<PAGE>
 
                                                                 EXHIBIT 10.3(b)
                             EMPLOYMENT AGREEMENT
                             --------------------

     THIS AGREEMENT, entered into this ______ day of _______, 1996, is an
amendment and restatement of the agreement  entered into the 11th day of
January, 1996, by and between First Lancaster Federal Savings Bank (the "Bank")
and Virginia R.S. Stump (the "Employee"), effective on the date (the "Effective
Date") of the Bank's conversion from mutual to stock form.

     WHEREAS, the Employee has heretofore been employed by the Bank as its
President and Chief Executive Officer and is experienced in all phases of the
business of the Bank; and

     WHEREAS, the Board of Directors of the Bank believes it is in the best
interests of the Bank to enter into this Agreement with the Employee in order to
assure continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to her assigned duties; and

     WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.

     NOW, THEREFORE, it is AGREED as follows:

     1.    Employment.  The Employee is employed as the President and Chief
           ----------                                                      
Executive Officer of the Bank.  The Employee shall render such administrative
and management services for the Bank as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity.  The
Employee shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank.  The Employee's other duties shall
be such as the Board of Directors (the "Board") of the Bank may from time to
time reasonably direct, including normal duties as an officer of the Bank.

     2.    Base Compensation.  The Bank agrees to pay the Employee during the
           -----------------                                                 
term of this Agreement a salary at the rate of $_________ per annum, payable in
cash not less frequently than monthly.  The Board shall review, not less often
than annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase her salary.

     3.    Discretionary Bonuses.  The Employee shall participate in an
           ---------------------                                       
equitable manner with all other senior management employees of the Bank in
discretionary bonuses that the Board may award from time to time to the Bank's
senior management employees.  No other compensation provided for in this
Agreement shall be deemed a substitute for the Employee's right to participate
in such discretionary bonuses.

     4.    (a)  Participation in Retirement, Medical and Other Plans.  During
                ----------------------------------------------------         
the term of this Agreement, the Employee shall be eligible to participate in the
following benefit plans:  group hospitalization, disability, health, dental,
sick leave, life insurance, travel and/or accident insurance, auto
allowance/auto lease, retirement, pension, and/or other present or future
qualified plans provided by the Bank.

           (b)  Employee Benefits; Expenses.  The Employee shall be eligible to
                ---------------------------                                    
participate in any fringe benefits which are or may become available to the
Bank's senior management employees, including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the Employee under this
Agreement.  The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which she shall incur in connection with her services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Bank.

     5.    Term.  The Bank hereby employs the Employee, and the Employee hereby
           ----                                                                
accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending thirty-six months 

                                      -1-
<PAGE>
 
thereafter (or such earlier date as is determined in accordance with Section 9).
Additionally, on each annual anniversary date from the Effective Date, the
Employee's term of employment shall be extended for an additional one-year
period beyond the then effective expiration date provided the Board determines
in a duly adopted resolution that the performance of the Employee has met the
Board's requirements and standards, and that this Agreement shall be extended.
Only those members of the Board of Directors who have no personal interest in
this Employment Agreement shall discuss and vote on the approval and subsequent
review of this Agreement .

     6.    Loyalty; Noncompetition.
           ----------------------- 

           (a)  During the period of her employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all her full business time, attention, skill, and efforts
to the faithful performance of her duties hereunder; provided, however, from
time to time, Employee may serve on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Bank or any of its subsidiaries or
affiliates, or unfavorably affect the performance of Employee's duties pursuant
to this Agreement, or will not violate any applicable statute or regulation.
"Full business time" is hereby defined as that amount of time usually devoted to
like companies by similarly situated executive officers.  During the term of her
employment under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the Bank, or be
gainfully employed in any other position or job other than as provided above.

           (b)  Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.

     7.    Standards.  The Employee shall perform her duties under this
           ---------                                                   
Agreement in accordance with such reasonable standards as the Board may
establish from time to time.  The Bank will provide Employee with the working
facilities and staff customary for similar executives and necessary for her to
perform her duties.

     8.    Vacation and Sick Leave.  At such reasonable times as the Board shall
           -----------------------                                              
in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent herself voluntarily from the performance of her employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:

           (a)  The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Bank.

           (b)  The Employee shall not receive any additional compensation from
the Bank on account of her failure to take a vacation or sick leave, and the
Employee shall not accumulate unused vacation or sick leave from one fiscal year
to the next, except in either case to the extent authorized by the Board.

           (c)  In addition to the aforesaid paid vacations, the Employee shall
be entitled without loss of pay, to absent herself voluntarily from the
performance of her employment with the Bank for such additional periods of time
and for such valid and legitimate reasons as the Board may in its discretion
determine. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.

           (d)  In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.

     9.    Termination and Termination Pay.  Subject to Section 11 hereof, the
           -------------------------------                                    
Employee's employment hereunder may be terminated under the following
circumstances:

                                      -2-
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           (a)  Death.  The Employee's employment under this Agreement shall
                -----                                                       
terminate upon her death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which her death occurred.

           (b)  Disability.  (1) The Bank may terminate the Employee's
                ---------- 
employment after having established the Employee's Disability. For purposes of
this Agreement, "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially perform her duties under this Agreement
and which results in the Employee becoming eligible for long-term disability
benefits under the Bank's long-term disability plan (or, if the Bank has no such
plan in effect, which impairs the Employee's ability to substantially perform
her duties under this Agreement for a period of one hundred eighty (180)
consecutive days). The Employee shall be entitled to the compensation and
benefits provided for under this Agreement for (i) any period during the term of
this Agreement and prior to the establishment of the Employee's Disability
during which the Employee is unable to work due to the physical or mental
infirmity, or (ii) any period of Disability which is prior to the Employee's
termination of employment pursuant to this Section 9(b); provided that any
benefits paid pursuant to the Bank's long term disability plan will continue as
provided in such plan.

     (2)  During any period that the Employee shall receive disability benefits
and to the extent that the Employee shall be physically and mentally able to do
so, she shall furnish such information, assistance and documents so as to assist
in the continued ongoing business of the Bank and, if able, shall make herself
available to the Bank to undertake reasonable assignments consistent with her
prior position and her physical and mental health.  The Bank shall, upon
substantiation by the Employee in accordance with the policies of the Bank, pay
all reasonable expenses incident to the performance of any assignment given to
the Employee during the disability period.

           (c)  Just Cause.  The Board may, by written notice to the Employee,
                ----------                                                    
immediately terminate her employment at any time, for Just Cause.  The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.  Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee'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 similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.  Notwithstanding the foregoing, in
the event of termination for Just Cause there shall be delivered to the Employee
a copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), such meeting and the opportunity to be heard to be held prior
to, or as soon as reasonably practicable following, termination, but in no event
later than 60 days following such termination, finding that in the good faith
opinion of the Board the Employee was guilty of conduct set forth above in the
second sentence of this Subsection (c) and specifying the particulars thereof in
detail.  If following such meeting the Employee is reinstated, the Board may, in
its discretion, direct payment to the Employee in an amount up to the amount of
pay that the Employee would have received if she had been employed by the Bank
during the period between her termination and reinstatement.

           (d)  Without Just Cause; Constructive Discharge.  (1) The Board may,
                ------------------------------------------
by written notice to the Employee, immediately terminate her employment at any
time for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits (unless such
termination occurs within the time periods set forth in Section 11(b) hereof in
which event the benefits and compensation provided for in Section 11 shall
apply): (i) the salary provided pursuant to Section 2 hereof, up to the date of
termination of the term as provided in Section 5 hereof (including any renewal
term) of this Agreement (the "Expiration Date"), plus said salary for an
additional 12-month period, and (ii) at the Employee's election either (A) cash
in an amount equal to the cost to the Employee of obtaining all health, life,
disability and other benefits which the Employee would have been eligible to
participate in through the Expiration Date based upon the benefit levels
substantially equal to those that the Bank provided for the Employee at the date
of termination of employment or (B) continued participation under 

                                      -3-
<PAGE>
 
such Bank benefit plans through the Expiration Date, but only to the extent the
Employee continues to qualify for participation therein. All amounts payable to
the Employee shall be paid, at the option of the Employee, either (I) in
periodic payments through the Expiration Date, or (II) in one lump sum within
ten (10) days of such termination.

     (2)  The Employee may voluntarily terminate her employment under this
Agreement, and the Employee shall thereupon be entitled to receive the
compensation and benefits payable under Section 9(d)(1) hereof, within ninety
(90) days following the occurrence of any of the following events, which has not
been consented to in advance by the Employee in writing (unless such voluntary
termination occurs within the time periods set forth in Section 11(b) hereof in
which event the benefits and compensation provided for in Section 11 shall
apply): (i) the requirement that the Employee move her personal residence, or
perform her principal executive functions, more than thirty (30) miles from her
primary office; (ii) a material reduction in the Employee's base compensation,
as the same may be changed by mutual agreement from time to time other than in
connection with an institution-wide reduction; (iii) the failure by the Bank to
continue to provide the Employee with compensation and benefits provided for
under this Agreement, as the same may be increased from time to time, or with
benefits substantially similar to those provided to her under any of the
employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Bank which, directly or
indirectly, would materially reduce any of such benefits or deprive the Employee
of any material fringe benefit enjoyed by her; (iv) the assignment to the
Employee of duties and responsibilities materially different from those normally
associated with her position as referenced at Section 1; (v) a failure to elect
or reelect the Employee to the Board of Directors of the Bank if the Employee
was serving on the Board on the Effective Date or was otherwise elected to the
Board during the term of this Agreement; (vi) a material diminution or reduction
in the Employee's responsibilities or authority (including reporting
responsibilities) in connection with her employment with the Bank; or (vii) a
material reduction in the secretarial or other administrative support of the
Employee other than in connection with an institution-wide reduction in force.

     (3)  Notwithstanding the foregoing, but only to the extent required under
federal banking law, the amount payable under clause (d)(1)(i) hereof shall be
reduced to the extent that on the date of the Employee's termination of
employment, the present value of the benefits payable under clauses (d)(1)(i)
and (ii) hereof exceeds the limitation on severance benefits that is set forth
in Regulatory Bulletin 27a of the Office of Thrift Supervision, as in effect on
the Effective Date.  In the event that Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code") becomes applicable to payments made under this
Section 9(d), and the payments exceed the "Maximum Amount" as defined in Section
11(a)(1) hereof, the payments shall be reduced as provided by Section 11(a)(2)
of this Agreement.

           (e)  Termination or Suspension Under Federal Law.  (1) If the
                ------------------------------------------- 
Employee 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 ("FDIA") (12 U.S.C. 1818(e)(4) and
(g)(1)), all obligations of the Bank under this Agreement shall terminate, as of
the effective date of the order, but vested rights of the parties shall not be
affected.

           (2)  If the Bank is in default (as defined in Section 3(x)(1) of
FDIA), all obligations under this Agreement shall terminate as of the date of
default; however, this Paragraph shall not affect the vested rights of the
parties.

           (3)  All obligations under this Agreement shall terminate, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank:  (i) by the Director of the Office of Thrift
Supervision ("Director of OTS"), or his or her designee, at the time that the
Federal Deposit Insurance Corporation ("FDIC") or the Resolution Trust
Corporation enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of FDIA; or (ii) by the
Director of the OTS, or his or her designee, at the time that the Director of
the OTS, or his or her designee approves a supervisory merger to resolve
problems related to operation of the Bank or when the Bank is determined by the
Director of the OTS to be in an unsafe or unsound condition.  Such action shall
not affect any vested rights of the parties.

                                      -4-
<PAGE>
 
           (4)  If a notice served under Section 8(e)(3) or (g)(1) of the FDIA
(12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the
Employee from participating in the conduct of the Bank's affairs, the Bank's
obligations under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings.  If the charges in the notice
are dismissed, the Bank may in its discretion (i) pay the Employee all or part
of the compensation withheld while its contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.

           (f)  Voluntary Termination by Employee.  Subject to Section 11
                ---------------------------------
hereof, the Employee may voluntarily terminate employment with the Bank during
the term of this Agreement, upon at least ninety (90) days' prior written notice
to the Board of Directors, in which case the Employee shall receive only her
compensation, vested rights and employee benefits up to the date of her
termination (unless such termination occurs pursuant to Section 9(d)(2) hereof
or within the time period set forth in Section 11(a) hereof in which event the
benefits and compensation provided for in Sections 9(d) or 11, as applicable,
shall apply).

     10.   No Mitigation.  The Employee shall not be required to mitigate the
           -------------                                                     
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.

     11.   Change in Control.
           ----------------- 

           (a)  Change in Control; Involuntary Termination.  (1) Notwithstanding
                ------------------------------------------                      
any provision herein to the contrary, if the Employee's employment under this
Agreement is terminated by the Bank, without the Employee's prior written
consent and for a reason other than Just Cause, in connection with or within
twelve (12) months after any change in control of the Bank or the Company, the
Employee shall, subject to paragraph (2) of this Section 11(a), be paid an
amount equal to the difference between (i) the product of 2.99 times her "base
amount" as defined in Section 280G(b)(3) of the Code and regulations promulgated
thereunder (the "Maximum Amount"), and (ii) the sum of any other parachute
payments (as defined under Section 280G(b)(2) of the Code) that the Employee
receives on account of the change in control.  Said sum shall be paid in one
lump sum within ten (10) days of such termination. This paragraph would not
apply to a termination of employment due to death, Disability or voluntary
termination by the Employee.

     (2)  In the event that the Employee and the Bank jointly determine and
agree that the total parachute payments receivable under clauses (i) and (ii) of
Section 11(a)(1) hereof exceed the Maximum Amount, notwithstanding the payment
procedure set forth in Section 11(a)(1) hereof, the Employee shall determine
which and how much, if any, of the parachute payments to which she is entitled
shall be eliminated or reduced so that the total parachute payments to be
received by the Employee do not exceed the Maximum Amount.  If the Employee does
not make her determination within ten business days after receiving a written
request from the Bank, the Bank may make such determination, and shall notify
the Employee promptly thereof.  Within five business days of the earlier of the
Bank's receipt of the Employee's determination pursuant to this paragraph or the
Bank's determination in lieu of a determination by the Employee, the Bank shall
pay to or distribute to or for the benefit of the Employee such amounts as are
then due the Employee under this Agreement.

     (3)  As a result of uncertainty in application of Section 280G of the Code
at the time of payment hereunder, it is possible that such payments will have
been made by the Bank which should not have been made ("Overpayment") or that
additional payments will not have been made by the Bank which should have been
made ("Underpayment"), in each case, consistent with the calculations required
to be made under Section 11(a)(1) hereof.  In the event that the Employee, based
upon the assertion by the Internal Revenue Service against the Employee of a
deficiency which the Employee believes has a high probability of success,
determines that an Overpayment has been made, any such Overpayment paid or
distributed by the Bank to or for the benefit of Employee shall be treated for
all purposes as a loan ab initio which the Employee shall repay to the Bank
                       -- ------                                           
together with interest at the applicable federal rate provided for in Section
7872(f)(2)(B) of the Code; provided, however, that no such loan shall be deemed
to have been made 

                                      -5-
<PAGE>
 
and no amount shall be payable by the Employee to the Bank if and to the extent
such deemed loan and payment would not either reduce the amount on which the
Employee is subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the Employee and the Bank
determine, based upon controlling precedent or other substantial authority, that
an Underpayment has occurred, any such Underpayment shall be promptly paid by
the Bank to or for the benefit of the Employee together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.

     (4)  The term "change in control" shall mean any one of the following
events: (1) the acquisition of ownership, holding or power to vote more than 25%
of the Bank's or the Company's voting stock, (2) the acquisition of the ability
to control the election of a majority of the Bank's or the Company's directors,
(3) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934),
(4) the acquisition of control of the Bank or the Company within the meaning of
12 C.F.R. Part 574 or its applicable equivalent (except in the case of (1), (2),
(3) and (4) hereof, ownership or control of the Bank by the Company itself shall
not constitute a "change in control"), or (5) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company or the Bank (the "Existing Board") (the
"Continuing Directors") cease for any reason to constitute at least a majority
thereof, provided that any individual whose election or nomination for election
as a member of the Existing Board was approved by a vote of at least a majority
of the Continuing Directors then in office shall be considered a Continuing
Director. For purposes of this subparagraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.

     Notwithstanding the foregoing, but only to the extent required under
federal banking law, the amount payable under Subsection (a) of this Section 11
shall be reduced to the extent that on the date of the Employee's termination of
employment, the amount payable under Subsection (a) of this Section 11 exceeds
the limitation on severance benefits that is set forth in Regulatory Bulletin
27a of the Office of Thrift Supervision, as in effect on the Effective Date.

           (b)  Change in Control; Voluntary Termination.  Notwithstanding any
                ----------------------------------------                      
other provision of this Agreement to the contrary, but subject to Sections
11(a)(2), 11(a)(3), and 11(c) hereof, the Employee may voluntarily terminate her
employment under this Agreement within thirty (30) days following a change in
control of the Bank or the Company, as defined in Section 11(a)(4) hereof, and
be entitled to receive the payment described in Section 11(a)(1) of this
Agreement.  Alternatively, the Employee may voluntarily terminate her employment
under this Agreement within twelve (12) months following such change in control
of the Bank or the Company and the Employee shall thereupon be entitled to
receive the payment described in Section 11(a)(1) of this Agreement upon the
occurrence of any of the following events, or within 90 days thereafter, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee perform her principal executive functions more
than thirty (30) miles from her primary office as of the date of the change in
control; (ii) a material reduction in the Employee's base compensation as in
effect on the date of the change in control or as the same may be changed by
mutual agreement from time to time other than in connection with an institution-
wide reduction in force; (iii) the failure by the Bank to continue to provide
the Employee with compensation and benefits provided for under this Agreement,
as the same may be increased from time to time, or with benefits substantially
similar to those provided to her under any employee benefit in which the
Employee is a participant or the taking of any action by the Bank which,
directly or indirectly, would materially reduce any of such benefits or deprive
the Employee of any material fringe benefit enjoyed by her at the time of the
change in control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with her
position as referenced at Section 1; (v) a failure to elect or reelect the
Employee to the Board of Directors of the Bank, if the Employee is serving on
the Board on the date of the change in control; (vi) a material diminution or
reduction in the Employee's responsibilities or authority (including reporting
responsibilities) in connection with her employment with the Bank if the
Employee was serving on the Board on the Effective Date or was otherwise elected
to the Board during the term of this Agreement; or (vii) 

                                      -6-
<PAGE>
 
a material reduction in the secretarial or other administrative support of the
Employee other than in connection with an institution-wide reduction in force.

           (c)  Compliance with 12 U.S.C. Section 1828(k).  Any payments made to
                -----------------------------------------                       
the Employee pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.

           (d)  Trust.  (1) Within five business days before or after a change
                ----- 
in control as defined in Section 11(a) of this Agreement which was not approved
in advance by a resolution of a majority of the Continuing Directors of the
Bank, the Bank shall (i) deposit, or cause to be deposited, in a grantor trust
(the "Trust) substantially in the form of the trust that the Bank's Board of
Directors approved on January 11, 1996, an amount equal to 2.99 times the
Employee's "base amount" as defined in Section 280G(b)(3) of the Code, and (ii)
provide the trustee of the Trust with a written direction to hold said amount
and any investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of such amounts from the Trust.

     (2)  During the twelve (12) consecutive month period following the date on
which the Bank makes the deposit referred to in the preceding paragraph, the
Employee may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Employee an amount designated in the notice as being
payable pursuant to Section 11(a) or (b).  Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail return receipt requested.  On the
tenth (10th) business day after mailing said notice to the Bank, the trustee of
the Trust shall pay the Employee the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment.  In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to Section 11(a) or (b) hereof, and the party responsible for the payment of the
costs of such arbitration (which may include any reasonable legal fees and
expenses incurred by the Employee) shall be determined by the arbitrator.  The
trustee shall choose the arbitrator to settle the dispute, and such arbitrator
shall be bound by the rules of the American Arbitration Association in making
her determination.  The parties and the trustee shall be bound by the results of
the arbitration and, within 3 days of the determination by the arbitrator, the
trustee shall pay from the Trust the amounts required to be paid to the Employee
and/or the Bank, and in no event shall the trustee be liable to either party for
making the payments as determined by the arbitrator.

     (3)  Upon the earlier of (i) any payment from the Trust to the Employee, or
(ii) the date twelve (12) months after the date on which the Bank makes the
deposit referred to in the first paragraph of this subsection (d)(1), the
trustee of the Trust shall pay to the Bank the entire balance remaining in the
segregated account maintained for the benefit of the Employee.  The Employee
shall thereafter have no further interest in the Trust pursuant to this
Agreement.

           (e)  In the event that any dispute arises between the Employee and
the Bank as to the terms or interpretation of this Agreement, including this
Section 11, whether instituted by formal legal proceedings or otherwise,
including any action that the Employee takes to enforce the terms of this
Section 11 or to defend against any action taken by the Bank, the Employee shall
be reimbursed for all costs and expenses, including reasonable attor neys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
shall obtain a final judgement by a court of competent jurisdiction in favor of
the Employee. Such reimbursement shall be paid within ten (10) days of
Employee's furnishing to the Bank written evidence, which may be in the form,
among other things, of a cancelled check or receipt, of any costs or expenses
incurred by the Employee.

     12.   Federal Income Tax Withholding.  The Bank may withhold all Federal
           ------------------------------                                    
and State income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or ruling.

                                      -7-
<PAGE>
 
     13.   Successors and Assigns.
           ---------------------- 

           (a)  Bank.  This Agreement shall not be assignable by the Bank,
                ----                                                      
provided that this Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.

           (b)  Employee.  Since the Bank is contracting for the unique and
                --------                                                   
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating her rights or duties hereunder without first obtaining the written
consent of the Bank; provided, however, that nothing in this paragraph shall
preclude (i) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon her death, or (ii) the executors, administrators, or
other legal representatives of the Employee or her estate from assigning any
rights hereunder to the person or persons entitled thereunto.

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

     14.   Amendments.  No amendments or additions to this Agreement shall be
           ----------                                                        
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

     15.   Applicable Law.  Except to the extent preempted by Federal law, the
           --------------                                                     
laws of the Commonwealth of Kentucky shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.

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

     17.   Entire Agreement.  This Agreement, together with any understanding or
           ----------------                                                     
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.

ATTEST:                            FIRST LANCASTER FEDERAL SAVINGS BANK


________________________           By:_____________________________
Secretary                             Its: Executive Vice President


WITNESS:


________________________           ________________________________
                                   Virginia R.S. Stump

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