EXHIBIT 10-5

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN





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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



THE HARBOR BANK OF MARYLAND

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN



THIS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the Agreement) is adopted this 29th day of July, 2004, by and between THE HARBOR BANK OF MARYLAND, a state-chartered commercial bank located in Baltimore, Maryland (the Company), and
TEODORO J. HERNANDEZ (the Executive).



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 Company.
This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), as amended from time to time. The Company will pay the benefits from its general assets.



The Company and the Executive agree as provided herein.



Article 1

Definitions



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



|1.1 | Accrual Balance means the liability that should be accrued by the Company, under Generally Accepted Accounting Principles (GAAP), for the
Companys obligation to the Executive under this Agreement, by applying Accounting Principles Board Opinion Number 12 (APB 12) as amended by Statement of Financial Accounting Standards Number 106 (FAS 106) and the
Discount Rate. Any one of a variety of amortization methods may be used to determine the Accrual Balance. However, once chosen, the method must be consistently applied. The Accrual Balance shall be reported by the Company to the Executive on
Schedule A.
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|1.2 | Beneficiary means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined
pursuant to Article 4.
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|1.3 | Beneficiary Designation Form means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan
Administrator to designate one or more Beneficiaries.
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|1.4 | Change of Control means (a) the transfer of shares of the Companys voting common stock such that one entity or one person acquires (or is
deemed to acquire when applying Section 318 of the Code) more than fifty percent (50%) of the Companys outstanding
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



| | voting common stock followed within twelve months by the Executives Termination of Employment for reasons other than death or retirement; or (b) such
definition of Change of Control hereafter promulgated by the Secretary of the Treasury or other authorized regulatory body, in which case such definition shall supersede any other definition of Change of Control in this Agreement and shall control
the terms of this Agreement.
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|1.5 | Code means the Internal Revenue Code of 1986, as amended.
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|1.6 | Discount Rate means the rate used by the Plan Administrator for determining the Accrual Balance. The initial Discount Rate is six percent (6.0%). However, the
Plan Administrator, in its sole discretion, may adjust the Discount Rate to maintain the rate within reasonable standards according to GAAP.
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|1.7 | Early Termination means the Termination of Employment before Normal Retirement Age for reasons other than death, Termination for Cause, or following a Change of
Control.
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|1.8 | Early Termination Date means the month, day and year in which Early Termination occurs.
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|1.9 | Effective Date means May 1, 2004.
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|1.10 | Normal Retirement Age means the Executives 65thbirthday.
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|1.11 | Normal Retirement Date means the later of the Normal Retirement Age or Termination of Employment.
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|1.12 | Plan Administrator means the plan administrator described in Article 8.
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|1.13 | Plan Year means each twelve-month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective
Date of this Agreement.
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|1.14 | Termination for Cause has that meaning set forth in Article 5.
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|1.15 | Termination of Employment means that the Executive ceases to be employed by the Company for any reason, voluntary or involuntary, other than by reason of a leave
of absence approved by the Company.
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Article 2

Benefits During Lifetime



|2.1 | Normal Retirement Benefit. Upon Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Company shall pay to the
Executive
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



| | the benefit described in this Section 2.1 in lieu of any other benefit under this Article.
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| | 2.1.1 | Amount of Benefit. The annual benefit under this Section 2.1 is Forty Thousand Dollars ($40,000).
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| | 2.1.2 | Payment of Benefit. The Company shall pay the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the
Executives Normal Retirement Date. The annual benefit shall be paid to the Executive for fifteen (15) years.
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|2.2 | Early Termination Benefit. Upon Early Termination, the Company shall pay to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this
Article.
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| | 2.2.1 | Amount of Benefit. The annual benefit under this Section 2.2 is the Early Termination Benefit set forth on Schedule A for the Plan Year during which the Early Termination
Date occurs. This benefit is determined by vesting the Executive in one hundred percent (100%) of the Accrual Balance.
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| | 2.2.2 | Payment of Benefit. The Company shall pay the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following
Normal Retirement Age. The annual benefit shall be paid to the Executive for fifteen (15) years.
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|2.3 | Change of Control Benefit. Upon a Change of Control, followed within twelve (12) months by the Executives Termination of Employment, the Company shall pay to the
Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.
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| | 2.3.1 | Amount of Benefit. The annual benefit under this Section 2.3 is the Normal Retirement Benefit amount described in Section 2.1.1.
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| | 2.3.2 | Payment of Benefit. The Company shall pay the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following
Normal Retirement Age. The annual benefit shall be paid to the Executive for fifteen (15) years.
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| | 2.3.3 | Parachute Payments. Notwithstanding any provision of this Agreement to the contrary, to the extent the amount or timing of any payment(s), if made, under this Section 2.3
would be treated as an excess parachute payment under Section 280G of the Code, the Company shall reduce or delay the payment(s) under this Section 2.3 to the extent it would not be an excess parachute payment.
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



Article 3

Death Benefits



|3.1 | Death During Active Service. If the Executive dies while in the active service of the Company, the Company shall pay to the Beneficiary the benefit described in this Section
3.1. This benefit shall be paid in lieu of the benefits under Article 2.
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| | 3.1.1 | Amount of Benefit. The benefit under this Section 3.1 is Pre-Retirement Death Benefit set forth on Schedule A for the Plan Year during which the Executives death
occurs. This benefit is determined by vesting the Executive in one hundred percent (100%) of the Accrual Balance.
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| | 3.1.2 | Payment of Benefit. The Company shall pay the benefit to the Beneficiary in a lump sum within ninety (90) days following the Executives death .
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|3.2 | Death During Payment of a Benefit. If the Executive dies after any benefit payments have commenced under Article 2 of this Agreement but before receiving all such payments,
the Company shall pay the remaining benefits to the Beneficiary at the same time and in the same amounts they would have been paid to the Executive had the Executive survived.
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|3.3 | Death After Termination of Employment But Before Payment of a Benefit Commences. If the Executive is entitled to any benefit payments under Article 2 of this Agreement, but
dies prior to the commencement of said benefit payments, the Company shall pay the same benefit payments to the Beneficiary that the Executive was entitled to prior to death except that the benefit payments shall commence on the first day of the
month following the date of the Executives death.
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Article 4

Beneficiaries



|4.1 | Beneficiary Designation. The Executive shall have the right, at any time, to designate a Beneficiary(ies) to receive any benefits payable under this Agreement upon the death
of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under any other benefit plan of the Company in which the Executive participates.
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|4.2 | Beneficiary Designation: Change. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to
the Plan Administrator or its designated agent. 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. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrators rules and procedures, as in effect
from time to time. Upon the
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



| | acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan
Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executives death.
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|4.3 | Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or
its designated agent.
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|4.4 | No Beneficiary Designation. If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the
Executives spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the benefits shall be made to the personal representative of the Executives estate.
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|4.5 | Facility of Payment. If the Plan Administrator determines in its discretion that a benefit is to be paid to a minor, to a person declared incompetent, or to a person
incapable of handling the disposition of that persons property, the Plan Administrator may direct payment of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable
person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Executive and the
Executives Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement for such payment amount.
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Article 5

General Limitations



|5.1 | Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Companys Board
of Directors terminates the Executives employment for:
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| | (a) | Gross negligence or gross neglect of duties to the Company;
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| | (b) | Commission of a felony or of a gross misdemeanor involving moral turpitude;
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| | (c) | Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the Executives employment and resulting in a material
adverse effect on the Company; or
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| | (d) | Issuance of an order for removal of the Executive by the Companys banking regulators.
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|5.2 | Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective
Date. In addition,
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



| | the Company shall not pay any benefit under this Agreement if the Executive has made any material misstatement of fact on any application for life insurance
owned by the Company on the Executives life.
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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:
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| | 6.1.1 | Initiation  Written Claim. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits.
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| | 6.1.2 | Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within 90 days after receiving the claim. If the Plan Administrator determines
that special circumstances require additional time for processing the claim, the Plan Administrator 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 Plan Administrator expects to render its decision.
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| | 6.1.3 | Notice of Decision. If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan
Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:
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(a) The specific reasons for the denial;



(b) A reference to the specific provisions of the Agreement on which the denial is based;



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



(d) An explanation of the
Agreements review procedures and the time limits applicable to such procedures; and



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



|6.2 | Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of
the denial, as follows:
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| | 6.2.1 | Initiation  Written Request. To initiate the review, the claimant, within 60 days after receiving the Plan Administrators notice of denial, must file with the
Plan Administrator a written request for review.
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



| | 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 Plan Administrator shall also provide the claimant, 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.
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| | 6.2.3 | Considerations on Review. In considering the review, the Plan Administrator 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.
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| | 6.2.4 | Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within 60 days after receiving the request for review. If the Plan
Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator 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 Plan Administrator expects to render its decision.
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| | 6.2.5 | Notice of Decision. The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth:
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(a) The specific reasons for the denial;



(b) A reference to the specific provisions of the Agreement on which the denial is based;



(c) 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



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



Article 7

Amendments and Termination



This Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive. Provided, however, if the Companys Board of Directors determines that the Executive is no longer a
member of a select group of management or highly compensated employees, as that phrase applies to ERISA, for reasons other than death



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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



or retirement, the Company may amend or terminate this Agreement. Upon such amendment or termination the Company shall pay benefits to the Executive as if
Early Termination occurred on the date of such amendment or termination, regardless of whether Early Termination actually occurs. Additionally, the Company may also amend this Agreement to conform with written directives to the Company from its
banking regulators.



Article 8

Administration of Agreement



|8.1 | Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator which shall consist of the Board, or such committee or person(s) as the Board shall
appoint. The Executive may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this
Agreement and (ii) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the Agreement.
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|8.2 | Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting
through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Company.
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|8.3 | Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration,
interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. No Executive or Beneficiary shall be deemed to have
any right, vested or nonvested, regarding the continued use of any previously adopted assumptions, including but not limited to the Discount Rate.
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|8.4 | Indemnity of Plan Administrator. The Company shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.
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|8.5 | Company Information. To enable the Plan Administrator to perform its functions, the Company shall supply full and timely information to the Plan Administrator on all matters
relating to the date and circumstances of the retirement, death, or Termination of Employment of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.
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|8.6 | Annual Statement. The Plan Administrator shall provide to the Executive, within 120 days after the end of each Plan Year, a statement setting forth the benefits payable under
this Agreement.
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



Article 9

Miscellaneous



|9.1 | Binding Effect. This Agreement shall bind the Executive and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.
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|9.2 | 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 Company, nor does it
interfere with the Companys right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executives right to terminate employment at any time.
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|9.3 | Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.
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|9.4 | Tax Withholding. The Company shall withhold any taxes that, in its reasonable judgment, are required to be withheld from the benefits provided under this Agreement. The
Executive acknowledges that the Companys sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies).
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|9.5 | Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the State of Maryland, except to the extent preempted by the laws of the United States
of America.
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|9.6 | Unfunded Arrangement. The Executive and Beneficiary are general unsecured creditors of the Company for the payment of benefits under this Agreement. The benefits represent
the mere promise by the Company 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 Company to which the Executive and Beneficiary have no preferred or secured claim.
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|9.7 | Reorganization. The Company 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 Company under this Agreement. Upon the occurrence of such event, the term Company as used in this Agreement shall
be deemed to refer to the successor or survivor company.
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|9.8 | Entire Agreement. This Agreement constitutes the entire agreement between the Company 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.
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|9.9 | Interpretation. Wherever the fulfillment of the intent and purpose of this Agreement
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THE HARBOR BANK OF MARYLAND

Supplemental Executive Retirement Plan



| | requires, and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.
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|9.10 | Alternative Action. In the event it shall become impossible for the Company or the Plan Administrator to perform any act required by this Agreement, the Company or Plan
Administrator may in its discretion perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Company.
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|9.11 | Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions.
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|9.12 | Validity. In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but
this Agreement shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.
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|9.13 | Notice. Any notice or filing required or permitted to be given to the Company or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:
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____________________________

____________________________

____________________________



Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for
registration or certification.



Any notice or filing required
or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Executive.



IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Company have signed this Agreement.



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