. Purpose. In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Executive and the Employers,
the Employers are willing to provide, subject to the terms of this Agreement,
certain severance benefits to protect the Executive from the consequences of a
Terminating Event (as defined in Section 3) occurring subsequent to a Change in
Control.

     2. Change in Control. A "Change in Control" shall be deemed to have
occurred upon the occurrence of any of the following events:

     (i)  any circumstance that the Company or the Bank would be required to
          report as a change in control under Item 5.01 of the Current Report on
          Form 8-K as prescribed by applicable regulations promulgated under the
          Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
          successor provision; or

     (ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
          the 1934 Act) becomes a "beneficial owner" (as such term is defined in
          Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
          securities of the Company or the Bank representing twenty-five percent
          (25%) or more of the total number of votes that may be cast for the
          election of directors of the Company or the Bank (other than in the
          case of the Bank, for the Company's ownership of the capital stock of
          the Bank), and the Board of Directors of the Company or the Bank, as
          the case may be, has not consented to such event by a two-thirds (2/3)
          vote of all of the members of the Board of Directors adopted either
          prior to such event or within sixty (60) days thereafter, provided
          that if at the time such a consent vote is adopted after such event,
          the persons who were directors of the Company or the Bank, as the case
          may be, immediately prior to such event do not constitute a majority
          of the Board of Directors of the Company or the Bank, respectively, or
          of any successor institution, such vote shall not be deemed to
          constitute consent for the purposes of this provision; or

     (iii) any tender or exchange offer for the ordinary voting stock of the
          Company or the Bank, or any merger, consolidation, or other business
          combination involving the Company or the Bank, or any sale or other
          disposition of assets of the Company or the Bank constituting all or
          substantially all of the Company's assets



          (considered a consolidated basis), or any combination of the foregoing
          transactions has occurred, and as the result of, or in connection
          with, such transaction(s) (A) the individuals who were directors of
          the Company or the Bank immediately before the commencement of such
          transaction(s) cease to constitute a majority of the Board of
          Directors of the Company or the Bank, respectively, or of any
          successor institution or (B) persons, who, immediately prior to the
          commencement of such transaction(s), were the beneficial owners of
          ordinary voting stock of the Company or the Bank, beneficially own
          (within the meaning of Rule 13d-3), directly or indirectly, less than
          forty percent (40%) of the then outstanding shares of ordinary voting
          stock of the entity resulting from such transaction(s), including,
          without limitation, an entity which as a result of such transaction(s)
          owns the Company or the Bank or all or substantially all of the assets
          of the Company or the Bank either directly or through one or more
          subsidiaries; or

     (iv) during any period of two consecutive years, individuals who constitute
          the Board of Directors of the Company at the beginning of the two-year
          period cease for any reason to constitute at least a majority of the
          Company's directors; provided, however, that for purposes of this
          clause, an individual shall be deemed to have also been a director at
          the beginning of such period if such individual was elected by the
          Company's Board of Directors (or nominated by the Company's Board of
          Directors of the Company for election by the stockholders) by a vote
          of at least two-thirds (2/3) of the directors who either were
          directors at the beginning of the two-year period or who were so
          elected or nominated by such directors.

     3. Terminating Event; Cause; Good Reason; Disability.

          a. As used in this Agreement, the phrase "Terminating Event" shall
mean the occurrence, after a Change in Control, of (a) termination by either of
the Employers of the employment of the Executive with either of the Employers
for any reason other than (i) death, (ii) Disability (as defined in this
Section), or (iii) Cause (as defined in this Section), or (b) resignation of the
Executive from the employ of either of the Employers for Good Reason (as defined
in this Section), while the Executive is not receiving disability payments or
benefits from the Employers.

          b. As used in this Agreement, the term "Cause" shall mean the
Executive, after the date of this Agreement,

     (i)  has been convicted by a court of competent jurisdiction of any
          criminal offense involving dishonesty, breach of trust or
          misappropriation, or has entered a plea of nolo contendere to such an
          offense; or

     (ii) has committed an act of fraud, embezzlement, theft, or has committed
          any other act which has resulted in the termination of coverage under
          either Employer's Blanket Bond as to the Executive (as distinguished
          from termination of coverage as to the Employer as a whole); or


                                        2



     (iii) has committed a willful violation of the Bank's Code of Conduct or
          any law, rule or regulation governing the operation of the Company or
          the Bank or any of its affiliates or the insurance of deposits held by
          the Bank (A) which is a felony or misdemeanor, or (B) which the Board
          of Directors of either of the Employers determines in good faith, by
          the affirmative vote of at least two-thirds (2/3) of the then current
          directors, has had or will likely have a material adverse effect on
          the business, interests or reputation of the Employers or any of their
          affiliates; or

     (iv) has committed any act which the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, constitutes (A)
          a willful or reckless breach of fiduciary duty to the Company or the
          Bank or any of their affiliates involving personal profit to the
          Executive or any of the Executive's family members, associates or
          affiliates and (B) that such breach, together with all consequences
          related thereto, has had or will likely have a material adverse effect
          on the business, interests or reputation of the Employers or any of
          their affiliates or on the Executive's ability to perform the duties
          reasonably assigned to the Executive; or

     (v)  has been convicted of any crime, or has entered a plea of nolo
          contendere to such an offense, or has committed any other act, in each
          case which the Board of Directors of either of the Employers
          determines in good faith, by the affirmative vote of at least
          two-thirds (2/3) of the then current directors, is (A) abhorrent to
          the community and (B) will likely have a material adverse effect on
          the business, interests or reputation of the Employers or the
          Executive's ability to perform the duties reasonably assigned to the
          Executive; or

     (vi) has committed a willful and unauthorized disclosure of material
          confidential information regarding the Employers or any of their
          affiliates, which disclosure the Board of Directors of either of the
          Employers determines in good faith, by the affirmative vote of at
          least two-thirds (2/3) of the then current directors, has had or will
          likely have a material adverse effect on the business, interests or
          reputation of the Employers or any of their affiliates; or

     (vii) has been found by the Board of Directors of either of the Employers,
          acting in good faith by the affirmative vote of at least two-thirds
          (2/3) of the then current directors, after reasonable written notice
          to the Executive and an opportunity to cure, to have a dependency on
          alcohol or other drugs that substantially interferes with the
          Executive's performance of duties reasonably assigned to the
          Executive.

          c. As used in this Agreement, the term "Good Reason" shall mean

     (i)  A significant and, from the Executive's perspective, adverse change in
          the nature or scope of the Executive's responsibilities, authorities,
          powers, functions or duties from the responsibilities, authorities,
          powers, functions or duties exercised by the Executive immediately
          prior to the Change in Control (or at the Executive's election, prior
          to the earlier commencement of the Proposed Business Combination that
          results in such Change in Control); or


                                        3



     (ii) A reasonable determination by the Executive that, as a result of a
          Change in Control, the Executive is unable to exercise the
          responsibilities, authorities, powers, functions or duties exercised
          by the Executive immediately prior to such Change in Control (or at
          the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control);
          or

     (iii) Any decrease in the Executive's base salary or any decrease of five
          percent (5%) or more in the total annual compensation payable by the
          Employers to the Executive as compared to the Executive's base salary
          or total annual compensation target immediately prior to the Change in
          Control (or at the Executive's election, prior to the earlier
          commencement of the Proposed Business Combination that results in such
          Change in Control); provided, however, that a decrease in base salary
          or total compensation payable to the Executive and to all other
          executive officers of the Employers on a comparable basis as a result
          of the Employers' financial performance shall not constitute Good
          Reason; or

     (iv) The failure by the Employers to continue the Executive's participation
          in any material compensation, incentive, bonus or benefit plan,
          including life, medical and disability coverage, in which the
          Executive participates immediately prior to the Change in Control (or
          at the Executive's election, prior to the earlier commencement of the
          Proposed Business Combination that results in such Change in Control),
          or in any successor plan, or the taking of any action by the Employers
          that would reduce, directly or indirectly, in any material respect any
          of such benefits or deprive the Executive of any material fringe
          benefit enjoyed by the Executive under such plan at the time of the
          Change in Control (or at the Executive's election, prior to the
          earlier commencement of the Proposed Business Combination that results
          in such Change in Control), or any successor plan (except to the
          extent any benefits or coverage under such plans may be changed in its
          application to all of the employees of the Employers (or
          successors-in-interest) on a nondiscriminatory basis), or the failure
          of a successor-in-interest to make available its benefits plans to the
          Executive on a basis that is not substantially less favorable than the
          successor generally affords to its other employees holding similar
          positions; or

     (v)  The relocation of the Employers' offices at which the Executive is
          principally employed immediately prior to the Change in Control, or at
          the Executive's election, the earlier commencement of the Proposed
          Business Combination that results in such Change in Control, to a
          location more than 25 miles from such office or from North Andover,
          Massachusetts, or either of the Employers requiring the Executive to
          be based anywhere other than the Employers' executive offices, except
          for required travel on the Employers' business to an extent
          substantially consistent with customary business travel obligations;
          or

     (vi) The failure of either of the Employers to obtain a satisfactory
          agreement from any successor to assume and agree to perform this
          Agreement as required by Section


                                        4



          16 hereof, after written notice from the Executive that makes
          reference to this provision and provides a reasonable opportunity to
          cure.

     For purposes of this Agreement, the term "Business Combination" shall mean
any tender or exchange offer for the ordinary voting stock of the Company or the
Bank, or any merger, consolidation, or other business combination involving the
Company or the Bank, or any sale or other disposition of assets of the Company
or the Bank constituting all or substantially all of the Company's assets
(considered a consolidated basis). A "Proposed Business Combination" shall mean
the occurrence of the Company or the Bank entering into a definitive agreement
providing for a Business Combination that, as the result of or in connection
with such transaction or any combination of related transactions, will result in
a Change in Control.

          d. For purposes of this Agreement, the Executive shall be deemed to be
subject to a Disability if the Executive is permanently disabled within the
meaning of the Employers' long-term disability policy, or if there is no such
policy, if the Executive is unable, through physical or mental illness or other
cause, to perform normal and customary duties which the Executive reasonably is
required to perform for the Employers, for a total of six (6) months during any
one (1) year period. In determining whether the Executive is disabled, the
Employers may rely upon the written statement provided by a licensed physician
reasonably acceptable to the Employers and the Executive. The Executive shall
allow examination from time to time by any licensed physician selected by the
Employers and reasonably acceptable to the Executive. All such examinations will
be conducted at or in a reasonable place, time and manner.

     4. Severance Payment. Subject to the provisions of Section 6 below and the
Executive signing the Employers' standard separation agreement, which includes,
among other provisions, a General Release, in the event a Terminating Event
occurs within two (2) years after a Change in Control, the Employers shall pay
to the Executive an aggregate amount (the "Severance Payment") equal to (x)
three (3) times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) any other payment or benefit received by the Executive from
the Employers or either of them that is deemed to constitute a "parachute
payment" as defined in Section 280G of the Code, and less (z) One Dollar
($1.00). The Severance Payment shall be payable by the Employers in one lump sum
on the effective date of such Terminating Event.

     5. Benefit Continuation. If a Terminating Event occurs within two years
after a Change in Control, the Employers shall continue to provide to the
Executive, for three (3) years after the Terminating Event, the life, medical
and disability coverage in which the Executive participated, and at the level in
effect, and at the same out-of-pocket cost to the Executive, immediately prior
to the Change in Control, or at the Executive's election, the earlier
commencement of the Proposed Business Combination that results in such Change in
Control (except to the extent any benefit or coverage under such plans may be
changed in its application to all of the employees of the Employers (or
successors-in-interest) on a nondiscriminatory basis). If the Employers are
unable to provide the benefits set forth in this Section 5 due to the change in
Executive's status to that of a non-employee, the Employers shall instead pay to
the Executive a lump sum amount equal to the value of the benefits required to
be provided by this Section 5.


                                        5



     6. Limitation on Benefits.

          (a) It is the intention of the Executive and of the Employers that no
payment by the Employers to or for the benefit of the Executive under this
Agreement and/or any other agreement or plan pursuant to which the Executive is
entitled to receive payments or benefits shall be non-deductible to the
Employers by reason of the operation of Section 280G of the Code relating to
parachute payments. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of said
Section 280G, any such payments exceed the amount which can be deducted by the
Employers in the aggregate, such payments shall be reduced to the maximum amount
which can be deducted by the Employers. To the extent that payments exceeding
such maximum deductible amount have been made to or for the benefit of the
Executive, such excess payments shall be refunded to the Employers with interest
thereon at the applicable Federal Rate determined under Section 1274(d) of the
Code, compounded annually, or at such other rate as may be required in order
that no such payments shall be non-deductible to the Employers by reason of the
operation of said Section 280G. To the extent that there is more than one method
of reducing the payments to bring them within the limitations of said Section
280G, the Executive shall determine which method shall be followed, provided
that if the Executive fails to make such determination within forty-five days
(45) after the Employers have sent him written notice of the need for such
reduction, the Employers may determine the method of such reduction in their
sole discretion.

          (b) If any dispute between the Employers and the Executive as to any
of the amounts to be determined under Section 6(a), or the method of calculating
such amounts, cannot be resolved by the Employers and the Executive, either the
Employers or the Executive after giving three (3) days written notice to the
other, may refer the dispute to a partner in the Boston office of a firm of
nationally recognized independent certified public accountants selected jointly
by the Employers and the Executive, which firm shall not be the Employers'
independent registered public accounting firm. The determination of such partner
as to the amount to be determined under Section 6(a) and the method of
calculating such amounts shall be final and binding on both the Employers and
the Executive. The Employers shall bear the costs of any such determination.

          (c) This Agreement is intended to be construed in a manner to avoid
imposition on payments hereunder of interest and additional tax under Section
409A(a)(1)(B) of the Code. Without limiting the scope of the previous sentence,
with respect to any payment hereunder subject to Section 409A, distributions on
account of a separation from service may not be made to the Executive if he is a
"Specified Employee" within the meaning of Section 409A(a)(2)(B)(i) before the
date which is six (6) months after the date after separation from service (or,
if earlier, the date of death of the Executive).

     7. Employment Status. This Agreement is not an agreement for the employment
of the Executive and shall confer no rights on the Executive except as herein
expressly provided.

     8. Term. This Agreement shall take effect August 10, 2006, and shall
terminate upon the earlier of (a) the termination by the Employers of the
employment of the Executive because of death, Disability (as defined in Section
3(d) hereof) or Cause (as defined in Section 3(b) hereof), (b) the resignation
or termination by the Executive for any reason prior to a Change


                                        6



in Control, or (c) the resignation of the Executive after a Change in Control
other than for Good Reason (as defined in Section 3(c) hereof).

     9. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.

     10. Mitigation. The Executive shall have no obligation to mitigate the
consequences of a termination by the Employers of the Executive's employment
without Cause or the Executive's resignation for Good Reason, and neither the
Severance Payment nor benefits provided under Section 5 (or the lump sum payment
is lieu of some or all of such benefits) shall be reduced or otherwise modified
as a result of the Executive obtaining other employment after such a termination
or resignation.

     11. Confidentiality. The Executive understands and agrees (a) that the
Executive will maintain all proprietary and confidential information of the
Employers as proprietary and confidential at all times during and after his/her
employment, (b) that the Executive will not disclose or communicate such
information to any third party or make use of it on his/her own behalf or on
behalf of any third party, and (c) upon his/her termination, that the Executive
will deliver all tangible forms or media which the Executive may have containing
such information to the Employers. For purposes of this Section 11,
"information" includes trade secrets and all non-public records, practices,
letters, plans, drawings, computer programs and data, technical data, financial
and other business data pertaining to the Employers or either of them or any of
their affiliates, customers, vendors or other persons associated with the Bank.
The Executive acknowledges and further agrees that the disclosure of such
information would be a material breach of this Agreement for which the Bank
shall be entitled to any remedies available to it in law or in equity.

     12. Covenant Not to Disrupt Business. The Executive hereby covenants and
agrees that he or she will not now, or for a period of one (1) year after the
effective date of the Executive's termination of employment, whether or not
following a Change in Control, disrupt, damage, impair or interfere with the
business of the Employers or either of them or any of their affiliates, whether
by way of interfering with or soliciting its employees (other than a general
solicitation not targeted at the Employers' employees), or disrupting either of
the Employers' or any of their affiliates' relationships with any customer, loan
packager, representative, vendor, broker or similar party doing business with
the Employer. After termination of employment, whether or not following a Change
in Control, the Executive is not, however, restricted from being employed by or
engaged in a competing business, except as may be provided expressly in any
other written agreement to which the Executive and the Employers or either of
them is a party.

     13. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall


                                        7



be conducted in the City of Boston in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 13. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. This
provision shall not apply to Section 6(b), except in the event that the
Employers and the Executive cannot agree on the selection of the accounting
partner described in said section.

     14. Payment of Costs and Legal Fees. All reasonable costs and legal fees
paid or incurred by the Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Employers, plus interest on any delayed payment at the rate provided for in
Section 7872(f)(2)(A) of the Code or any successor provision, unless (A) the
Executive is wholly unsuccessful on the merits of such dispute or question of
interpretation, as determined pursuant to a legal judgment, arbitration award or
settlement (whether formal or informal) or (B) unless and to the extent the
arbitrators shall determine that under the circumstances recovery by the
Executive of all or a part of any such fees and costs and expenses would be
unjust.

     15. Cooperation Covenant. Both during and after the Executive's employment,
the Executive shall cooperate fully with the Employers and with any legal
counsel, expert or consultant the Employers or either of them may retain to
assist in connection with any judicial proceedings, arbitration, administrative
proceeding, governmental investigation, examination, inquiry or internal audit
in which the Employers or either of them or any of their affiliates, may be or
become involved, including full disclosure of all relevant information and
truthfully testifying on the Employers' behalf (or, at the request of the
Employers, on behalf of any such affiliate of the Employers) in connection with
any such proceeding or investigation.

     16. Assignment; Successors and Assigns.

     a. The Executive may not make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written
consent of the Employers.

     b. This Agreement shall inure to the benefit of and be binding upon the
Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Employers of all payments due to the
Executive under this Agreement, the Employers shall continue such payments to
the Executive's beneficiary designated in writing to the Employers prior to the
Executive's death (or to the Executive's estate, if the Executive fails to make
such designation).

     c. Each of the Employers shall require their respective successors (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of their business and/or assets to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Employers would be required to perform it if no such succession had taken place.
Failure by either of the Employers to obtain such assumption and agreement prior
to the effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 hereof shall apply. As used in this
Agreement, the term "Employers" shall mean any successor to the respective
business and/or assets of the


                                        8



Employers or either of them that assumes, by operation of law or otherwise, the
Employers' obligations under this Agreement.

     17. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. The agreements of the Executive contained in
Section 11 and Section 12 hereof are of a special, unique and extraordinary
character, and the obligations of the Executive set forth therein shall
therefore be enforceable both at law and in equity, by injunction or otherwise.
The rights and remedies of the parties hereunder shall be cumulative and not
alternative and shall not be exhausted by any one or more uses thereof

     18. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. Only the Chief Executive
Officer of the Company or the Bank, as applicable, is authorized by such entity
to sign a writing waiving a provision hereof. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

     19. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main offices, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.

     20. Election of Remedies. An election by the Executive to resign for Good
Reason after a Change in Control under the provisions of this Agreement shall
not constitute a breach by the Executive of any employment agreement between the
Employers and the Executive and shall be deemed a voluntary termination of
employment by the Executive for the purpose of interpreting the provisions of
any of the Employers' benefit plans, programs or policies.

     21. Time. Time is of the essence with respect to the performance of every
provision of this Agreement.

     22. Entire Agreement. This Agreement represents the entire and integrated
agreement among the Employers and the Executive regarding the subject matter
hereof and supersedes all prior negotiations, representations or agreements,
either written or oral. Notwithstanding the immediately preceding sentence,
except as expressly provided in this Agreement, nothing in this Agreement shall
affect in any way any benefit to which the Executive may be entitled under any
prior written agreement or previously adopted plan.

     23. Construction. Headings at the beginning of each paragraph are solely
for the convenience of the parties and are not a part of this Agreement.
Whenever required by the context of this Agreement, the singular shall include
the plural and the masculine shall include the feminine and vice versa. This
Agreement shall not be construed as if it had been prepared by


                                        9



one of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to sections are to this Agreement.

     24. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by duly authorized representatives of
each of the Employers.

     25. Allocation of Obligations Between Employers. The obligations of the
Employers under this Agreement are intended to be the joint and several
obligations of the Bank and the Company and the Employers shall, as between
themselves, allocate these obligations in a manner agreed upon by them.
Notwithstanding any other provision of this Agreement, neither the Company nor
the Bank shall have any obligation to pay the Severance Payment or to provide
any other benefit hereunder if and to the extent such Severance Payment or other
benefit is prohibited by applicable federal or state law, including without
limitation Part 359 of the regulations of the Federal Deposit Insurance
Corporation (12 CFR Section 359 et seq.) or any successor provision.

     26. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.

                  [Remainder of Page Intentionally Left Blank]


                                       10



     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Bank, the Executive and the Company as of the date first above written.

                                        RIVER BANK


                                        By: /s/ Gerald T. Mulligan
                                            ------------------------------------
                                            Gerald T. Mulligan
                                            President and Chief Executive
                                            Officer


                                        LSB CORPORATION


                                        By: /s/ Gerald T. Mulligan
                                            ------------------------------------
                                            Gerald T. Mulligan
                                            President and Chief Executive
                                            Officer


                                        EXECUTIVE


                                        /s/ Diane L. Walker
                                        ----------------------------------------
                                        Diane L. Walker


                                       11

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Gerald T. Mulligan, certify that:

1. I have reviewed this Form 10-Q of LSB Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and,

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting,

Date: August 11, 2006

/s/ Gerald T. Mulligan  

Gerald T. Mulligan 

President and
Chief Executive Officer 

EX-31.2

Exhibit 31.2

I, Diane L. Walker, certify that:

1. I have reviewed this report on Form 10-Q of LSB Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation and;
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting and;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the Audit Committee of registrant’s Board of Directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2006

/s/ Diane L. Walker  

Diane L. Walker 

Executive Vice President
Chief Financial Officer 

EX-32.1

Exhibit 32.1

LSB CORPORATION AND SUBSIDIARY

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADDED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of LSB Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gerald T. Mulligan, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as added by section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of June 30, 2006 and results of operations of the Company for the six months ended June 30, 2006.

/s/ Gerald T. Mulligan

Gerald T. Mulligan

President and

Chief Executive Officer

August 11, 2006

EX-32.2

Exhibit 32.2

LSB CORPORATION AND SUBSIDIARY

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADDED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of LSB Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Diane L. Walker, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as added by section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of June 30, 2006 and results of operations of the Company for the six months ended June 30, 2006.

/s/ Diane L. Walker

Diane L. Walker

Executive Vice President

Chief Financial Officer

August 11, 2006