LAWRENCE FEDERAL SAVINGS BANK
                      EMPLOYEE SEVERANCE COMPENSATION PLAN


                               Article I - Purpose
Section 1.01 Purpose.

The  purpose  of  this  Lawrence   Federal   Savings  Bank  Employee   Severance
Compensation  Plan (the  "Plan") is to assure the  services of  employees of the
Bank (and  affiliates  of the Bank that have adopted the Plan) in the event of a
Change in  Control  (as  defined  in Section  2.01 of the  Plan).  The  benefits
contemplated  by the Plan  recognize  the value to the Bank of its employees and
the potential effect upon the Bank's employees  resulting from the uncertainties
of continued  employment,  reduced  employee  benefits,  management  changes and
relocations  that may arise in the event of a Change  in  Control.  The Board of
Directors  of the  Bank  believes  that  the  Plan  will  also  aid the  Bank in
attracting and retaining the qualified  individuals  essential to the success of
the Bank and will  reduce  the  distractions  and other  adverse  effects on the
performance of employees in the event of a Change in Control.

                            Article II - Definitions

Section 2.01 Definitions.

In this Plan,  whenever  the context so  indicates,  the  singular or the plural
number and the  masculine  or  feminine  gender  shall be deemed to include  the
other,  the terms  "he,"  "his," and "him,"  shall refer to a  Participant  and,
except as otherwise  provided,  or unless the context  otherwise  requires,  the
capitalized terms shall have the following meanings:

(a)  "Annual  Compensation"  of  a  Participant  means  and  includes  all  cash
compensation  paid or accrued by the Employer with respect to the  Participant's
service  during the 12  consecutive-month  period  ending on the last day of the
month preceding the date the Participant's employment terminates.

(b) "Bank" means Lawrence Federal Savings Bank, Ironton, Ohio, and any successor
to Lawrence Federal Savings Bank.

(c) "Board of Directors" means the Board of Directors of the Bank.

(d) "Change in Control" of the Bank or Holding  Company shall mean an event of a
nature  that:  (i) would be required to be reported in response to Item 1 of the
current report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the  Securities  Exchange Act of 1934, as amended (the  "Exchange
Act"); or (ii) results in a Change in Control of the Bank or the Holding Company
within the meaning of the Home Owners' Loan Act of 1933, as amended, the Federal
Deposit Insurance Act and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the date
hereof  (provided,  that in applying the  definition of Change in Control as set
forth under the rules and regulations of the OTS,



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the Board of Directors  shall  substitute  its judgment for that of the OTS); or
(iii)  without  limitation  such a Change  in  Control  shall be  deemed to have
occurred at such time as (A) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial  owner" (as defined
in Rule  13d-3  under the  Exchange  Act),  directly  or  indirectly,  of voting
securities of the Bank or the Holding  Company  representing  25% or more of the
Bank's  or the  Holding  Company's  outstanding  voting  securities  or right to
acquire such securities  except for any voting  securities of the Bank purchased
by the  Holding  Company and any voting  securities  purchased  by any  employee
benefit  plan  of the  Bank  or the  Holding  Company,  or (B)  individuals  who
constitute  the Board of  Directors on the date hereof (the  "Incumbent  Board")
cease for any reason to  constitute at least a majority  thereof,  provided that
any person becoming a director  subsequent to the date hereof whose election was
approved by a vote of at least  three-quarters  of the directors  comprising the
Incumbent  Board,  or whose  nomination  for  election by the Holding  Company's
stockholders  was approved by the same  Nominating  Committee  serving  under an
Incumbent Board, shall be, for purposes of this clause (B), considered as though
he were a  member  of the  Incumbent  Board,  or (C) a plan  of  reorganization,
merger,  consolidation,  sale of all or substantially all the assets of the Bank
or the  Holding  Company  or  similar  transaction  occurs  in which the Bank or
Holding Company is not the resulting  entity;  provided,  however,  that such an
event listed above will be deemed to have  occurred or to have been  effectuated
upon the receipt of all required regulatory approvals not including the lapse of
any statutory waiting periods.

(e) "Disability"  means the permanent and total inability by reason of mental or
physical  infirmity,  or both,  of an employee  to perform the work  customarily
assigned  to him.  Additionally,  a medical  doctor  selected or approved by the
Board of  Directors  must  advise the Board of  Directors  that it is either not
possible to  determine  if or when such  Disability  will  terminate  or that it
appears  probable that such Disability will be permanent during the remainder of
the employee's lifetime.

(f) "Effective Date" means December 28, 2000.

(g)  "Employer"  means  (i) the  Bank,  (ii) the  Holding  Company  or (iii) any
subsidiary of the Bank or the Holding Company that has adopted the Plan pursuant
to the provision of Article VI.

(h) "Holding  Company"  means  Lawrence  Financial  Holdings,  Inc., the holding
company of the Bank.

(i)  "Participant"  means an employee of an Employer  who meets the  eligibility
requirements of Article III.

(j)  "Plan"  means  this  Lawrence  Federal  Savings  Bank  Employee   Severance
Compensation Plan.

(k)  "Termination  for Cause" means  termination  of  employment  because of the
Participant's 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 other similar offenses) or any final cease-and-desist order.


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                            Article III - Eligibility

Section 3.01 Eligibility.

(a) Every active  employee (or any employee on an approved  leave of absence) of
an Employer shall be eligible to participate in this Plan upon the completion of
12 consecutive months of employment.

(b)  Notwithstanding  paragraph (a) of this Section  3.01,  any employee who has
entered into an employment or change in control  agreement with an Employer that
is in  effect  at the time the  employee's  employment  terminates  shall not be
entitled to participate in this Plan.

                              Article IV - Benefits

Section 4.01 Right to Benefits.

If a Change in  Control  occurs,  a  Participant  shall be  entitled  to receive
benefits  under this Plan from his  Employer or a successor  to the Employer if,
within one (1) year of the Change in Control,  his  employment  is terminated by
the  Employer  or the  successor  to the  Employer  for any  reason  other  than
Termination for Cause.

Section 4.02 Determination of Benefits.

(a) Each Participant who is entitled to a payment under this Plan, shall receive
from the Bank a lump sum cash  payment  equal to one  twenty-sixth  (1/26th)  of
Annual  Compensation  for each year of service.  The maximum  benefit paid under
this subsection shall be twelve (12) months' salary.

(b) Participants  shall not be required to mitigate damages on the amount of the
Payment by seeking other  employment or otherwise,  nor shall the amount of such
Payment be reduced by any compensation  earned by the Participant as a result of
employment after termination of employment hereunder.

(c) Neither the provisions of this Plan nor the benefits provided for under this
Plan shall reduce any amounts  otherwise payable to a Participant under any plan
or arrangement of the Participant's Employer.

Section 4.03 Time of Payment.

Any  Participant  entitled to benefits under this Plan shall receive  payment of
those  benefits from the Employer or the successor to the Employer,  in cash and
in full,  not later than thirty (30) business days after the  termination of the
Participant's  employment. If any Participant should die after becoming entitled
to benefits under this Plan but before he has received  payment of the benefits,
then the Employer or the successor to the Employer  shall pay the  benefits,  in
full, to the Participant's  named beneficiary,  if living, or, if not living, to
the Participant's personal representative on behalf of or for the benefit of the
Participant's estate.


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Section 4.04 Suspension of Payment.

Notwithstanding  the  foregoing,  no payments or portions  thereof shall be made
under this Plan,  if such payment or portion would result in the Bank failing to
meet its  minimum  regulatory  capital  requirements  as  required  by 12 C.F.R.
ss.567.2.  Any payments or portions  thereof not paid shall be  suspended  until
such time as their  payment  would not  result in a failure  to meet the  Bank's
minimum regulatory capital  requirements.  Any portion of benefit payments which
have not been suspended will be paid to Participants on an equitable  basis, pro
rata, based upon amounts due each Participant.

                       Article V - Participating Employers

Section 5.01 Participating Employers.

Upon approval by the Board of Directors of this Plan, any subsidiary of the Bank
or the Holding  Company  may adopt this Plan for the  benefit of its  employees.
Upon adoption, the subsidiary shall become an Employer for purposes of this Plan
and the  provisions  of the Plan shall be fully  applicable  to the employees of
that subsidiary.  For this purpose,  the term "subsidiary" means any corporation
in which  the Bank or the  Holding  Company,  directly  or  indirectly,  holds a
majority of the voting power of its outstanding shares of capital stock.

Section 5.02 Successors to the Employers.

The Bank and the Holding  Company  shall require that any successor or assignee,
whether direct or indirect, by purchase, merger,  consolidation or otherwise, to
all or  substantially  all the  business  or assets  of the Bank or the  Holding
Company,  expressly  and  unconditionally  to assume  and agree to  perform  the
obligations of the Employers under this Plan.

                     Article VI - Administration and Claims

Section 6.01 Administration.

The Board of Directors or a committee  appointed by the Board of Directors shall
administer the Plan.  Subject to the specific  provisions of the Plan, the Board
of Directors or the committee  shall have the authority to adopt,  amend,  alter
and repeal any  administrative  rules,  guidelines  or practices it may consider
advisable  with respect to the Plan.  The Board of  Directors  or the  committee
shall also have the  authority to interpret  the  provisions  of the Plan and to
resolve all disputes arising in connection with the Plan. The Board of Directors
or the  committee may correct any defect or supply any omission or reconcile any
inconsistency  in the Plan in the manner and to the extent it deems  appropriate
to carry out the purpose of the Plan. The decisions and  interpretations  of the
Board of Directors or the  committee  shall be final and binding.  Any action of
the Board of Directors or the committee  with respect to the  administration  of
the Plan shall be taken pursuant to a majority vote or by the unanimous  written
consent  of  the  members  of the  Board  of  Directors  or  the  committee,  as
appropriate.


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Section 6.02 Claims and Review Procedures.

(a) Claims  procedure.  If any  person  believes  he or she is being  denied any
rights or benefits under the Plan,  such person may file a claim in writing with
the Board of  Directors.  If any such claim is wholly or partially  denied,  the
Board of  Directors  will notify such  person of its  decision in writing.  Such
notification  will be written in a manner  calculated  to be  understood by such
person and will  contain (i)  specific  reasons for the  denial,  (ii)  specific
reference to pertinent  Plan  provisions,  (iii) a description of any additional
material or  information  necessary for such person to perfect such claim and an
explanation  of  why  such  material  or  information  is  necessary,  and  (iv)
information as to the steps to be taken if the person wishes to submit a request
for review.  Such  notification  will be given within 90 days after the claim is
received by the Board of Directors (or within 180 days, if special circumstances
require an extension of time for processing the claim,  and if written notice of
such extension and  circumstances  is given to such person within the initial 90
day period).  If such  notification  is not given within such period,  the claim
will be considered  denied as of the last day of such period and such person may
request a review of his claim.

(b) Review procedure. Within 60 days after the date on which a person receives a
written  notice of a denied claim (or, if  applicable,  within 60 days after the
date on which such denial is  considered to have  occurred)  such person (or his
duly authorized representative) may (i) file a written request with the Board of
Directors  for a review of his denied claim and of pertinent  documents and (ii)
submit  written  issues and  comments  to the Board of  Directors.  The Board of
Directors will notify such person of its decision in writing.  Such notification
will be written in a manner  calculated to be understood by such person and will
contain  specific  reasons for the  decision as well as specific  references  to
pertinent  Plan  provisions.  The decision on review will be made within 60 days
after the request for review is  received by the Board of  Directors  (or within
120 days, if special  circumstances  require an extension of time for processing
the  requests  such as an election by the Board of  Directors to hold a hearing,
and if  written  notice of such  extension  and  circumstances  is given to such
person within the initial 60 day period).  If the decision on review is not made
within such period, the claim will be considered denied.

Section 6.03 Named Fiduciary.

The Board of  Directors  will be a "named  fiduciary"  for  purposes  of Section
402(a)(1)  of ERISA with  authority  to control  and  manage the  operation  and
administration  of the Plan, and will be  responsible  for complying with all of
the reporting and disclosure  requirements of Part 1 of Subtitle B of Title I of
ERISA.




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                           Article VII - Miscellaneous

Section 7.01 Amendment and Termination.

(a) At any time prior to a Change in  Control,  the Bank may amend or  terminate
the Plan by a resolution  adopted by a majority of the Board of  Directors.  Any
amendment  or  termination  of the Plan by the Bank shall  apply  equally to all
Employers.  Further, at any time prior to a Change in Control,  any Employer may
terminate its participation in the Plan by a resolution adopted by a majority of
its Board of Directors.

(b) The form of any amendment to the Plan shall be a written  instrument  signed
by a duly  authorized  officer  or  officers  of the Bank,  certifying  that the
amendment has been approved by the Board of Directors.

Section 7.02 No Attachment.

(a) Except as  required  by law,  no right to receive  benefits  under this Plan
shall be subject to anticipation,  commutation,  alienation,  sale,  assignment,
encumbrance,  charge,  pledge,  or hypothecation,  or to execution,  attachment,
levy,  or similar  process or  assignment  by operation of law, and any attempt,
voluntary or involuntary,  to affect such action shall be null,  void, and of no
effect.

(b) The  provisions of this Plan shall be binding upon, and inure to the benefit
of, each Participant, the Employers and their respective successors and assigns.

Section 7.03 Legal Fees and Expenses.

All  reasonable  legal fees and other expenses paid or incurred by a Participant
or an  Employer  with  respect  to any claim  under  this Plan  shall be paid or
reimbursed  to the  prevailing  party by the other party in any legal  judgment,
arbitration or settlement.

Section 7.04 Applicable Law.

The laws of the State of Ohio shall be controlling  law in all matters  relating
to the Plan to the extent not preempted by federal law.

Section 7.05 Severability.

If any  provision of this Plan is held  illegal or invalid,  the  illegality  or
invalidity of that  provision  shall not affect the remaining  provisions of the
Plan and the Plan shall be  construed  and enforced as if the illegal or invalid
provision had not been included.




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Section 7.06 Employment Status.

This Plan does not constitute a contract of employment or impose on any Employer
any  obligation  to  retain  a  Participant,  to  maintain  the  status  of  the
Participant's  employment,  or  to  change  the  Employer's  policies  regarding
termination of employment.

                       Article VIII - Required Provisions

Section 8.01 Required Provisions.

(a) An Employer may terminate a  Participant's  employment at any time,  but any
termination  by the  Employer,  other  than  Termination  for  Cause,  shall not
otherwise  prejudice the  Participant's  right to compensation or other benefits
under this Plan.

(b)  If  a  Participant  is  suspended   and/or   temporarily   prohibited  from
participating  in the  conduct of the Bank's  affairs by a notice  served  under
Sections  8(e)(3) or 8(g)(1) of the  Federal  Deposit  Insurance  Act, 12 U.S.C.
ss.1818(e)(3)  or  (g)(1),  the  Bank's  obligations  under  this Plan  shall be
suspended as of the date of service,  unless stayed by appropriate  proceedings.
If the charges in the notice are  dismissed,  the Bank may in its discretion (i)
pay  the  Participant  all  or  part  of the  compensation  withheld  while  the
obligations  were  suspended and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.

(c) If a Participant is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under  Sections  8(e)(4)
or 8(g)(1) of the Federal  Deposit  Insurance  Act, 12 U.S.C.  ss.1818(e)(4)  or
(g)(1),  all  obligations of the Bank under this Plan shall  terminate as of the
effective date of the order.

(d) If the Bank is in  default,  as defined in  Section  3(x)(1) of the  Federal
Deposit  Insurance  Act, 12 U.S.C.  ss.1813(x)(1),  all  obligations of the Bank
under this Plan shall  terminate as of the date of default;  provided,  however,
that this  paragraph  shall not affect any vested  rights of the parties to this
Plan.

(e) Any payments made to a Participant pursuant to this Plan, or otherwise,  are
subject to and conditioned upon their  compliance with 12 U.S.C.  ss.1828(k) and
any regulations promulgated thereunder.




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Having been adopted by the Board of Directors on December 7, 2000,  this Plan is
executed by a duly authorized officer of the Bank on this December 28, 2000.

Attest:


 /s/ Mary Kratzenberg                          /s/ Jack L. Blair
---------------------                          ---------------------------------
                                               For the Entire Board of Directors


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