Document:

exv10w3

 

Exhibit
10.3

AMENDED AND RESTATED

CHANGE IN CONTROL SEVERANCE AGREEMENT

     THIS AMENDED AND RESTATED AGREEMENT (this “Agreement”) is effective the 20th day of
July 2006, between Laurel Savings Bank (the “Bank”), a Pennsylvania-chartered savings bank and
wholly owned subsidiary of Laurel Capital Group, Inc. (the “Corporation”), and Robert A. Stephens
(the “Executive”).

INTRODUCTION

     The Bank and the Executive previously entered into a certain Change in Control Severance
Agreement effective as of July 1, 2003 (the “Prior Agreement”). This Agreement amends and restates
the Prior Agreement in its entirety as hereinafter set forth in order to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
including the guidance issued to date by the Internal Revenue Service (the “IRS”) and the proposed
regulations issued by the IRS in the fall of 2005.

WITNESSETH

     WHEREAS, the Executive is presently an officer of the Bank, and the Bank desires to be ensured
of the Executive’s continued active participation in the business of the Bank;

     WHEREAS, in order to induce the Executive to remain in the employ of the Bank and in
consideration of the Executive’s agreeing to remain in the employ of the Bank, the parties desire
to specify the severance benefits which shall be due the Executive in the event that his employment
with the Bank is terminated under specified circumstances.

     NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained,
the parties hereby agree as follows:

     1. Definitions. The following words and terms shall have the meanings set forth below for
the purposes of this Agreement:

     (a) Annual Compensation. The Executive’s “Annual Compensation” for purposes of this Agreement
shall be deemed to mean the highest level of base salary and cash bonus paid to the Executive by
the Corporation, the Bank or any subsidiary of either entity during the calendar year in which the
Date of Termination occurs (determined on an annualized basis) or either of the two calendar years
immediately preceding the calendar year in which the Date of Termination occurs.

     (b) Cause. Termination of the Executive’s employment for “Cause” shall mean termination
because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order or
material breach of any provision of this Agreement. For purposes of

 

 

this subparagraph, no act or
failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the Executive’s action
or omission was in the best interest of the Bank and/or the Corporation.

     (c) Change in Control of the Corporation. “Change in Control of the Corporation” shall mean
a change in the ownership of the Bank or the Corporation, a change in the effective control of the
Bank or the Corporation or a change in the ownership of a substantial portion of the assets of the
Bank or the Corporation as provided under Section 409A of the Code and the regulations thereunder.

     (d) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

     (e) Date of Termination. “Date of Termination” shall mean (i) if the Executive’s employment
is terminated for Cause, the date specified in the Notice of Termination, and (ii) if the
Executive’s employment is terminated for any other reason, the date on which a Notice of
Termination is given or as specified in such Notice.

     (f) Disability. “Disability” shall mean the Executive (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the Bank.

     (g) Good Reason. Termination by the Executive of the Executive’s employment for “Good
Reason” shall mean termination by the Executive following a Change in Control of the Corporation
based on:

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

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

     (h) IRS. IRS shall mean the Internal Revenue Service.

     (i) Notice of Termination. Any purported termination of the Executive’s employment by the
Bank for any reason, including without limitation for Cause, Disability or Retirement, or by the
Executive for any reason, including without limitation for Good Reason, shall be communicated by a
written “Notice of Termination” to the other party hereto. For purposes of this Agreement, a
“Notice of Termination” shall mean a dated notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s employment under the
provision so indicated, (iii) specifies a Date of Termination, which shall be not less that thirty
(30) nor more that ninety (90) days after such Notice of Termination is given, except in the case
of the Bank’s termination of Executive’s employment for Cause; and (iv) is given in the manner
specified in Section 8 hereof.

     (j) Retirement. Termination by the Bank’s of the Executive’s employment based on “Retirement”
shall mean voluntary termination by the Employee in accordance with the Bank’s or the Corporation’s
retirement policies, including early retirement, generally applicable to their salaried employees.

     2. Benefits Upon Termination. If the Executive’s employment by the Employers shall be
terminated within the two (2) year period subsequent to a Change in Control of the Corporation by
(i) the Bank for other than Cause, Disability, Retirement or the Executive’s death (ii) the
Executive for Good Reason or (iii) the Executive for any reason within the first sixty (60) days
following the one year anniversary of the Change in Control of the Corporation, then the Bank
shall:

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     (a) pay to the Executive, in twenty-four (24) equal monthly installments beginning with the
first business day of the month following the Date of Termination, a cash severance amount equal to
two (2) times the Executive’s Annual Compensation; and

     (b) maintain and provide for a period ending at the earlier of (i) twelve (12) months from the
Date of Termination or (ii) the date of the Executive’s full-time employment by another employer
(provided that the Executive is entitled under the terms of such employment to benefits
substantially similar to those described in this subparagraph (b)), at no cost to the Executive,
the Executive’s continued participation in all group insurance, life insurance, health and accident
insurance, disability insurance and other employee benefit plans, programs and arrangements offered
by the Employers in which the Executive was entitled to participate immediately prior to the Date
of Termination (excluding (x) any additional contributions under any of the Bank’s or the
Corporation’s qualified defined contribution or defined benefit plans, (y) stock option plans or
restricted stock plans of the Corporation and (z) cash incentive compensation included in Annual
Compensation), provided that in the event that the Executive’s participation in any plan, program
or arrangement as provided in this subparagraph (b) is barred, or during such period any such plan,
program or arrangement is discontinued or the benefits thereunder are materially reduced, the
Employers shall arrange to provide the Executive with either (A) benefits substantially similar to
those which the Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination or (A) a cash payment equal to the then current
monthly cost of benefits multiplied by the number of whole months remaining in the period during
which benefits are required to be provided under the terms of this subparagraph (b); provided
further, however, that if the provision of any of the benefits covered by this Section 2(b) would
trigger the 20% tax and interest penalties under Section 409A of the Code, then the benefit(s) that
would trigger such tax and interest penalties shall not be provided (collectively, the “Excluded
Benefits”), and in lieu of the Excluded Benefits the Bank shall pay to the Executive, in a lump sum
within 10 business days after such determination, a cash amount equal to the cost to the Bank (or
its successor) of providing the Excluded Benefits.

     3. Limitation of Benefits under Certain Circumstances. If the payments and benefits due
Executive pursuant to Section 2 hereof, either alone or together with other payments and benefits
which the Executive has the right to receive from the Bank or the Corporation, would constitute a
“parachute payment” under Section 280G of the Code, the payments and benefits payable by the Bank
or Corporation pursuant to Section 2 hereof shall be reduced by the amount, if any, which is the
minimum necessary to result in no portion of the payments and benefits payable by the Bank or the
Corporation under Section 2 being non-deductible to the Bank and the Corporation pursuant to
Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. If
the payments and benefits under Section 2 are required to be reduced, any costs assigned to fringe
benefits which are not provided for the full twelve (12) months because the Executive obtains
subsequent employment shall be reduced first. If the Executive receives fringe benefits for the
full 12-month period specified in Section 2(b) above, then any remaining cash severance to be
provided in the 24 monthly installments specified in Section 2(a) above shall be reduced by the
minimum amount necessary so that the present value of all of the payments and benefits are less
than three (3) times the Executive’s “base amount” under Section 280G, starting by reducing the
last scheduled installment in whole or in part, then
the next to last scheduled installment, et cetera. The determination of any

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reduction in the
payments and benefits to be made pursuant to Section 2 shall be based upon the opinion of
independent counsel selected by the Bank and paid by the Bank. Such counsel shall promptly prepare
the foregoing opinion, but in no event later than thirty (30) days from the Date of Termination,
and may use such actuaries as such counsel deems necessary or advisable for the purpose. Nothing
contained herein shall result in a reduction of any payments or benefits to which the Executive may
be entitled upon termination of employment under any circumstances other than as specified in this
Section 3, or a reduction in the payments and benefits specified in Section 2 below zero.

     4. Mitigation; Exclusivity of Benefits.

     (a) The Executive shall not be required to mitigate the amount of any benefits hereunder by
seeking other employment or otherwise, nor, except as otherwise provided herein, shall the amount
of any such benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise.

     (b) The specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of employment with the Bank
pursuant to employee benefits plans of the Bank or the Corporation or otherwise.

     5. Withholding. All payments required to be made by the Bank hereunder to the Executive
shall be subject to the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Bank may reasonably determine should be withheld pursuant to any applicable law
or regulation.

     6. Severability. If any term, provision, paragraph or section of this Agreement shall be
determined by a court of competent jurisdiction to be invalid or unenforceable for any reason, such
determination shall not effect the remaining terms, provisions or paragraphs or sections of this
Agreement which shall continue to be given full force and effect. Should any court of competent
jurisdiction find any term, provision, paragraph or section of this Agreement invalid or
unenforceable, or enforceable only in restricted form, then any such finding shall apply only to
the jurisdiction of such Court and shall not serve to alter or amend this Agreement in any other
jurisdiction.

     7. Assignability. The Bank may assign this Agreement and its rights and obligations
hereunder in whole, but not in part, to any corporation, bank or other entity with or into which
the Bank or the Corporation may hereafter merge or consolidate or to which the Bank or the
Corporation may transfer all or substantially all of their assets, if in any such case said
corporation, bank or other entity shall by operation of laws or expressly in writing assume all
obligations of the Bank hereunder as fully as if it had been originally made a party hereto, but
may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may
not assign or transfer this Agreement or any rights or obligations hereunder.

     8. Notice. For the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have

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

	 	 	 	 	 	 	 
	 

	 	To the Bank:
	 	President
	 	 
	 

	 	 	 	Laurel Savings Bank.	 	 
	 

	 	 	 	2724 Harts Run Road	 	 
	 

	 	 	 	Allison Park, Pennsylvania 15101	 	 
	 
	 	 	 	 	 	 
	 

	 	To the Executive:
	 	Robert A. Stephens	 	 
	 

	 	 	 	At the address last appearing	 	 
	 

	 	 	 	On the records of the Bank	 	 

     9. Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by the Executive and
such officer or officers as may be specifically designated by the Board of Directors of the Bank to
sign on its behalf, except as set forth below. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. In addition,
notwithstanding anything in this Agreement to the contrary, the Bank may amend in good faith any
terms of this Agreement, including retroactively, in order to comply with Section 409A of the Code.
In no event shall the Corporation or the Bank be liable for any taxes or interest penalties
incurred by the Executive under Section 409A of the Code.

     10. Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the United States where applicable and otherwise by the
substantive laws of the Commonwealth of Pennsylvania. Any actions brought with respect to this
Agreement or performance of services hereunder may be brought only in the state or federal courts
of Allegheny County, Pennsylvania, and the parties consent to the jurisdiction and venue therein.

     11. Nature of Employment and Obligations.

     (a) Nothing contained herein shall be deemed to create other than a terminable at will
employment relationship between the Bank and the Executive, and the Bank may terminate the
Executive’s employment at any time, subject to providing any payments specified herein in
accordance with the terms hereof.

     (b) Nothing contained herein shall create or require the Bank to create a trust of any kind to
fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Bank hereunder, such right shall be no greater than the right of
any unsecured general creditor of the Bank.

     12. Term of Agreement. The term of this Agreement shall be for two (2) years, commencing as
of July 1, 2003 (the “Effective Date”). Commencing on the first anniversary of the Effective Date,
the term of this Agreement shall extend for an additional year on each annual

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anniversary of the
Effective Date of this Agreement until such time as the Board of Trustees of the Bank or the
Executive give notice in accordance with the terms of Section 8 hereof of its or his election,
respectively, not to extend the term of this Agreement. As a consequence, subsequent to the first
anniversary of the Effective Date, the remaining term of this Agreement will be between one (1) two
and two (2) years. Such written notice of the election not to extend must be given not less than
thirty (30) days prior to any such anniversary date. If any party gives timely notice that the
term will not be extended as of any annual anniversary date, then this Agreement shall terminate at
the conclusion of its remaining term. References herein to the term of this Agreement shall refer
both to the initial term and successive terms.

     13. Headings. The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.

     14. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     15. Regulatory Prohibition. Notwithstanding any other provision of this Agreement to the
contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, are subject
to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act
(12 U.S.C. §1828(k)) and any regulations promulgated thereunder, including 12 C.F.R. Part 359.

     16. Entire Agreement. This Agreement embodies the entire agreement between the Bank and the
Executive with respect to the matters agreed to herein. All prior agreements, if any, between the
Bank and the Executive with respect to the matters agreed to herein are hereby superseded and shall
have no force or effect.

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

	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	LAUREL SAVINGS BANK:	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ John A. Howard

	 	 	 	By:
	 	/s/ Edwin R. Maus	 	 
	 

	 	 	 	 	 	 	 	 
	John A. Howard, Jr., Secretary

	 	 	 	 	 	Edwin R. Maus	 	 
	 

	 	 	 	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Witness:	 	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ John A. Howard

	 	 	 	By:
	 	Robert A. Stephens	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Robert A. Stephens	 	 

8exv10w4

 

Exhibit
10.4

LAUREL SAVINGS BANK

AMENDED AND RESTATED SUPPLEMENTAL

EXECUTIVE RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED AGREEMENT (this “Agreement”) is made effective the
20th day of July 2006 (the “Effective Date”), by and between Laurel Savings Bank
(the “Bank”), a state-chartered savings bank located in Allison Park, Pennsylvania,
and ___(the “Executive”), intending to be legally bound hereby.

INTRODUCTION

     The Bank and the Executive previously entered into a certain Supplemental Executive Retirement
Plan Agreement effective as of January 1, 2004 (the “Prior Agreement”). This Agreement amends and
restates the Prior Agreement in its entirety as hereinafter set forth in order to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
including the guidance issued to date by the Internal Revenue Service (the “IRS”) and the proposed
regulations issued by the IRS in the fall of 2005, with none of the benefits payable under this
Agreement to be deemed grandfathered for purposes of Section 409A of the Code.

     The purpose of this Agreement is to provide specified benefits to the Executive, a member of a
select group of management or highly compensated employees who contribute materially to the
continued growth, development and future business success of the Bank. This Agreement shall be
unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”).

     To encourage the Executive to remain an employee of the Bank, the Bank is willing to provide
supplemental retirement benefits to the Executive. The Bank will pay the benefits from its general
assets.

AGREEMENT

     The Bank and the Executive agree as follows:

Article 1

Definitions

     Whenever used in this Agreement, the following words and phrases shall have the meanings
specified:

     1.1 “Change in Control” means a change in the ownership of the Bank or the Corporation, a
change in the effective control of the Bank or the Corporation or a change in the

 

 

ownership of a substantial portion of the assets of the Bank or the Corporation as provided
under Section 409A of the Code and the regulations thereunder.

     1.2 “Corporation” means Laurel Capital Group, Inc.

     1.3 “Disability” means the Executive (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than three months under
an accident and health plan covering employees of the Bank.

     1.4 “Early Termination” means the Termination of Employment before Normal Retirement Age for
reasons other than death, Disability, Termination for Cause or following a Change of Control.

     1.5 “Early Termination Date” means the month, day and year in which Early Termination occurs.

     1.6 “Normal Retirement Age” means the Executive’s attainment of age 70 and 1/2.

     1.7 “Normal Retirement Date” means the later of the Normal Retirement Age or Separation from
Service.

     1.8 “Plan Year” means each twelve-month period commencing with the Effective Date of this
Agreement.

     1.9 “Separation from Service” shall mean separation from service within the meaning of Section
409A of the Code and the regulations thereunder.

     1.10 “Termination for Cause” has the meaning set forth in Section 5.1 hereof.

     1.11 “Termination of Employment” means a Separation from Service from the Bank for any reason,
voluntary or involuntary, other than by reason of a leave of absence approved by the Bank.

Article 2

Retirement Benefits

     2.1 Normal Retirement Benefit. Upon Termination of Employment on or after the Normal
Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit
described in this Section 2.1 in lieu of any other benefit under this Agreement.

     2.1.1 Amount of Benefit. The annual normal retirement benefit under this Section 2.1 is
$___ (___thousand dollars). [$60,000 for Mr. Maus; $48,000 for Mr. Howard]

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     2.1.2 Payment of Benefit. The Bank shall pay the annual normal retirement benefit to the
Executive each year for a period of 15 years. The annual benefit shall be paid in equal
monthly installments commencing the first day of the month following the lapse of six months
after the Executive’s Normal Retirement Date and continuing for the 179 months thereafter,
resulting in a total of 180 payments.

     2.2 Early Termination Benefit. Upon Early Termination, the Bank shall pay to the Executive
the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement.

     2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination
Annual Benefit set forth in Schedule A for the Plan Year ended immediately prior to the Early
Termination Date (except if termination occurs during the first Plan Year, the benefit in the
amount set forth for Plan Year 1 in Schedule A hereto).

     2.2.2 Payment of Benefit. The Bank shall pay the annual Early Termination benefit to the
Executive each year for a period of 15 years. The annual benefit shall be paid in equal
monthly installments commencing the first day of the month following the lapse of six months
after Termination of Employment and continuing for the 179 months thereafter, resulting in a
total of 180 payments.

     2.3 Disability Benefit. If the Executive terminates employment due to Disability prior to
Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section
2.3 in lieu of any other benefit under this Agreement.

     2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the annual Disability
benefit set forth in Schedule A for the Plan Year ended immediately prior to the date on which
the Termination of Employment occurs (except if termination occurs during the first Plan Year,
the benefit is the amount set forth for Plan Year 1 in Schedule A hereto).

     2.3.2 Payment of Benefit. The Bank shall pay the annual Disability benefit to the
Executive each year for a period of 15 years in equal monthly installments payable on the
first day of each month commencing on the later of (a) the first day of the month immediately
following the Executive’s Normal Retirement Date or (b) the first day of the month following
the lapse of six months after Termination of Service, and continuing for the 179 months
thereafter, resulting in a total of 180 payments.

     2.4 Change in Control Benefit. Upon a Change in Control, the Bank shall pay to the Executive
the benefit described in this Section 2.4 in lieu of any other benefit under this Agreement.

     2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the normal retirement
benefit set forth in Section 2.1.1.

     2.4.2 Payment of Benefit. The Bank shall pay the annual normal retirement benefit to the
Executive each year for a period of 15 years. The annual benefit shall be paid in equal
monthly installments commencing the first day of the month immediately following the

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Normal Retirement Date and continuing for the 179 months thereafter, resulting in a total
of 180 payments; provided, however, that if this Agreement is terminated within 30 days prior
to a Change in Control pursuant to the second sentence of Article 7 hereof, then the Bank
shall pay to the Executive as of the date of the Change in Control a lump sum cash amount
equal to the present value of the foregoing 180 monthly payments, with the present value
calculated using a discount rate equal to 120% of the applicable federal rate (determined
under Section 1274(d) of the Code) as published by the IRS for the month in which the Change
in Control occurs.

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

Article 3

Death Benefits

     3.1 Death During Active Service. If the Executive dies while in the active service of the
Bank, the Bank shall pay to the Executive’s beneficiary the benefit described in this Section 3.1.
This benefit shall be paid in lieu of the benefits provided under Article 2.

     3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the Normal Retirement
Benefit set forth in Section 2.1.1.

     3.1.2 Payment of Benefit. The Bank shall pay the annual death benefit to the Executive’s
beneficiary each year for a period of 15 years. The annual benefit shall be paid in equal
monthly installments commencing within 90 days of the date on which the Executive’s death
certificate is received by the Bank and continuing for the 179 months thereafter, resulting in
a total of 180 payments.

     3.2 Death During Period in Which Benefits Being Paid. If the Executive dies after any benefit
payments have commenced under this Agreement but before receiving all such payments, the Bank shall
pay the remaining benefits to the Executive’s beneficiary at the same time and in the same amounts
they would have been paid to the Executive had the Executive survived.

     3.3 Death Following Termination of Employment But Before Retirement Benefits Commence. If the
Executive is entitled to benefits under this Agreement, but dies prior to receiving said benefits,
the Bank shall pay to the Executive’s beneficiary the same benefits, in the same manner, that would
have been paid to the Executive had the Executive survived; however, said benefit payments will
commence within 90 days of receipt by the Bank of the Executive’s death certificate.

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

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Article 4

Beneficiaries

     4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written
designation with the Bank. The Executive may revoke or modify the designation at any time by
filing a new designation. However, designations and revocation or modification of designations
shall only be effective if they are filed with the Bank as a written document, signed by the
Executive and received by the Bank during the Executive’s lifetime. The Executive’s beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or
if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the
Executive dies without a valid beneficiary designation, all payments shall be made to the
Executive’s estate. Upon commencement of any payments due hereunder to the Executive’s beneficiary
in accordance with the terms of this Agreement, the beneficiary shall designate his or her
beneficiary by filing a written designation with the Bank. In the event the Executive’s
beneficiary dies after commencement of benefits due hereunder to the beneficiary but prior to
receiving all the payments due thereto under the terms hereof without a valid beneficiary
designation, all payments shall be made to the beneficiary’s estate,

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

Article 5

General Limitations

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

     5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary,
the Bank shall not pay any benefit under this Agreement, if the Bank terminates the Executive’s
employment for cause. Termination of the Executive’s employment for “Cause” shall mean termination
because of personal dishonesty by the Executive in the performance of his duties which results in
demonstrable material injury to the Bank, willful misconduct by the Executive which remains uncured
15 days following the giving of written notice thereof to the Executive, breach by the Executive of
a fiduciary duty to the Bank involving personal profit, intentional failure to perform stated
duties following the giving of written notice thereof to the Executive, 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 material provision of the Agreement. For purposes
of this paragraph, no act or failure to act on the Executive’s part shall be considered “willful”
unless done, or omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive’s action or omission was in the best interest of the Bank.

     5.2 Removal. Notwithstanding any provision of this Agreement to the contrary, the Bank shall
not pay any benefit under this Agreement if the Executive is subject to a final removal or

5

 

prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of
the Federal Deposit Insurance Act.

     5.3 Competition after Termination of Employment. The Executive shall forfeit his right to any
further benefits hereunder if the Executive, without the prior written consent of the Bank,
violates any of the following described restrictive covenants.

     5.3.1 Non-compete Provision. The Executive shall not, for a period of 12 months
following termination of employment, directly or indirectly, either as an individual or as a
proprietor, stockholder, partner, officer, trustee, director, employee, agent, consultant or
independent contractor of any individual, partnership, corporation or other entity (excluding
an ownership interest of five percent (5%) or less in the stock of a publicly-traded company):

	 	(i)	 	become employed by, participate in, or be connected in any manner
with the ownership, management, operation or control of any bank, savings and
loan or other similar financial institution if the Executive’s responsibilities
will include providing banking or other financial services within the
twenty-five (25) mile radius of the main office maintained by the Bank as of the
date of the termination of the Executive’s employment;
	 
	 	(ii)	 	participate in any way in hiring or otherwise engaging, or
assisting any other person or entity in hiring or otherwise engaging, on a
temporary, part-time or permanent basis, any individual who was employed by the
Bank as of the date of termination of the Executive’s employment;
	 
	 	(iii)	 	sell, offer to sell, provide banking or other financial
services, assist any other person in selling or providing banking or other
financial services, or solicit or otherwise compete for, either directly or
indirectly, any orders, contracts, or accounts for services of a kind or nature
like or substantially similar to the financial services performed or financial
products sold by the Bank (the preceding hereinafter referred to as “Services”),
to or from any person or entity from whom the Executive or the Bank, to the
knowledge of the Executive, provided banking or other financial services, sold,
offered to sell or solicited orders, contracts or accounts for Services during
the three (3) year period immediately prior to the termination of the
Executive’s employment; or
	 
	 	(iv)	 	divulge, disclose, or communicate to others in any manner
whatsoever, any nonpublic confidential information of the Corporation or the
Bank or any of its subsidiaries, including, but not limited to, the names and
addresses of customers or prospective customers, of the Bank or any of its
subsidiaries, as they may have existed from time to time, work performed or
services rendered for any customer, any method and/or procedures relating to
projects or other work developed for the Bank or any of its subsidiaries,
earnings or other information concerning the Corporation or the Bank or any of
its subsidiaries. The restrictions contained in this subparagraph (iv) apply to
all nonpublic

6

 

	 	 	 	confidential information regarding the Corporation or the Bank, regardless of
the source who provided or compiled such information. Notwithstanding anything
to the contrary, the restriction set forth in this paragraph shall not apply to
any information that becomes known to the general public from sources other
than the Executive.

     5.3.2 Judicial Remedies. In the event of a breach or threatened breach by the Executive
of any provision of these restrictions, the Executive recognizes the substantial and immediate
harm that a breach or threatened breach will impose upon the Bank, and further recognizes that
in such event monetary damages may be inadequate to fully protect the Bank. Accordingly, in
the event of a breach or threatened breach of this Agreement, the Executive consents to the
Bank’s entitlement to such ex parte, preliminary, interlocutory, temporary or
permanent injunctive, or any other equitable relief, protecting and fully enforcing the Bank’s
rights hereunder and preventing the Executive from further breaching any of his obligations
set forth herein. The Executive expressly waives any requirement, based on any statute, rule
of procedure, or other source, that the Bank post a bond as a condition of obtaining any of
the above-described remedies. Nothing herein shall be construed as prohibiting the Bank from
pursuing any other remedies available to the Bank at law or in equity for such breach or
threatened breach, including the recovery of damages from the Executive. The Executive
expressly acknowledges and agrees that: (i) the restrictions set forth in Section 5.3.1 hereof
are reasonable in terms of scope, duration, geographic area and otherwise, (ii) the
protections afforded the Bank in Section 5.3.1 hereof are necessary to protect its legitimate
business interests, (iii) the restrictions set forth in Section 5.3.1 hereof will not be
materially adverse to the Executive’s employment with the Bank, and (iv) his agreement to
observe such restrictions forms a material part of the consideration for this Agreement.

     5.3.3 Overbreadth of Restrictive Covenant. It is the intention of the parties that if
any restrictive covenant in this Agreement is determined by a court of competent jurisdiction
to be overly broad, then the court should enforce such restrictive covenant to the maximum
extent permitted under the law as to area, scope, breadth and duration.

     5.3.4 Applicability in Change in Control. The non-compete provision detailed in Section
5.3.1 hereof shall not be applicable following a Change in Control.

     5.4 Suicide or Misstatement. No benefits shall be payable if the Executive commits suicide
within two years after the date of this Agreement, or if the insurance company denies coverage for
material misstatements of fact made by the Executive on any application for life insurance
purchased by the Bank or for any other reason. The Bank shall have no liability to the Executive
for any denial of coverage by the insurance company.

     5.5 Severability. A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other provision hereof.

7

 

Article 6

Claims and Review Procedures

     6.1 Claims Procedure. An Executive or beneficiary (“claimant”) who has not received benefits
under the Agreement that he or she believes should be paid shall make a claim for such benefits as
follows:

     6.1.1 Initiation – Written Claim. The claimant initiates a claim by submitting to the
Bank a written claim for the benefits.

     6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days
after receiving the claim. If the Bank determines that special circumstances require
additional time for processing the claim, the Bank can extend the response period by an
additional 90 days by notifying the claimant in writing, prior to the end of the initial
90-day period, that an additional period is required. The notice of extension must set forth
the special circumstances and the date by which the Bank expects to render its decision.

     6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall
notify the claimant in writing of such denial. The Bank shall write the notification in a
manner calculated to be understood by the claimant. The notification shall set forth:

     6.1.3.1 The specific reasons for the denial;

     6.1.3.2 A reference to the specific provisions of the Agreement on which the
denial is based;

     6.1.3.3 A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed;

     6.1.3.4 An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures; and

     6.1.3.5 A statement of the claimant’s right to bring a civil action under Section
502(a) of ERISA following an adverse benefit determination on review.

     6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the
opportunity for a full and fair review by the Bank of the denial, as follows:

     6.2.1 Initiation – Written Request. To initiate the review, the claimant, within 60 days
after receiving the Bank’s notice of denial, must file with the Bank a written request for
review.

     6.2.2 Additional Submissions – Information Access. The claimant shall then have the
opportunity to submit written comments, documents, records and other information relating to the
claim. The Bank shall also provide the claimant, upon request and free of charge, reasonable

8

 

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.

     6.2.3 Considerations on Review. In considering the review, the Bank shall take into account
all materials and information the claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit determination.

     6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60
days after receiving the request for review. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day
period, that an additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Bank expects to render its decision.

     6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on
review. The Bank shall write the notification in a manner calculated to be understood by the
claimant. If the decision is a denial, the notification shall set forth:

     6.2.5.1 The specific reasons for the denial;

     6.2.5.2 A reference to the specific provisions of the Agreement on which the denial
is based;

     6.2.5.3 A statement that the claimant is entitled to receive, upon request 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; and

     6.2.5.4 A statement of the claimant’s right to bring a civil action under Section
502(a) of ERISA.

Article 7

Amendments and Termination

     This Agreement may be amended or terminated only by a written agreement signed by the Bank and
the Executive, except as provided by the provisions of Article 5 and except as set forth below.
This Agreement may be terminated within the 30 days preceding a Change in Control if (1) all
substantially similar arrangements sponsored by the Bank and the Corporation are terminated, and
(2) the Executive and all participants under the substantially similar arrangements receive all of
their benefits under the terminated arrangements within 12 months of the date of termination of the
arrangements. In addition, notwithstanding anything in this Agreement to the contrary, the Bank
may amend in good faith any terms of this Agreement, including retroactively, in order to comply
with Section 409A of the Code. In no event shall the Corporation or the Bank be liable for any
taxes or interest penalties incurred by the Executive under Section 409A of the Code.

9

 

Article 8

Miscellaneous

     8.1 Binding Effect. This Agreement shall bind the Executive and the Bank, and their
beneficiaries, survivors, executors, successors, administrators and transferees.

     8.2 No Guarantee of Employment. This Agreement is not an employment policy or contract. It
does not give the Executive the right to remain an employee of the Bank, nor does it interfere with
the Bank’s right to terminate the Executive’s employment. It also neither requires the Executive
to remain in employment with the Bank nor interferes with the Executive’s right to terminate his
employment with the Bank at any time.

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

     8.4 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from
the benefits provided under this Agreement.

     8.5 Applicable Law. This Agreement and all rights hereunder shall be governed by the laws of
the Commonwealth of Pennsylvania, except to the extent preempted by the laws of the United States
of America.

     8.6 Reorganization. The Bank shall not merge or consolidate into or with another company, or
reorganize, or sell substantially all of its assets to another company, firm, or person unless such
succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of
the Bank under this Agreement. Upon the occurrence of such event, the term “Bank” as used in this
Agreement shall be deemed to refer to the successor or survivor company.

     8.7 Unfunded Arrangement. The Executive and the beneficiary thereof are general unsecured
creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the
mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Bank to
which the Executive and beneficiary have no preferred or secured claim.

     8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and
the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of
this Agreement other than those specifically set forth herein.

     8.9 Administrator. The Bank shall be the administrator of this Agreement. The Bank may
delegate to others certain aspects of the management and operational responsibilities including the
service of advisors and the delegation of ministerial duties to qualified individuals.

10

 

     8.10 Administration. The Bank shall have powers which are necessary to administer this
Agreement, including but not limited to:

     8.10.1 Interpreting the provisions of the Agreement;

     8.10.2 Establishing and revising the method of accounting for the Agreement;

     8.10.3 Maintaining a record of benefit payments;

     8.10.4 Establishing rules and prescribing any forms necessary or desirable to administer
the Agreement; and

     8.10.5 Delegate any of the foregoing powers to any person or persons or committee or
committees.

     8.11 Right of Offset. The Bank shall have the right to offset the benefits against any unpaid
obligation the Executive may have with the Bank.

     8.12 Notice. Any notice, consent or demand required or permitted to be given under the
provisions of this Agreement by one party to another shall be in writing, shall be signed by the
party giving or making the same, and may be given either by delivering the same to such other party
personally, or by mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his or her last known address as shown on the records of the Bank. The date of
such mailing shall be deemed the date of such mailed notice, consent or demand.

     IN WITNESS WHEREOF, the Executive and the Bank have signed this Agreement.

	 	 	 	 	 	 	 	 	 
	EXECUTIVE:	 	 	 	LAUREL SAVINGS BANK:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 

     By execution hereof, Laurel Capital Group, Inc. consents to and agrees to be bound
by the terms and conditions of this Agreement.

	 	 	 	 	 	 	 
	ATTEST:	 	 	 	LAUREL CAPITAL GROUP, INC.:
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

11

 

BENEFICIARY DESIGNATION

LAUREL SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

___________

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

	 	 	 
	Primary:
	 	 
	 

	 	 
	 
	 	 
	 
	 
	 	 
	Contingent:
	 	 
	 

	 	 
	 
	 	 
	 

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

I understand that I may change these beneficiary designations by filing a new written designation
with the Bank. I further understand that the designations will be automatically revoked if the
beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is
subsequently dissolved.

Signature ______________________________

Date __________________________________

Received by the Bank this ______ day of _________________, 200_.

By ____________________________________

Title __________________________________

12

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