HARBOR FEDERAL BANCORP, INC.
SEVERANCE AGREEMENT WITH XXXXXXX X. XXXXX
____________________
1998 AMENDMENT
____________________
WHEREAS, Harbor Federal Bancorp, Inc. (the "Company")
entered into a severance agreement (the "Agreement") with
Xxxxxxx X. Xxxxx (the "Employee") on August 11, 1994; and
WHEREAS, the Company's Board of Directors and the Employee
have determined that it is in their respective best interests to
amend the Agreement to update its change-in-control provisions.
NOW, THEREFORE, effective March 30, 1998, the Agreement
shall be amended as follows, pursuant to Section 7 thereof:
1. The first paragraph of Section 1(a) of the Agreement
shall be amended in its entirety to provide as follows with
italics herein highlighting new text:
(a) Notwithstanding any provision herein to the
contrary, the Employee shall be entitled to collect the
severance benefits set forth in this Section in the event
that (1) the Employee's employment under this Agreement is
terminated by the Company, without the Employee's prior
written consent and for a reason other than Just Cause, in
connection with or within twenty-four (24) months after any
change in control of Harbor Federal Savings Bank (the
"Bank") or the Company, or (2) the Employee voluntarily
terminates employment for any reason within the 30-day
period beginning on the date of a change in control. The
Employee shall be paid an amount equal to the difference
between (i) the product of 2.99 times his "base amount" as
defined in Section 280G(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Code") and regulations
promulgated thereunder, and (ii) the sum of any other
parachute payments (as defined under Section 280G(b)(2) of
the Code) that the Employee receives on account of the
change in control.
Any severance benefits that are payable under this
Agreement after the closing date of a change in control of
the Bank or the Company shall be paid in the manner
selected by the Employee in a duly executed irrevocable
written election (the "Election Form"), attached hereto as
Exhibit "A"; provided that such an election will be honored
and given effect only if it is properly made and delivered
to the Company more than 90 days before said closing date.
Present value determinations and interest accruals on
present value sums that are paid in installments over a
fixed period of years shall be calculated at a rate equal
to 120% of the applicable federal rate, compounded
semiannually, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
1998 Amendment to
Severance Agreement
Page 2
The Employee may specify on the Election Form the
manner of payment to his beneficiary, and may at any time
or from time to time change the identity or manner of
payment to his beneficiary.
2. Section 1 of the Agreement shall be further amended by
adding subsection (d) immediately at the end thereof to provide
as follows:
(d) If the Employee's employment with the Company
terminates for any reason (other than Just Cause) on or
after a change in control, the Employee shall be entitled
to purchase from Company or its successor, at the
Employee's own expense which shall not exceed applicable
COBRA rates, family medical insurance under any group
health plan that the acquiring company maintains for its
employees. This right shall be (i) in addition to, and not
in lieu of, any other rights that the Employee has under
this Agreement and (ii) shall continue for five years after
the change in control.
3. Nothing contained herein shall be held to alter, vary
or affect any of the terms, provisions, or conditions of the
Agreement, other than as stated above.
WHEREFORE, on this 30th day of March, 1998, the Company
hereby executes this 1998 Amendment to the Agreement.
HARBOR FEDERAL BANCORP, INC.
Witnessed by:
/s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxxx
--------------------- -------------------------
Its Chairman of the Board
EMPLOYEE
Witnessed by:
/s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxxx X. Xxxxx
--------------------- -------------------------
HARBOR FEDERAL SAVINGS BANK
SEVERANCE AGREEMENT WITH XXXXXXX X. XXXXX
____________________
1998 AMENDMENT
____________________
WHEREAS, Harbor Federal Savings Bank (the "Bank") entered
into a severance agreement (the "Agreement") with Xxxxxxx X.
Xxxxx (the "Employee") on August 11, 1994; and
WHEREAS, the Bank and the Employee have determined that it
is in their respective best interests to amend the Agreement to
update its change-in-control provisions.
NOW, THEREFORE, the Agreement shall be amended as follows,
pursuant to Section 7 thereof:
1. The first paragraph of Section 1(a) of the Agreement
shall be amended in its entirety to provide as follows with
italics herein highlighting new text:
(a) Notwithstanding any provision herein to the
contrary, the Employee shall be entitled to collect the
severance benefits set forth in this Section in the event
that (1) the Employee's employment under this Agreement is
terminated by the Bank, without the Employee's prior
written consent and for a reason other than Just Cause, in
connection with or within twenty-four (24) months after any
change in control of the Bank or Harbor Federal Bancorp,
Inc. (the "Company"), or (2) the Employee voluntarily
terminates employment for any reason within the 30-day
period beginning on the date of a change in control. The
Employee shall be paid an amount equal to the difference
between (i) the product of 2.99 times his "base amount" as
defined in Section 280G(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Code") and regulations
promulgated thereunder, and (ii) the sum of any other
parachute payments (as defined under Section 280G(b)(2) of
the Code) that the Employee receives on account of the
change in control.
Any severance benefits that are payable under this
Agreement after the closing date of a change in control of
the Bank or the Company shall be paid in the manner
selected by the Employee in a duly executed irrevocable
written election (the "Election Form"), attached hereto as
Exhibit "A"; provided that such an election will be honored
and given effect only if it is properly made and delivered
to the Bank more than 90 days before said closing date.
Present value determinations and interest accruals on
present value sums that are paid in installments over a
fixed period of years shall be calculated at a rate equal
to 120% of the applicable federal rate, compounded
semiannually, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
1998 Amendment to Severance Agreement
Page 2
The Employee may specify on the Election Form the
manner of payment to his beneficiary, and may at any time
or from time to time change the identity or manner of
payment to his beneficiary.
2. Section 1(d) of the Agreement shall be amended in its
entirety to provide as follows, with italics herein highlighting
new text:
(d) Funding of Grantor Trust. Not later than three
business days after a change in control, the Bank shall (a)
deposit, in the Harbor Federal Savings Bank Grantor Trust
(the "Trust"), an amount that the Bank reasonably projects
to be sufficient to fund the payment of all severance
benefits that are or may become payable, pursuant to this
Section, after the closing date of the change in control of
the Bank or the Company, and (b) provide the trustee of the
Trust with a written direction both to hold said amount and
any investment return thereon in a segregated account for
the benefit of the Employee, and to follow the procedures
set forth in the next paragraph as to the payment of such
amounts from the Trust. The provisions of this Section
shall be null and void only if the Executive provides a
written release of all claims under this Agreement.
During the 24-consecutive month period after a change
in control of the Bank or the Company, the Employee may
provide the trustee of the Trust with a written notice
directing the trustee to pay to Employee an amount
designated in the notice as being payable pursuant to this
Agreement. Within three business days after receiving said
notice, the trustee of the Trust shall pay such amount to
the Employee,and coincidentally shall provide the Bank or
its successor with notice of such payment. Upon the
earlier of the Trust's final payment of all amounts due
under the preceding paragraph or the date 24 months after
the change in control of the Bank or the Company, the
trustee of the Trust shall pay to the Bank the entire
balance remaining in the segregated account maintained for
the benefit of the Employee. The Employee shall thereafter
have no further interest in the Trust.
3. Section 1 of the Agreement shall be further amended by
adding subsection (e) immediately at the end thereof to provide
as follows:
(e) If the Employee's employment terminates with the
Bank for any reason other than Just Cause, the Employee
shall be entitled to purchase from the acquiring company,
at the Employee's own expense which shall not exceed
applicable COBRA rates, family medical insurance under any
group health plan that the acquiring company maintains for
its employees. This right shall be (i) in addition to,
and not in lieu of, any other rights that the Employee has
under this Agreement and (ii) shall continue for five years
after the change in control.
4. Nothing contained herein shall be held to alter, vary
or affect any of the terms, provisions, or conditions of the
Agreement, other than as stated above.
1998 Amendment to Severance Agreement
Page 3
WHEREFORE, on this 30th day of March, 1998, the Bank hereby
executes this 1998 Amendment to the Agreement.
HARBOR FEDERAL SAVINGS BANK
Witnessed by:
/s/ Xxxxx Xxxxx By /s/ Xxxxxx X. Xxxxxxxx
--------------------- -------------------------
Its Chairman of the Board
EMPLOYEE
Witnessed by:
/s/ Xxxxx Xxxxx By /s/ Xxxxxxx X. Xxxxx
--------------------- -------------------------
