**Exhibit 10.1**

 

**PSB BANCORP, INC.**

**SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT**

 

AGREEMENT,made the 1st day of July 2004, by and between PSB BANCORP, INC. (“PSB”),a Pennsylvania corporation with its****principal****executive****offices****located in Philadelphia, Pennsylvania, and VINCENT J. FUMO(the “Executive”).

 

**INTRODUCTION**

 

Thepurpose of this Agreement is to provide specified benefits to the Executive, amember of a select group of management or highly compensated employees whocontribute materially to the continued growth, development and future businesssuccess of PSB.  This Agreement shall beunfunded for tax purposes and for purposes of Title I of the EmployeeRetirement Income Security Act of 1974, as amended (“ERISA”).

 

Toencourage the Executive to remain an employee of PSB, PSB is willing to providesupplemental retirement benefits to the Executive.  PSB will pay the benefits from its generalassets.

 

**AGREEMENT**

 

PSBand the Executive agree as follows:

 

# **Article1Definitions**

# ** **

Wheneverused in this Agreement, the following words and phrases shall have the meaningsspecified:

 

## 1.1  “*Change in Control*”means any of the following:

##  

#### (i)  any person (as such term is used in Sections13d and 14d-2 of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), other than PSB, a majority-owned subsidiary of PSB, an employee benefitplan (or related trust) of PSB or a direct or indirect majority-ownedsubsidiary of PSB, or affiliates of PSB (as defined in Rule 12b-2 underthe Exchange Act), becomes the beneficial owner (as determined pursuant to Rule13d-3 under the Exchange Act), directly or indirectly, of securities of PSBrepresenting more than 25% of the combined voting power of PSB’s thenoutstanding securities (other than any person beneficially owning five percent[5%] or more of the voting power of PSB’s stock on the date hereof);

####  

#### (ii)  the liquidation or dissolution of PSB or theoccurrence of, or execution of an agreement providing for, a sale of all orsubstantially all of the assets of PSB to an entity which is not a direct orindirect majority-owned subsidiary of PSB;

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#### (iii)  the occurrence of, or execution of anagreement providing for, a reorganization, merger, consolidation or othersimilar transaction or connected series of

 

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#### transactions of PSB as a result of which either (A)PSB does not survive or (B) pursuant to which shares of PSB common stock (“CommonStock”) would be converted into cash, securities or other property, unless, incase of either (A) or (B), the holders of PSB Common Stock immediately prior tosuch transaction will, following the consummation of the transaction,beneficially own, directly or indirectly, more than 50% of the combined votingpower of the then outstanding voting securities entitled to vote generally inthe election of directors of the company surviving, continuing or resultingfrom such transaction;

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#### (iv)  the occurrence of, or execution of anagreement providing for a reorganization, merger, consolidation or similartransaction of PSB, or any connected series of such transactions, if uponconsummation of such transaction or transactions, the persons who are membersof the Board of Directors of PSB immediately before such transaction ortransactions cease or, in the case of the execution of an agreement for suchtransaction or transactions, it is contemplated in such agreement that, uponconsummation, such persons would cease to constitute a majority of the Board ofDirectors of PSB or, in the case where PSB does not survive in suchtransaction, of the company surviving, continuing or resulting from suchtransaction or transactions;

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#### (v)  any other event which is at any timedesignated as a “Change in Control” for purposes of this Agreement by aresolution adopted by the Board of Directors of PSB with the affirmative voteof a majority of the non-employee directors in office at the time theresolution is adopted; and in the event any such resolution is adopted, theChange in Control event specified thereby shall be deemed incorporated hereinby reference and thereafter may not be amended, modified or revoked without thewritten agreement of the Executive;

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#### (vi)  during any period of two (2) consecutiveyears during the term of this Agreement, individuals who at the beginning ofsuch period constitute the Board of Directors of PSB cease for any reason toconstitute at least a majority thereof, unless the election of each directorwho was not a director at the beginning of such period has been approved inadvance by directors representing at least two-thirds of the directors then inoffice who were directors at the beginning of the period; provided, howeverthat this provision shall not apply in the event two-thirds of the Board ofDirectors at the beginning of a period no longer are directors due to death,retirement, or other circumstances not related to a Change in Control.

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Notwithstanding anything else to the contrary setforth in this Agreement, if (i) an agreement is executed by PSB providing forany of the transactions or events constituting a Change in Control as definedherein, and the agreement subsequently expires or is terminated without thetransaction or event being consummated, and (ii) Executive’s employment did notterminate during the period after the agreement and prior to such expiration ortermination, for purposes of this Agreement it shall be as though suchagreement was never executed and no Change in Control event shall be deemed tohave occurred as a result of the execution of such agreement.

 

## 1.2  “*Code*” means theInternal Revenue Code of 1986, as amended.

 

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## 1.3  “*Disability*”means the Executive’s suffering a sickness, accident or injury which has beendetermined by the carrier of any group disability insurance policy provided byPSB or made available by PSB to its employees and covering the Executive, or bythe Social Security Administration, to be a disability rendering the Executivetotally and permanently disabled.  TheExecutive must submit proof to PSB of the carrier’s or Social SecurityAdministration’s determination upon the request of PSB.

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## 1.4  “*Early Termination*”means the Termination of Employment before Normal Retirement Age for reasonsother than death, Disability, termination for Cause or following a Change ofControl.

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## 1.5  “*Normal Retirement Age*”means the Executive’s 65th birthday.

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## 1.6  “*Normal Retirement Date*”means the later of the Normal Retirement Age or Termination of Employment.

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## 1.7  “*Termination of Employment*”means that the Executive ceases to be employed by PSB, or a majority-ownedsubsidiary of PSB, for any reason, voluntary or involuntary, other than byreason of a leave of absence approved by PSB.

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# **Article2Retirement Benefits**

# ** **

## 2.1  *Normal Retirement Benefit*.  Upon Termination of Employment on or afterthe Executive’s Normal Retirement Age for any reason other than death, PSBshall pay to the Executive the benefit described in this Section 2.1.

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### 2.1.1  *Amount of Benefit*.  The annual benefit under this Section 2.1 isequal to the product of (i) 30%, times (ii) the sum of (A) the highest totalannualized base salary(ies) paid to the Executive by PSB and its majority-ownedsubsidiaries during the four (4) year period ending on the date of hisTermination of Employment, plus (B) the highest total annual bonus(es)  paid to the Executive by such entity(ies)with respect to any one of the four (4) full calendar years immediatelypreceding the year of his Termination of Employment.  In the event the Executive continues in the employof PSB beyond his Normal Retirement Age, the annual benefit determined inaccordance with the preceding sentence shall be increased by five percent (5%)for each full year that his employment continues beyond his Normal RetirementAge.  For purposes of this Section 2.1.1and Section 2.2.1, only base salary and annual bonus are intended to beincluded for purposes of the required benefit calculations, so thatcompensation resulting from stock-based awards, director fees and otherremuneration not generally considered salary or bonus shall be excluded.

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### 2.1.2  *Payment of Benefit*.  PSB shall pay the annual benefit to theExecutive in 12 equal monthly installments commencing on the first day of themonth following the Executive’s Normal Retirement Date and continuing on thefirst day of the month for the 239 months that follow; provided, however, thatin the event of his death prior to the payment of all of his benefit, therelevant provision of Article 3 shall apply.

 

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## 2.2  *Early Termination Benefit*.  Upon Early Termination, PSB shall pay to theExecutive the benefit described in this Section 2.2.

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### 2.2.1  *Amount of Benefit*.  The annual benefit under this Section 2.2 isequal to the product of (i) 30%, times (ii) the sum of (A) the highest totalannualized base salary(ies) paid to the Executive by PSB and its majority-ownedsubsidiaries during the four (4) year period ending on the date of EarlyTermination, plus (B) the highest total annual bonus(es) paid to the Executiveby such entities with respect to any one of the four (4) full calendar yearsimmediately preceding the year of the date of Early Termination, times (iii)30%, times (iv) the number of full years that have elapsed from the date ofthis Agreement to the date of Early Termination.  The provisions of this section are subject tothe last sentence of Section 2.1.1.

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### 2.2.2  *Payment of Benefit*.  PSB shall pay the annual benefit to theExecutive in 12 equal monthly installments commencing on the first day of themonth following the Executive’s Normal Retirement Age and continuing on thefirst day of the month for the 239 months that follow; provided, however, thatin the event of his death prior to the payment of all of his benefit, therelevant provision of Article 3 shall apply.

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## 2.3  *Disability Benefit*.  If the Executive terminates employment due toDisability prior to his Normal Retirement Age, PSB shall pay to the Executivethe benefit described in this Section 2.3.

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### 2.3.1  *Amount of Benefit*.  The annual benefit under this Section 2.3 isequal the Normal Retirement Benefit determined in the same manner described inSection 2.1.1, but by treating the date of his Termination of Employment as theattainment of his Normal Retirement Age.

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### 2.3.2  *Payment of Benefit*.  PSB shall pay the annual benefit to theExecutive in 12 equal monthly installments commencing on the first day of themonth following his Termination of Employment and continuing on the first dayof the month for the 239 months that follow; provided, however, that in theevent of his death prior to the payment of all of his benefit, the relevantprovision of Article 3 shall apply.

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## 2.4  *Change in Control Benefit*.  Notwithstanding any provisions herein to thecontrary (except the provisions of Section 5.2), upon the occurrence of aChange in Control prior to, or concurrent with, the Executive’s Termination ofEmployment, PSB shall pay to the Executive the benefit described in thisSection 2.4.

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### 2.4.1  *Amount of Benefit*.  The benefit under this Section 2.4 is equalto the present value of the product of (i) the Normal Retirement Benefitdetermined in the same manner described in Section 2.1.1, but by treating thedate of the occurrence of the Change in Control as the Executive’s NormalRetirement Date (whether or not he terminates employment at such time), times(ii) two (2).  For purposes of thepreceding sentence, the present value of the Executive’s benefit shall bedetermined by (i) using a discount factor of 4% per annum, (ii) assuming 240monthly payments would otherwise be made, and (iii) discounting the flow ofassumed payments to the date of the Change in Control, but

 

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### by assuming that such monthly payments would havecommenced the first day of the month following the attainment of Executive’sNormal Retirement Age.

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### 2.4.2  *Payment of Benefit*.  PSB shall pay the benefit, determined underSection 2.4.1, in one lump sum, within 30 days after the date it is determinedwith certainty that the last sentence of Section 1.1 will not becomeoperative.  In the event of the Executive’sdeath prior to payment of the lump sum benefit, his death shall not operate toreduce the amount payable (under Section 3 or otherwise), and it shall be paidto his beneficiary at the otherwise relevant time.

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## 2.5  *Limitations*.  All benefits payable under this Article 2shall be subject to the provisions contained in Article 5 of this Agreement.

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# **Article3Death Benefits**

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## 3.1  *Death During ActiveService*.  If the Executivedies while employed by PSB, PSB shall pay to the Executive’s beneficiary thebenefit described in this Section 3.1. This benefit shall be paid in lieu of the benefits under Article 2,unless Section 2.4 becomes applicable.

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### 3.1.1  *Amount of Benefit*.  The benefit under this Section 3.1 is equalto the amount of the annual benefit determined under Section 2.1.1, times ten(10).

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### 3.1.2  *Payment of Benefit*.  PSB shall pay the amount described in Section3.1.1 to the Executive’s beneficiary, in one lump sum, on the date that hewould have attained his Normal Retirement Age had he not died.

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## 3.2  *Death During Payment ofBenefit*.  If the Executivedies after any benefit payments have commenced under this Agreement, but beforereceiving all such payments, PSB shall pay to the Executive’s beneficiary anamount equal to the excess, if any, of (i) the product of (A) the annualbenefit he was receiving at the time of his death, times (B) ten (10), minus(ii) the sum of the benefits paid to him hereunder through the date of hisdeath.  Any such excess shall be paid tosuch beneficiary, in one lump sum, no later than 30 days after proof of theExecutive’s death is submitted to PSB.

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## 3.3  *Death After Termination ofEmployment But Before Payment of a Retirement Benefit Commences*.  If the Executive’s employment terminatesafter having accrued benefits under this Agreement, but he dies prior tocommencement of the payment of such benefits, PSB shall pay to the Executive’sbeneficiary an amount equal to the annual benefit to which he would have beenentitled had he not died, times ten (10). Such amount shall be paid to such beneficiary, in one lump sum, on thedate that the Executive would have been paid his first benefit installment had henot died.

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## 3.4  *Limitations*.  All benefits payable under this Article 3shall be subject to the provisions contained in Article 5 of this Agreement.

 

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# **Article4Beneficiaries**

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## 4.1  *Beneficiary Designations*.  The Executive shall designate a beneficiaryby filing a written designation with PSB. The Executive may revoke or modify the designation at any time by filinga new designation.  However, designationswill only be effective if signed by the Executive and received by PSB duringthe Executive’s lifetime.  The Executive’sbeneficiary designation shall be deemed automatically revoked if thebeneficiary predeceases the Executive, or if the Executive names a spouse asbeneficiary and the marriage is subsequently dissolved.  If the Executive dies without a validbeneficiary designation, all payments shall be made to the Executive’s estate.

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## 4.2  *Facility of Payment*.  If a benefit is payable to a minor, to aperson declared incompetent, or to a person incapable of handling thedisposition of his or her property, PSB may pay such benefit to the guardian,legal representative or person having the care or custody of such minor,incompetent person or incapable person. PSB may require proof of incompetence, minority or guardianship as itmay deem appropriate prior to distribution of the benefit.  Such distribution shall completely dischargePSB from all liability with respect to such benefit.

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# **Article5General Limitations**

# ** **

Allbenefits payable under this Agreement shall be subject to the following limitations:

 

## 5.1  *Excess Parachute or GoldenParachute Payment*.  In theevent that the amounts and benefits payable under this Agreement, when added toother amounts and benefits which may become payable to the Executive by PSB andany affiliated company, are such that he becomes subject to the excise taxprovisions of Code Section 4999, he shall be paid such additional amount oramounts as will result in his retention (after the payment of all federal,state and local excise, employment and income taxes on such payments and thevalue of such benefits) of a net amount equal to the net amount he would haveretained had the initially calculated payments and benefits been subject onlyto income and employment taxation.  Forpurposes of the preceding sentence, the Executive shall be deemed to be subjectto the highest marginal federal, relevant state and relevant local taxrates.  All calculations required to bemade under this subsection shall be made by PSB’s independent publicaccountants, subject to the right of Executive’s representative to review thesame.  All such amounts required to bepaid shall be paid at the time any withholding may be required under applicablelaw, and any additional amounts to which the Executive may be entitled shall bepaid or reimbursed no later than 15 days following confirmation of such amountby the Company’s accountants.  In theevent any amounts paid hereunder are subsequently determined to be in errorbecause estimates were required or otherwise, the parties agree to reimburseeach other to correct such error, as appropriate, and to pay interest thereonat the applicable federal rate (as determined under Code Section 1274 for theperiod of time such erroneous amount remained outstanding and unreimbursed).  The parties recognize that the actualimplementation of the provisions of this subsection are complex and agree todeal with each other in good faith to resolve any questions or disagreementsarising hereunder.

 

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## 5.2  *Termination for Cause*.  Notwithstanding any provision of thisAgreement to the contrary, PSB shall not pay any benefit under this Agreementif PSB terminates the Executive’s employment for Cause. Termination of theExecutive’s employment for “Cause” shall mean termination because of personaldishonesty by the Executive in the performance of his duties which results indemonstrable material injury to PSB, willful misconduct by the Executive whichremains uncured 15 days following the giving of written notice thereof to theExecutive by the Board of Directors of PSB, breach by the Executive of afiduciary duty to PSB involving personal profit, intentional failure to performstated duties following the giving of written notice thereof to the Executiveby the Board of Directors of PSB, or the issuance of a final cease-and-desistorder, relating to the Executive’s conduct, by a state or federal regulatorybody.  For purposes of this paragraph, noact 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 andwithout reasonable belief that the Executive’s action or omission was in thebest interest of PSB or any of its majority-owned subsidiaries.

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## 5.3  *Removal*.  Notwithstanding any provision of thisAgreement to the contrary, PSB shall not pay any benefit under this Agreementif the Executive is subject to a final removal or prohibition order issued byan appropriate federal banking agency pursuant to Section 8(e) of the FederalDeposit Insurance Act.

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## 5.4  *Competition afterTermination of Employment*. The Executive shall forfeit his right to any further benefits if theExecutive, without the prior written consent of PSB, violates any one of thefollowing described restrictive covenants.

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### 5.4.1  *Non-Compete Provision*.  The Executive shall not, for a period of12 months following termination of employment, directly or indirectly,either as an individual or as a proprietor, stockholder, partner, officer,director, employee, agent, consultant or independent contractor of anyindividual, partnership, corporation or other entity (excluding an ownershipinterest of one percent (1%) or less in the stock of a publicly tradedcompany):

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#### (i)  become employed by, participate in, or beconnected in any manner with the ownership, management, operation or control ofany bank or bank holding company, savings and loan or savings and loan holdingcompany, or other similar financial institution if the Executive’sresponsibilities will include providing banking or other financial serviceswithin 25 miles of the main office(s) maintained by PSB, and any of itsmajority-owned subsidiaries, as of the date of the termination of the Executive’semployment;

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#### (ii)  participate in any way in hiring or otherwiseengaging, or assisting any other person or entity in hiring or otherwiseengaging, on a temporary, part-time or permanent basis, any individual who wasemployed by PSB or any of its majority-owned subsidiaries as of the date oftermination of the Executive’s employment;

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#### (iii)  sell, offer to sell, provide banking or otherfinancial services, assist any other person in selling or providing banking orother financial services, or solicit or otherwise compete for, either directlyor indirectly, any orders, contract, or accounts for

 

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#### services of a kind or nature like or substantiallysimilar to the financial services performed or financial products sold by PSBor any of its majority-owned subsidiaries (the preceding hereinafter referredto as “Services”), to or from any person or entity from whom the Executive orPSB (or such subsidiaries), to the knowledge of the Executive, provided bankingor other financial services, sold, offered to sell or solicited orders,contracts or accounts for Services during the one (1) year period immediatelyprior to the termination of the Executive’s employment; or

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#### (iv)  divulge, disclose, or communicate to othersin any manner whatsoever, any nonpublic confidential information of PSB and itsmajority-owned subsidiaries, to the knowledge of the Executive, including, butnot limited to, the names and addresses of customers or prospective customers,of PSB (and such subsidiaries), as they may have existed from time to time, ofwork performed or services rendered for any customer, any method and/orprocedures relating to projects or other work developed for PSB (or any of suchsubsidiaries), earnings or other information concerning PSB (or suchsubsidiaries).  The restrictionscontained in this subparagraph (iv) apply to all information regarding PSB (andsuch subsidiaries), regardless of the source who provided or compiled suchinformation.  Notwithstanding anything tothe contrary, the restriction set forth in this paragraph shall not apply to anyinformation that becomes known to the general public from sources other thanthe Executive.

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### 5.4.2  *Judicial Remedies*.  In the event of a breach or threatened breachby the Executive of any provision of these restrictions, the Executiverecognizes the substantial and immediate harm that a breach or threatenedbreach will impose upon PSB (and/or a majority-owned subsidiary of PSB), andfurther recognizes that in such event monetary damages may be inadequate tofully protect PSB (and such subsidiaries). Accordingly, in the event of a breach or threatened breach of thisAgreement, the Executive consents to PSB’s entitlement to preliminary,interlocutory, temporary or permanent injunctive, or any other equitablerelief, protecting and fully enforcing PSB’s rights hereunder and preventingthe Executive from further breaching any of his obligations set forthherein.  The Executive expressly waivesany requirement, based on any statute, rule of procedure, or other source, thatPSB post a bond as a condition of obtaining any of the above-describedremedies.  Nothing herein shall beconstrued as prohibiting PSB from pursuing any other remedies available to PSBat law or in equity for such breach or threatened breach, including therecovery of damages from the Executive, which may include the return of all ora portion of benefits previously paid hereunder.  The Executive expressly acknowledges andagrees that: (i) the restrictions set forth in Section 5.4.1 hereof arereasonable, in terms of scope, duration, geographic area, and otherwise, (ii)the protections afforded PSB in Section 5.4.1 hereof are necessary to protectits legitimate business interest, (iii) the restrictions set forth in Section5.4.1 hereof will not be materially adverse to the Executive’s employmentopportunities following his termination of employment with PSB or amajority-owned subsidiary of PSB, and (iv) his agreement to observe suchrestrictions forms a material part of the consideration for this Agreement.

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### 5.4.3  *Overbreadth of RestrictiveCovenant*.  It is the intentionof the parties that if any restrictive covenant in this Agreement is determinedby a court of competent

 

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### jurisdiction to be overly broad, then the court shouldenforce such restrictive covenant to the maximum extent permitted under the lawas to area, breadth and duration.

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### 5.4.4  *Change in Control*.  The non-compete provision detailed in Section5.4.1 hereof shall not be enforceable following a Change in Control.

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## 5.5  *Suicide or Misstatement*.  No benefits shall be payable if the Executivecommits suicide within two (2) years after the date of this Agreement, or if aninsurance company (if applicable) denies coverage for material misstatements offact made by the Executive on any application for life insurance purchased byPSB.

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# **Article6Claims and Review Procedures**

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## 6.1  *Claims Procedure*.  The Executive or a beneficiary (“Claimant”)who has not received benefits under the Agreement that he or she believesshould be paid shall make a claim for such benefits as follows:

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### 6.1.1  *Initiation – Written Claim*.  The Claimant initiates a claim by submittingto PSB a written claim for the benefits.

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### 6.1.2  *Timing of PSB Response*.  PSB shall respond to such Claimant within90 days after receiving the claim. If PSB determines that special circumstances require additional time forprocessing the claim, PSB can extend the response period by an additional 90days by notifying the Claimant in writing, prior to the end of the initial 90-dayperiod, that an additional period is required. The notice of extension must set forth the special circumstances and thedate by which PSB expects to render its decision.

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### 6.1.3  *Notice of Decision*.  If PSB denies part or all of the claim, PSBshall notify the Claimant in writing of such denial.  PSB shall write the notification in a mannercalculated to be understood by the Claimant. The notification shall set forth:

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#### (i)  the specific reasons for the denial,

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#### (ii)  a reference to the specific provisions of theAgreement on which the denial is based,

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#### (iii)  a description of any additional informationor material necessary for the Claimant to perfect the claim and an explanationof why it is needed,

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#### (iv)  an explanation of the Agreement’s reviewprocedures and the time limits applicable to such procedures, and

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#### (v)  a statement of the Claimant’s right to bringa civil action under ERISA Section 502(a) following an adverse benefitdetermination on review.

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## 6.2  *Review Procedure*.  If PSB denies part or all of the claim, theClaimant shall have the opportunity for a full and fair review by PSB of thedenial, as follows:

 

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### 6.2.1  *Initiation – WrittenRequest*.  To initiate thereview, the Claimant, within 60 days after receiving PSB’s notice ofdenial, must file with PSB a written request for review.

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### 6.2.2  *Additional Submissions –Information Access*.  TheClaimant shall then have the opportunity to submit written comments, documents,records and other information relating to the claim.  PSB shall also provide the Claimant, uponrequest and free of charge, reasonable access to, and copies of, all documents,records and other information relevant (as defined in applicable ERISA regulations)to the Claimant’s claim for benefits.

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### 6.2.3  *Considerations on Review*.  In considering the review, PSB shall takeinto account all materials and information the Claimant submits relating to theclaim, without regard to whether such information was submitted or consideredin the initial benefit determination.

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### 6.2.4  *Timing of PSB Response*.  PSB shall respond in writing to such Claimantwithin 60 days after receiving the request for review.  If PSB determines that special circumstancesrequire additional time for processing the claim, PSB can extend the responseperiod by an additional 60 days by notifying the Claimant in writing, prior tothe end of the initial 60-day period, that an additional period isrequired.  The notice of extension mustset forth the special circumstances and the date by which PSB expects to renderits decision.

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### 6.2.5  *Notice of Decision*.  PSB shall notify the Claimant in writing ofits decision on review.  PSB shall writethe notification in a manner calculated to be understood by the Claimant. Thenotification shall set forth:

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#### (i)  the specific reasons for the denial,

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#### (ii)  a reference to the specific provisions of theAgreement on which the denial is based,

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#### (iii)  a statement that the Claimant is entitled toreceive, upon request and free of charge, reasonable access to, and copies of,all documents, records and other information relevant (as defined in applicableERISA regulations) to the Claimant’s claim for benefits, and

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#### (iv)  a statement of the Claimant’s right to bringa civil action under ERISA Section 502(a).

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# **Article7Amendments and Termination**

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ThisAgreement may be amended or terminated only by a written agreement signed byPSB and the Executive.

 

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# **Article8Miscellaneous**

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## 8.1  *Binding Effect*.  This Agreement shall bind the Executive andPSB (and its majority-owned subsidiaries), and their beneficiaries, survivors,executors, successors, administrators and transferees.

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## 8.2  *No Guarantee of Employment*.  This Agreement is not an employment policy orcontract.  It does not give the Executivethe right to remain an employee of PSB or any of its majority-ownedsubsidiaries, nor does it interfere with PSB’s right to discharge theExecutive.  It also does not require theExecutive to remain an employee nor interfere with the Executive’s right toterminate employment at any time.

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## 8.3  *Non-Transferability*.  Benefits under this Agreement cannot be sold,transferred, assigned, pledged, attached or encumbered in any manner.

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## 8.4  *Reorganization*.  PSB shall not merge or consolidate into orwith another company, or reorganize, or sell substantially all of its assets toanother company, firm, or person unless such succeeding or continuing company,firm, or person agrees to assume and discharge the obligations of PSB underthis Agreement.  Upon the occurrence ofsuch event, the term “PSB” as used in this Agreement shall be deemed to referto the successor or survivor company.

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## 8.5  *Tax Withholding*.  PSB shall withhold any taxes that arerequired to be withheld from the benefits provided under this Agreement.  In the event adequate funds are unavailablefor such withholding, the Executive agrees to provide the same to PSB uponwritten request.

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## 8.6  *Applicable Law*.  The Agreement and all rights hereunder shallbe governed by the laws of the Commonwealth of Pennsylvania, except to theextent preempted by the laws of the United States of America.

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## 8.7  *Unfunded Arrangement*.  The Executive and any beneficiary are generalunsecured creditors of PSB for the payment of benefits under thisAgreement.  The benefits represent themere promise by PSB to pay such benefits. The rights to benefits are not subject in any manner to anticipation,alienation, sale, transfer, assignment, pledge, encumbrance, attachment, orgarnishment by creditors.  Any insuranceon the Executive’s life is a general asset of PSB, or a majority-ownedsubsidiary of PSB, to which the Executive and any beneficiary have no preferredor secured claim.

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## 8.8  *Entire Agreement*.  This Agreement constitutes the entireagreement between PSB and the Executive as to the subject matter hereof.  No rights are granted to the Executive byvirtue of this Agreement other than those specifically set forth herein.

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## 8.9  *Administration*.  PSB shall have powers which are necessary toadminister this Agreement, including but not limited to:

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#### (i)  establishing and revising the method ofaccounting for the Agreement;

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#### (ii)  maintaining a record of benefit payments;

 

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#### (iii)  establishing rules and prescribing any formsnecessary or desirable to administer the Agreement; and

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#### (iv)  interpreting the provisions of the Agreement.

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PSB shall have absolute discretion to interpret theprovisions of this Agreement and to make all determinations, including factualdeterminations attendant thereto.

 

## 8.10  *Named Fiduciary*.  PSB shall be the named fiduciary and planadministrator under this Agreement.  Itmay delegate to others certain aspects of the management and operationalresponsibilities including the employment of advisors and the delegation ofministerial duties to qualified individuals.

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## 8.11  *Headings*.  Headings are included in this Agreement forthe convenience of the parties and shall not be taken into consideration inconstruing the provisions of this Agreement.

##  

## 8.12  *Legal Fees to EnforceRights After Change in Control*. PSB is aware that upon the occurrence of a Change of Control, the Boardof Directors or a shareholder of PSB, or of any successor corporation mightthen cause or attempt to cause PSB or such successor to refuse to comply withits obligations under the Agreement and might cause or attempt to cause PSB toinstitute, or may institute, litigation seeking to deny the Executive thebenefits intended under the Agreement. In these circumstances, the purpose of the Agreement could befrustrated. Accordingly, if, following a Change of Control, it should appear tothe Executive that PSB or any successor corporation has failed to comply withany of its obligations under the Agreement or any agreement thereunder, or ifPSB or any other person takes any action to declare the Agreement void orunenforceable or institutes any litigation or other legal action designed todeny, diminish or to recover from the Executive the benefits intended to beprovided, then PSB irrevocably authorizes the Executive to retain counsel ofthe Executive’s choice at the expense of PSB to represent the Executive inconnection with the initiation or defense of any litigation or other legalaction, whether by or against PSB or any director, officer, shareholder orother person affiliated with PSB or any successor thereto in any jurisdiction

##  

INWITNESS WHEREOF, the Executive and PSB have signed this Agreement as of thedate and year first above written.

 
| EXECUTIVE:      | PSB BANCORP, INC. |
|-----------------|-------------------|
|            |              |
|            |              |
|            | By                |   |   |
|            |              |   |
| Vincent J. Fumo |              |
|            |              |
|            | Title             |   |   |
|                 |                   |  |  |  |  |

 

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**BENEFICIARY DESIGNATION**

 

**PSB BANCORP, INC.**

**SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT**

 

**Vincent J. Fumo**

 

I designate thefollowing as beneficiary of any death benefits under this Agreement:

 
| Primary:    |   |
|-------------|--------|
|        |
| Contingent: |   |
|        |

 

 

**Note:****                   To name a trustas beneficiary, please provide the name of the trustee(s) and the exactname and date of the trust agreement.**

 

I understand that I maychange these beneficiary designations by filing a new written designation withPSB.  I further understand that thedesignations will be automatically revoked if the beneficiary predeceases me,or, if I have named my spouse as beneficiary and our marriage is subsequentlydissolved.

 

 
| Signature                                                                                                                                                                                                                                                                                   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                        |
| Date                                                                                                                                                                                                                                                                                        |   |   |
|                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                        |
| Received by PSB this              day of                             ,  200  . |
|                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                        |
| By                                                                                                                                                                                                                                                                                          |   |   |
|                                                                                                                                                                                                                                                                                        |
| Title                                                                                                                                                                                                                                                                                       |   |   |
|                                                                                                                                                                                                                                                                                             |        |        |  |  |  |

 

13

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