Exhibit 10.3
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
     THIS AMENDED AND RESTATED AGREEMENT (this “Agreement”) is effective the
20th day of July 2006, between Laurel Savings Bank (the “Bank”), a
Pennsylvania-chartered savings bank and wholly owned subsidiary of Laurel
Capital Group, Inc. (the “Corporation”), and Robert A. Stephens (the
“Executive”).
INTRODUCTION
     The Bank and the Executive previously entered into a certain Change in
Control Severance Agreement effective as of July 1, 2003 (the “Prior
Agreement”). This Agreement amends and restates the Prior Agreement in its
entirety as hereinafter set forth in order to comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
including the guidance issued to date by the Internal Revenue Service (the
“IRS”) and the proposed regulations issued by the IRS in the fall of 2005.
WITNESSETH
     WHEREAS, the Executive is presently an officer of the Bank, and the Bank
desires to be ensured of the Executive’s continued active participation in the
business of the Bank;
     WHEREAS, in order to induce the Executive to remain in the employ of the
Bank and in consideration of the Executive’s agreeing to remain in the employ of
the Bank, the parties desire to specify the severance benefits which shall be
due the Executive in the event that his employment with the Bank is terminated
under specified circumstances.
     NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
     1. Definitions. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:
     (a) Annual Compensation. The Executive’s “Annual Compensation” for purposes
of this Agreement shall be deemed to mean the highest level of base salary and
cash bonus paid to the Executive by the Corporation, the Bank or any subsidiary
of either entity during the calendar year in which the Date of Termination
occurs (determined on an annualized basis) or either of the two calendar years
immediately preceding the calendar year in which the Date of Termination occurs.
     (b) Cause. Termination of the Executive’s employment for “Cause” shall mean
termination because of personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order or
material breach of any provision of this Agreement. For purposes of

 

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this subparagraph, no act or failure to act on the Executive’s part shall be
considered “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive’s action or omission
was in the best interest of the Bank and/or the Corporation.
     (c) Change in Control of the Corporation. “Change in Control of the
Corporation” shall mean a change in the ownership of the Bank or the
Corporation, a change in the effective control of the Bank or the Corporation or
a change in the ownership of a substantial portion of the assets of the Bank or
the Corporation as provided under Section 409A of the Code and the regulations
thereunder.
     (d) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.
     (e) Date of Termination. “Date of Termination” shall mean (i) if the
Executive’s employment is terminated for Cause, the date specified in the Notice
of Termination, and (ii) if the Executive’s employment is terminated for any
other reason, the date on which a Notice of Termination is given or as specified
in such Notice.
     (f) Disability. “Disability” shall mean the Executive (i) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than
12 months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Bank.
     (g) Good Reason. Termination by the Executive of the Executive’s employment
for “Good Reason” shall mean termination by the Executive following a Change in
Control of the Corporation based on:

  (i)   Without the Executive’s express written consent, the assignment by the
Bank to the Executive of any duties which are materially inconsistent with the
Executive’s positions, duties, responsibilities and status with the Bank
immediately prior to a Change in Control of the Corporation, or a material
change in the Executive’s reporting responsibilities, titles or offices as an
employee and as in effect immediately prior to such a Change in Control of the
Corporation or any removal of the Executive from or any failure to re-elect the
Executive to any of such responsibilities, titles or offices, except in
connection with the termination of the Executive’s employment for Cause,
Disability or Retirement or as a result of the Executive’s death or by the
Executive other than for Good Reason;     (ii)   Without the Executive’s express
written consent, a reduction by the Bank in the Executive’s base salary as in
effect immediately prior to the date of the Change in Control of the Corporation
or as the same may be increased

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      from time to time thereafter or a reduction in the package of fringe
benefits provided to the Executive, taken as a whole;     (iii)   The principal
executive office of the Bank is relocated more than fifty (50) miles from its
location as of the date hereof or, without the Executive’s express written
consent, the Bank requires the Executive to be based anywhere other than an area
in which the Bank’s principal executive office is located, except for required
travel on business of the Bank to an extent substantially consistent with the
Executive’s business travel obligations immediately preceding the Change in
Control of the Corporation;     (iv)   Any purported termination of the
Executive’s employment for Cause, Disability or Retirement which is not effected
pursuant to a Notice of Termination satisfying the requirements of paragraph
(i) below; or     (v)   The failure by the Bank to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated in Section
7 hereof.

     (h) IRS. IRS shall mean the Internal Revenue Service.
     (i) Notice of Termination. Any purported termination of the Executive’s
employment by the Bank for any reason, including without limitation for Cause,
Disability or Retirement, or by the Executive for any reason, including without
limitation for Good Reason, shall be communicated by a written “Notice of
Termination” to the other party hereto. For purposes of this Agreement, a
“Notice of Termination” shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less that thirty
(30) nor more that ninety (90) days after such Notice of Termination is given,
except in the case of the Bank’s termination of Executive’s employment for
Cause; and (iv) is given in the manner specified in Section 8 hereof.
     (j) Retirement. Termination by the Bank’s of the Executive’s employment
based on “Retirement” shall mean voluntary termination by the Employee in
accordance with the Bank’s or the Corporation’s retirement policies, including
early retirement, generally applicable to their salaried employees.
     2. Benefits Upon Termination. If the Executive’s employment by the
Employers shall be terminated within the two (2) year period subsequent to a
Change in Control of the Corporation by (i) the Bank for other than Cause,
Disability, Retirement or the Executive’s death (ii) the Executive for Good
Reason or (iii) the Executive for any reason within the first sixty (60) days
following the one year anniversary of the Change in Control of the Corporation,
then the Bank shall:

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     (a) pay to the Executive, in twenty-four (24) equal monthly installments
beginning with the first business day of the month following the Date of
Termination, a cash severance amount equal to two (2) times the Executive’s
Annual Compensation; and
     (b) maintain and provide for a period ending at the earlier of (i) twelve
(12) months from the Date of Termination or (ii) the date of the Executive’s
full-time employment by another employer (provided that the Executive is
entitled under the terms of such employment to benefits substantially similar to
those described in this subparagraph (b)), at no cost to the Executive, the
Executive’s continued participation in all group insurance, life insurance,
health and accident insurance, disability insurance and other employee benefit
plans, programs and arrangements offered by the Employers in which the Executive
was entitled to participate immediately prior to the Date of Termination
(excluding (x) any additional contributions under any of the Bank’s or the
Corporation’s qualified defined contribution or defined benefit plans, (y) stock
option plans or restricted stock plans of the Corporation and (z) cash incentive
compensation included in Annual Compensation), provided that in the event that
the Executive’s participation in any plan, program or arrangement as provided in
this subparagraph (b) is barred, or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder are materially reduced,
the Employers shall arrange to provide the Executive with either (A) benefits
substantially similar to those which the Executive was entitled to receive under
such plans, programs and arrangements immediately prior to the Date of
Termination or (A) a cash payment equal to the then current monthly cost of
benefits multiplied by the number of whole months remaining in the period during
which benefits are required to be provided under the terms of this subparagraph
(b); provided further, however, that if the provision of any of the benefits
covered by this Section 2(b) would trigger the 20% tax and interest penalties
under Section 409A of the Code, then the benefit(s) that would trigger such tax
and interest penalties shall not be provided (collectively, the “Excluded
Benefits”), and in lieu of the Excluded Benefits the Bank shall pay to the
Executive, in a lump sum within 10 business days after such determination, a
cash amount equal to the cost to the Bank (or its successor) of providing the
Excluded Benefits.
     3. Limitation of Benefits under Certain Circumstances. If the payments and
benefits due Executive pursuant to Section 2 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Bank or the Corporation, would constitute a “parachute payment” under
Section 280G of the Code, the payments and benefits payable by the Bank or
Corporation pursuant to Section 2 hereof shall be reduced by the amount, if any,
which is the minimum necessary to result in no portion of the payments and
benefits payable by the Bank or the Corporation under Section 2 being
non-deductible to the Bank and the Corporation pursuant to Section 280G of the
Code and subject to the excise tax imposed under Section 4999 of the Code. If
the payments and benefits under Section 2 are required to be reduced, any costs
assigned to fringe benefits which are not provided for the full twelve
(12) months because the Executive obtains subsequent employment shall be reduced
first. If the Executive receives fringe benefits for the full 12-month period
specified in Section 2(b) above, then any remaining cash severance to be
provided in the 24 monthly installments specified in Section 2(a) above shall be
reduced by the minimum amount necessary so that the present value of all of the
payments and benefits are less than three (3) times the Executive’s “base
amount” under Section 280G, starting by reducing the last scheduled installment
in whole or in part, then the next to last scheduled installment, et cetera. The
determination of any

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reduction in the payments and benefits to be made pursuant to Section 2 shall be
based upon the opinion of independent counsel selected by the Bank and paid by
the Bank. Such counsel shall promptly prepare the foregoing opinion, but in no
event later than thirty (30) days from the Date of Termination, and may use such
actuaries as such counsel deems necessary or advisable for the purpose. Nothing
contained herein shall result in a reduction of any payments or benefits to
which the Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 3, or a reduction in the
payments and benefits specified in Section 2 below zero.
     4. Mitigation; Exclusivity of Benefits.
     (a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor, except as
otherwise provided herein, shall the amount of any such benefits be reduced by
any compensation earned by the Executive as a result of employment by another
employer after the Date of Termination or otherwise.
     (b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Bank pursuant to employee benefits plans of
the Bank or the Corporation or otherwise.
     5. Withholding. All payments required to be made by the Bank hereunder to
the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
     6. Severability. If any term, provision, paragraph or section of this
Agreement shall be determined by a court of competent jurisdiction to be invalid
or unenforceable for any reason, such determination shall not effect the
remaining terms, provisions or paragraphs or sections of this Agreement which
shall continue to be given full force and effect. Should any court of competent
jurisdiction find any term, provision, paragraph or section of this Agreement
invalid or unenforceable, or enforceable only in restricted form, then any such
finding shall apply only to the jurisdiction of such Court and shall not serve
to alter or amend this Agreement in any other jurisdiction.
     7. Assignability. The Bank may assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which the Bank or the Corporation may hereafter merge
or consolidate or to which the Bank or the Corporation may transfer all or
substantially all of their assets, if in any such case said corporation, bank or
other entity shall by operation of laws or expressly in writing assume all
obligations of the Bank hereunder as fully as if it had been originally made a
party hereto, but may not otherwise assign this Agreement or its rights and
obligations hereunder. The Executive may not assign or transfer this Agreement
or any rights or obligations hereunder.
     8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have

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been duly given when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below:

             
 
  To the Bank:   President    
 
      Laurel Savings Bank.    
 
      2724 Harts Run Road    
 
      Allison Park, Pennsylvania 15101    
 
           
 
  To the Executive:   Robert A. Stephens    
 
      At the address last appearing    
 
      On the records of the Bank    

     9. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Bank to sign on its
behalf, except as set forth below. No waiver by any party hereto at any time of
any breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. In addition, notwithstanding anything in this
Agreement to the contrary, the Bank may amend in good faith any terms of this
Agreement, including retroactively, in order to comply with Section 409A of the
Code. In no event shall the Corporation or the Bank be liable for any taxes or
interest penalties incurred by the Executive under Section 409A of the Code.
     10. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania. Any actions brought with respect to this Agreement or performance
of services hereunder may be brought only in the state or federal courts of
Allegheny County, Pennsylvania, and the parties consent to the jurisdiction and
venue therein.
     11. Nature of Employment and Obligations.
     (a) Nothing contained herein shall be deemed to create other than a
terminable at will employment relationship between the Bank and the Executive,
and the Bank may terminate the Executive’s employment at any time, subject to
providing any payments specified herein in accordance with the terms hereof.
     (b) Nothing contained herein shall create or require the Bank to create a
trust of any kind to fund any benefits which may be payable hereunder, and to
the extent that the Executive acquires a right to receive benefits from the Bank
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Bank.
     12. Term of Agreement. The term of this Agreement shall be for two
(2) years, commencing as of July 1, 2003 (the “Effective Date”). Commencing on
the first anniversary of the Effective Date, the term of this Agreement shall
extend for an additional year on each annual

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anniversary of the Effective Date of this Agreement until such time as the Board
of Trustees of the Bank or the Executive give notice in accordance with the
terms of Section 8 hereof of its or his election, respectively, not to extend
the term of this Agreement. As a consequence, subsequent to the first
anniversary of the Effective Date, the remaining term of this Agreement will be
between one (1) two and two (2) years. Such written notice of the election not
to extend must be given not less than thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term will not be
extended as of any annual anniversary date, then this Agreement shall terminate
at the conclusion of its remaining term. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.
     13. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
     14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
     15. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. §1828(k)) and
any regulations promulgated thereunder, including 12 C.F.R. Part 359.
     16. Entire Agreement. This Agreement embodies the entire agreement between
the Bank and the Executive with respect to the matters agreed to herein. All
prior agreements, if any, between the Bank and the Executive with respect to the
matters agreed to herein are hereby superseded and shall have no force or
effect.

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     IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.

                  Attest:       LAUREL SAVINGS BANK:    
 
               
/s/ John A. Howard
      By:   /s/ Edwin R. Maus    
 
               
John A. Howard, Jr., Secretary
          Edwin R. Maus    
 
          President and Chief Executive Officer    
 
                Witness:       EXECUTIVE:    
 
               
/s/ John A. Howard
      By:   Robert A. Stephens    
 
               
 
          Robert A. Stephens    

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