Document:

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                                  EXHIBIT 10.20
                          AGREEMENT AND GENERAL RELEASE
                              WITH JOHN W. ATKINSON
<PAGE>

                          AGREEMENT AND GENERAL RELEASE
                              WITH JOHN W. ATKINSON

     This Agreement and General Release ("Agreement") is entered into effective
as of September 7, 2000, by and between WAYPOINT FINANCIAL CORP., a Pennsylvania
stock corporation (the "Company") and the holding company of Waypoint Bank (the
"Bank") and JOHN W. ATKINSON ("Executive").

                                    RECITALS:
                                    ---------

     A. In connection with the Agreement and Plan of Reorganization, as amended,
dated March 27, 2000 (the "Merger Agreement"), by and between Harris Financial,
M.H.C., Harris Financial, Inc., New Harris Financial, Inc. (which has changed
its name to Waypoint Financial Corp.), Harris Savings Bank (which has changed
its name to Waypoint Bank and which shall be referred to herein as the "Bank")
and York Financial Corp. and York Federal Savings and Loan Association, the
parties hereto agreed that Executive would be offered certain benefits,
including but not limited to supplemental pension benefits, health insurance
coverage, a bonus for calendar year 2000, title to the automobile currently
provided to Executive, and the option to convert existing life insurance
coverages maintained by the Bank for Executive to private policy coverages, upon
termination of employment pursuant to the Agreement and General Release in the
form attached hereto as Exhibit 1 (the "Separation Agreement"); and

     B. In connection with the approval of the merger (the "Merger") of York
Financial Corp. ("York Financial") with and into the Company, the Office of
Thrift Supervision ("OTS") stated by Order No. 2000-75, dated August 14, 2000,
that any agreements constituting "employment agreements" with the Bank (but not
the Company) within the meaning of 12 C.F.R. ss.563.39 could not be entered into
without first obtaining the non-objection of the Regional Director of the OTS,
which non-objection has not yet been received; and

     C. The OTS has informed the Bank that the Separation Agreement shall be
deemed to be an employment agreement subject to OTS regulatory review and the
issuance of the non-objection of the Regional Director of the OTS if entered
into by the Bank; and

     D. In consideration of the above and the agreement of the parties under the
Merger Agreement, the Separation Agreement shall be amended effective as of
September 7, 2000, as set forth below.

     For good and valuable consideration, the receipt of which is hereby
acknowledged and based on the mutual covenants and agreements herein contained
and in the Separation Agreement, the parties hereby agree as follows:

     The Separation Agreement is hereby amended to eliminate the Bank as a party
to said Separation Agreement. The Company shall honor all the terms and
conditions of the Separation Agreement and any reference to an obligation of
Harris Savings Bank in the Separation Agreement shall be deemed to be an
obligation of the Company so long as this Agreement remains in effect.

     This Agreement has been executed by a duly authorized officer of the
Company and the Executive, effective as of the date first above written.

     ATTEST:                                   WAYPOINT FINANCIAL CORP.

--------------------------------             -----------------------------------
                                             By:    Charles C. Pearson, Jr.
                                             Title: Chairman and Chief Executive
<PAGE>

                                                     Officer

                                                   WITNESS:
      JOHN W. ATKINSON

--------------------------------             -----------------------------------
                                                     John W. Atkinson
<PAGE>

                          AGREEMENT AND GENERAL RELEASE

     This Retirement Agreement and General Release is made and entered into on
this day of September 7, 2000, by and between Harris Financial, M.H.C., Harris
Financial, Inc., Harris Savings Bank, and New Harris Financial, Inc., its
successors, assigns, subsidiaries, and affiliates (collectively "Harris") and
John W. Atkinson ("Executive").

     WHEREAS, Executive is currently employed by Harris as Executive Vice
President, Chief Operating Officer of Harris Savings Bank; and

     WHEREAS, Executive has indicated his desire to retire as an employee and
officer of Harris; and

     WHEREAS, in recognition of the valuable services and contributions provided
by Executive to Harris, Harris is willing to provide certain supplemental
retirement benefits to Executive upon his retirement.

     NOW THEREFORE, in consideration of the foregoing, the promises and
covenants contained herein and other good and valuable consideration, the
parties hereto, intending to be legally bound, hereby agree as follows:

     1. Retirement. Executive and Harris hereby agree that Executive will
        ----------
(terminate his employment) with Harris effective December 31, 2000 ("Retirement
Date"). Provided that Executive has not revoked this Agreement, once executed by
him, within the revocation period set forth in Paragraph 11 Executive's last day
of employment with Harris will be his Retirement Date and following such date
Harris will commence paying to Executive the benefits described in the following
Paragraphs.

     2. Supplemental Pension Benefits. Commencing January 1, 2001, and
        -----------------------------
continuing on the first day of each month thereafter for a period which is 119
months, Harris shall pay to Executive a monthly supplemental pension benefit
equal to Two Thousand Dollars ($2,000.00).

     3. Health Insurance Coverage. Upon Executive's early retirement, Executive
        -------------------------
and his spouse shall be eligible to participate under the group health insurance
plan of Harris, in accordance with the provisions of Harris' group health. plan,
up to the date that each attains his/her Medicare eligibility age, said
participation accomplished either by way of active covered participation or by
way of continuation coverage ("COBRA") participation.

     4. Bonus. Executive will be eligible to receive a bonus for calendar year
        -----
2000 based on the level of achievement of his calendar year 2000 Major Business
Objectives ("MBO"). The parties hereby agree that Harris must meet minimum
thresholds .for ROE and EPS, as set forth in the Harris bonus plan for 2000, and
Executive must meet minimum thresholds for his MBO before he may be eligible to
receive any bonus for calendar year 2000.

     5. Automobile. As soon as administratively feasible after Executive's
        ----------
Retirement Date, Harris shall cause title to the automobile currently provided
to Executive by Harris to be transferred to Executive.

     6. Life Insurance. Harris confirms to Executive that Executive has the
        --------------
option to convert existing life insurance coverages maintained by Harris for
Executive for a period of thirty one (31) days following Executive's Retirement
Date. To the extent Executive does not elect to convert said life insurance
coverages to private policy coverages, all life insurance maintained by Harris
covering Executive restrain any such breach by Executive, or by any
representatives and any and all persons directly or indirectly acting for, on
behalf of or with Executive.

     7. Retirement Plans. Upon Executive's Retirement Date, Executive shall be
        ----------------
eligible to receive distributions from any of the qualified retirement plans
under which Executive currently participates.
<PAGE>

     8. Death of Executive. If Executive should die after benefits have
        ------------------
commenced under this Agreement but before Executive has received all such
payments, Hams shall pay the remaining benefits to the Executive's surviving
spouse up to the earlier of either: (a) the date which is the end of the
thirty-six (36) month payment term described in Paragraph 2; or (b) the death of
the surviving spouse. If Executive should die prior to commencement of benefits
under this Agreement, this Agreement shall terminate and no benefits shall be
provided to Executive or his surviving spouse hereunder. Provided however, if
Executive should die prior to the commencement of benefits under this Agreement,
Executive's surviving spouse shall be entitled to receive group term life
insurance benefits in an amount as previously selected by Executive under
Harris' group term life insurance plan.

     9. Tax Withholding. Harris shall withhold any and all taxes which are
        ---------------
required to be withheld from any benefits paid under this Agreement to
Executive.

     10. Non-Competition/Non-Solicitation Confidential Information. In
         ---------------------------------------------------------
consideration of Harris entering into this Agreement and agreeing to make
payments to Executive pursuant hereto, such payments to which Executive is
otherwise not entitled to receive, Executive covenants and agrees that from the
date of execution of this Agreement and up through the end of the thirty-six
(36) month payment term described in Paragraph 1, he shall not directly or
indirectly, either as an individual or as a proprietor, stockholder, partner,
officer, director, employee, agent, consultant or independent contractor of any
individual, partnership, corporation or other entity (excluding an ownership
interest of one percent (1%) or less in the stock of a publicly traded company):

     (a) become employed by, participate in, or become connected in any manner
with the ownership, management, operation or control of any bank, savings and
loan or other similar financial institution which provides banking or other
financial services within thirty (30) miles of any office now or in the future
maintained by Harris; or

     (b) participate in any way in hiring or otherwise engaging, or assisting
any other person or entity in hiring or otherwise engaging, on a temporary,
parttime, or permanent basis, any individual who was employed by Harris during
the three (3) year period immediately prior to Executive's Retirement Date.
Notwithstanding any other provisions of this Agreement to the contrary, the
terms of this subparagraph (b) shall not be limited to the thirty-six (36) month
restriction set forth above; or

     (c) assist, advise, or serve in any capacity, representative or otherwise,
any third party in any action against Harris or transaction involving Harris.
Notwithstanding any other provisions of this Agreement to the contrary, the
terms of this subparagraph (c) shall not be limited to the thirty-six (36) month
restriction set forth above; or

     (d) divulge, disclose, or communicate to others in any manner whatsoever,
any confidential information of Harris, including, but not limited to, the names
and addresses of customers of Harris, as they may have existed from time to time
or of any of Harris' prospective customers, work performed or services rendered
for any customer, any method and/or procedures relating to projects or other
work developed by or for Hams, information relating to audits, strategic
planning, acquisition strategies, employment information, and all other similar
information. The restrictions contained in this subparagraph (d) apply to all
information regarding Harris, regardless of the source who provided or compiled
such information. Notwithstanding any other provisions of this Agreement to the
contrary, the terms of this subparagraph (d) shall not be limited to the
thirty-six (36) month restriction set forth above and all information referred
to herein shall not be disclosed unless and until it becomes known to the
general public from sources other than the Executive.

     Executive understands and agrees that Harris will suffer irreparable harm
in the event that Executive breaches any of Executive's obligations under this
Paragraph 9, and that Executive's forfeiture of remaining payments under this
Agreement will be inadequate to compensate Harris for such breach. Accordingly,
Executive agrees that, in the event of a breach or threatened breach by
Executive of this Paragraph 9, Harris, in addition to and not in limitation of
any other rights, remedies or damages available to Harris at law or in equity,
shall be entitled to a temporary restraining order, preliminary injunction and
permanent injunction in order to prevent or to restrain any such breach
<PAGE>

by Executive, or by any representatives and any and all persons directly or
indirectly acting for, on behalf of or with Executive.

     11.  Release of Claims. In consideration of the benefits to be provided by
          -----------------
Harris to Executive, such benefits to which Executive is not otherwise entitled
to receive, Executive hereby agrees as follows:

          (a) Executive knowingly and voluntarily releases and forever
          discharges Harris, of and from any and all claims, known and unknown,
          which Executive, his heirs, executors, administrators, successors, and
          assigns have or may have against Harris that accrued or arose at any
          time prior to the execution of this Retirement Agreement and General
          Release, including, but not limited to, any alleged violations of
          Title VII of the Civil Rights Act; the Employee Retirement Income
          Security Act; the Americans with Disabilities Act; the Family and
          Medical Leave Act; the Fair Labor Standards Act; the Age
          Discrimination in Employment Act; the Older Workers Benefit Protection
          Act; the Pennsylvania Human Relations Act; the Pennsylvania Wage
          Payment and Collection Law; ss.ss. 1981-1988 of Title 42 of the
          U.S.C.; the Immigration Reform and Control Act; the National Labor
          Relations Act; any amendments to the foregoing statutes; any other
          federal, state, or local civil rights or employment-related law,
          regulation, or ordinance; any public policy, contract, tort, or common
          law, including wrongful discharge, reliance, or promissory estoppel;
          and any allegations for costs, fees, or other expenses, including
          attorneys' fees.

          (b) Executive waives his right to file any action, charge, or
          complaint on his own behalf and to participate in any action, charge,
          or complaint which may be made by any other person or organization on
          his behalf, with any federal, state, or local judicial body, court, or
          administrative agency against Harris, except where such waiver is
          prohibited by law. Should any such action, charge, or complaint be
          filed, Executive agrees that he will not accept any relief or recovery
          therefrom. Executive shall reimburse Harris for the fees and costs,
          including attorneys' fees, of defending such action, charge, or
          complaint.

          (c) Executive agrees not to disclose any, information regarding the
          existence or substance of this Retirement Agreement and General
          Release, except to any attorney with whom Executive chooses to consult
          regarding this Agreement, tax advisors, immediate family members, or
          where such disclosure is required by law.

               (d) Executive agrees that neither this Retirement Agreement and
          General Release nor the furnishing of the consideration for this
          Release shall be deemed or construed at any time for any purpose as an
          admission by Harris of any liability or unlawful conduct of any kind.

                    (e) In the event that Executive breaches or attempts to
          breach any provision of this Paragraph 11, Executive agrees that
          Harris will be entitled to proceed in any court of law or equity to
          stop or prevent such breach, and will be entitled to any and all forms
          of relief,-, including injunctive relief. Executive further agrees to
          reimburse Harris for all fees and costs, including attorneys' fees,
          incurred as a result thereof

     (f)  By signing this Agreement, Executive represents and agrees that:

                    (1)  this Agreement is entered into knowingly and
                         voluntarily;

                    (2)  that he is receiving consideration from Harris in
                         addition to anything of value to which he is already
                         entitled;

                    (3)  that he has been given at least twenty-one (21) days to
                         consider this Agreement and has chosen to execute it on
                         the date set forth above;
<PAGE>

                    (4)  that he knowingly and voluntarily intends to be legally
                         bound by this Agreement;

                    (5)  that he has been advised to consult with an attorney;
                         and

                    (6)  that he has seven (7) days following the execution of
                         this Agreement to revoke the same, in which case the
                         obligations of the parties to this Agreement shall be
                         null and void.

     12. Property. Executive shall, no later than his Retirement Date, return to
         --------
Harris all property and documents of Harris then in his possession.

     13. Severability. Executive and Harris acknowledge that any restrictions
         ------------
contained in this Agreement are reasonable and that consideration for this
Agreement has been exchanged. In the event that any provision of this Agreement
shall be held to be void, voidable, or unenforceable, the remaining portions
hereof shall remain in force and effect.

     14. Construction. This Agreement shall be construed in accordance with the
         ------------
laws of the Commonwealth of Pennsylvania.

     15. Captions. The captions used herein are for convenience and reference
         --------
only and are in no way to be construed as defining, limiting or modifying the
scope or intent of the various provisions that they introduce.

     16. Entire Agreement. This Agreement contains the entire understanding
         ----------------
between the parties hereto and supersedes and renders null and void and of no
force and effect any prior written or oral agreements between them including a
Change in Control Agreement effective August 10, 1998, by and between Executive
and Harris. There are no representations, agreements, arrangements or
understandings, oral or written, between the parties hereto relating to the
subject matter of this Agreement which are not fully expressed herein.

     17. Binding Effect- It is the intention of the parties hereto to be legally
         --------------
bound by the terms hereof and it is further intended that this Agreement be
binding upon the respective -heirs, successors, assigns, executors and
administrators of the parties.

     18. Amendment. No amendment to this Agreement shall be binding unless in
         ---------
writing and signed by the parties hereto.

ATTEST:                                             HARRIS FINANCIAL, M.H.C

                                             By:
--------------------------------                --------------------------------
Secretary

(SEAL)

ATTEST:                                               HARRIS SAVINGS BANK

                                             By:
--------------------------------                --------------------------------
Secretary

(SEAL)
<PAGE>

ATTEST:                                              HARRIS FINANCIAL, INC.

                                             By:
--------------------------------                --------------------------------
Secretary

(SEAL)

WITNESS:                                                  EXECUTIVE

--------------------------------                --------------------------------
                                                       John W. Atkinson<PAGE>

                                 Exhibit 10.21

                             EMPLOYMENT AGREEMENT

                              For David E. Zuern
<PAGE>

                             EMPLOYMENT AGREEMENT
                             --------------------

     EMPLOYMENT AGREEMENT (this "Agreement") entered into this 9th day of
August, 2000, by and between HARRIS FINANCIAL, INC., a Pennsylvania corporation
(the "Company"), with its principal office in Harrisburg, Pennsylvania or its
successor, and David E. Zuern, a resident of Pennsylvania ("Executive"). Any
reference herein to the "Bank" shall refer to HARRIS SAVINGS BANK or its
successor, a wholly-owned subsidiary of the Company.

     WHEREAS, Company desires to employ Executive in the capacity of President
and Chief Operating Officer of the Company and the Bank; and

     WHEREAS, Executive and Company desire to evidence their agreement as to the
terms and conditions of Executive's appointment and continued employment as
President and Chief Operating Officer of the Company and the Bank.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.   Employment.  The Company and Bank hereby agree to employ Executive,
          ----------
and Executive hereby accepts such employment and agrees to perform his duties
and responsibilities, in accordance with the terms, conditions and provisions
hereinafter set forth subject nevertheless to the specific approval of Company
and Bank's Board of Directors.

     1.1. Employment Term.  The term of Executive's employment under this
          ---------------
Agreement will begin on September 15, 2000 (the "Effective Date") and will
continue until September 15, 2003; provided, however, that on September 15 of
each calendar year, the term of this Agreement will automatically extend for an
additional year renewal unless one party notifies the other, in writing at least
60 days prior to the end of the then current term, that the Agreement will not
be further renewed or until the agreement is terminated in accordance with
Section 5 or Section 6. The period commencing as of the Effective Date and
ending on the date on which the term of Executive's employment under this
Agreement terminates is hereinafter referred to as the "Employment Term".

     1.2. Duties and Responsibilities.  Executive shall serve as President and
          ---------------------------
Chief Operating Officer of the Company and the Bank during the Employment Term.
The Company's Board shall nominate Executive to be elected as a member of its
Board of Directors (the "Board"). The Board shall support such nomination.
Executive agrees to serve as a director during the Employment Term.  The Board
shall cause the Company to elect Executive as a director of the Bank, and
Executive agrees to serve as a director of the Bank.  During the Employment
Term, Executive shall perform all duties and accept all responsibilities
incident to such positions as may be assigned to him by the Boards of the
Company and the Bank.
<PAGE>

     1.3.  Extent of Service.  During the Employment Term, Executive agrees to
           -----------------
use his best efforts to carry out his duties and responsibilities under Section
1.2 hereof and, consistent with the other provisions of this Agreement, to
devote substantially all his business time, attention and energy thereto. The
foregoing shall not be construed as preventing Executive from continuing in any
director capacities in which he is currently involved other than Directorships
of other financial institutions or entities precluded by applicable statutes or
regulations or from making investments in other businesses or enterprises,
provided that Executive agrees not to engage in any other business activity
which, in the reasonable judgment of the Board, is likely to interfere with his
ability to discharge his duties and responsibilities to the Company. Executive
further agrees not to accept any new positions on either a part time or
independent contracting basis for any other business or enterprise during the
Employment Term without the prior written consent of the Board.

     1.4.  Base Salary.  For all the services rendered by Executive hereunder,
           -----------
the Company or the Bank shall pay Executive a base salary ("Base Salary"),
commencing on the Effective Date, at the annual rate of $225,000, payable in
installments at such times as the Company or the Bank customarily pays its other
senior level executives (but in any event no less often than monthly).
Executive's Base Salary for each year shall be reviewed annually during the
Company's regular annual salary review process for appropriate adjustment (but
shall not be reduced below the then current level) by the Board pursuant to its
normal performance review policies for senior level executives.

     1.4   (a)  Post Merger Re-evaluation.  Within 90 days of the effective date
                -------------------------
of the Harris Financial, Inc. and York Financial, Inc. merger the Company will
re-evaluate the peer group salary, bonus and incentive range for Executive's
position in a $4.6 billion asset (versus $2.7 billion asset) institution and
adjust Executive's salary and percentage bonus combination to the equivalent mid
point of the new range.

           (b)  As additional inducement for Executive to enter into this
Employment Agreement Company will annually, commencing after the first full year
of employment, review the overall performance of the Company for the immediately
preceding fiscal year and Company may grant to Executive a bonus, in addition to
the bonus of section 1.7 in recognition of Executive's contribution to Company's
performance.  Executive is encouraged to fully utilize the Company's deferred
compensation plan as a vehicle for deferring immediate recognition of the
proceeds of the bonus.

     1.5.  Retirement and Benefit Coverage and Perquisite.  During the
           ----------------------------------------------
Employment Term, Executive shall be entitled to participate in all (a) employee
pension and retirement plans and programs ("Retirement Plans") and (b) welfare
benefit plans and programs ("Benefit Coverages"), in each case made available to
the Company's or the Bank's senior level executives as a group or to its
employees generally, as such Retirement Plans or Benefit Coverages may be in
effect from time to time. Notwithstanding the terms of any of the Retirement
Plans, Executive shall at all times after the Effective Date have a fully vested
right to all benefits earned under such Retirement Plans payable under such
Retirement Plans or by the Company where the effect of granting such full
vesting would

                                       2
<PAGE>

not present a qualification issue for any such Retirement Plan under the
applicable tax laws. Executive also shall be entitled to a Buick Park Avenue or
equivalent automobile, country club initiation fees, dues and assessments and
all other executive perquisites in accordance with the Company's policy for its
most senior executives.

     1.6.  Reimbursement of Expenses; Vacation.  Executive shall be provided
           -----------------------------------
with reimbursement of expenses related to his employment by the Company on a
basis no less favorable than that which may be authorized from time to time for
senior level executives as a group, and shall be entitled to vacation (five
weeks per calendar year) and holidays in accordance with the Company's or the
Bank's normal personnel policies for senior level executives.

     1.6a  Signing Bonus.  Executive shall be paid a signing bonus of $20,000
           -------------
within 30 days of the execution hereof.  This bonus shall be in lieu of
relocation expense reimbursement.

     1.7.  Short-Term Incentive Compensation.  Executive shall be entitled to
           ---------------------------------
participate in any short-term incentive compensation programs established by the
Company or the Bank for its senior level executives generally. Bonuses under
such programs shall be based upon achievement of certain annual individual or
business performance objectives specified and approved by the Board (or a
Committee thereof) in its sole discretion.  Executive's bonus eligibility shall
be set initially at 40% of base salary and pro rated for 2000.

     1.8.  Long-Term Incentive Compensation Stock Option.
           ---------------------------------------------

           (a)  Executive shall also be entitled to participate in all long-term
incentive compensation programs, including but not limited to stock option plans
and stock recognition or award plans, established by the Company for its senior
level executives generally. Bonuses under such programs shall be based upon
achievement of certain individual or business performance objectives specified
and approved by the Board (or a Committee thereof) in its sole discretion.

     2.   Confidential Information.  Executive recognizes and acknowledges that
          ------------------------
by reason of his employment by and service to the Company before, during and, if
applicable, after the Employment Term, he has had and will continue to have
access to certain confidential and proprietary information relating to the
Company's business, which may include, but is not limited to, trade secrets,
trade "know-how", customer information, supplier information, cost and pricing
information, marketing and sales techniques, strategies and programs, computer
programs and software and financial information (collectively referred to as
"Confidential Information"). Executive acknowledges that such Confidential
Information is a valuable and unique asset of the Company and Executive
covenants that he will not, unless expressly authorized in writing by the Board,
at any time during the course of his employment use any Confidential Information
or divulge or disclose any Confidential Information to any person, firm or
corporation except in connection with the performance of his duties for the
Company and in a manner consistent with the Company's policies regarding
Confidential Information. Executive also covenants that at any time after the
termination of such employment he will not, directly or indirectly, use any
Confidential Information or divulge
                                       3
<PAGE>

or disclose any Confidential Information to any person, firm or corporation,
unless such information is in the public domain through no fault of Executive or
except when required to do so by a court of law, by any governmental agency
having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information in which case Executive will inform the Company in writing promptly
of such required disclosure, but in any event at least two business days prior
to disclosure, provided, however, if prior notice is not possible, then as soon
thereafter as reasonably practicable. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive's possession during the course of his employment
shall remain the property of the Company. Except as required in the performance
of Executive's duties for the Company, or unless expressly authorized in writing
by the Board, Executive shall not remove any written Confidential Information
from the Company's premises, except in connection with the performance of his
duties for the Company and in a manner consistent with the Company's policies
regarding Confidential Information. Upon termination of Executive's employment,
Executive agrees immediately to return to the Company all written Confidential
Information in his possession.

     3.   Non-Compete Obligation.  Executive agrees that during the term of this
          ----------------------
Agreement and any extension thereof and for any period during which Executive's
compensation is continued after termination, Executive shall not, directly or
indirectly, engage in (as principal, partner, director, officer, agent,
employee, consultant, owner, independent contractor or otherwise, with or
without compensation) or hold a financial interest in any firm or organization
engaged in the business of banking (including, but not limited to, the providing
of wholesale banking services, consumer financial services, retail banking,
trust and investment management services, electronic payment services, secured
and unsecured loan and financing services, real estate financing services, asset
and investment management and fiduciary services, cash management services,
consumer and commercial credit card services, merchant card services, card
processing services, and electronic transaction processing services) or which
otherwise is engaged in competition with the Company, or its subsidiaries or
affiliates, within sixty miles of Harrisburg, Pennsylvania.

     Executive shall not entice or solicit, directly or indirectly, any other
executives or key management personnel of the Company (or any subsidiary) to
work with Executive or any entity with which Executive has affiliated for a
period of two years after the end of the Employment Term. Executive shall also
not entice or solicit, directly or indirectly, any client or customer of the
Company (or any subsidiary) for any competitor or in any competitive activity
for a period of two years after the end of the Employment Term.

     The foregoing restriction shall not be construed to prohibit the ownership
by Executive of not more than 5% of any class of securities of any corporation
which is engaged in any of the foregoing businesses having a class of securities
registered pursuant to the Securities Exchange Act of 1934, provided that such
ownership represents a passive investment and that neither Executive nor any
group of persons including Executive in any way, either directly or indirectly,
manages or exercises

                                       4
<PAGE>

control of any such corporation, guarantees any of its financial obligations,
otherwise takes part in its business, other than exercising his rights as a
shareholder, or seeks to do any of the foregoing.

     4.   Enforcement of Obligations.  Executive acknowledges that the
          --------------------------
restrictions contained in Sections 2 and 3 are reasonable and necessary to
protect the legitimate interests of the Company, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company. Executive further represents and acknowledges that (i) he has
been advised by the Company to consult his own legal counsel in respect to this
Agreement; and (ii) that he has, prior to execution of this Agreement, reviewed
thoroughly this Agreement with his counsel. Executive agrees that the Company
shall be entitled to preliminary and permanent injunctive relief, without the
necessity of proving actual damages, as well as to an equitable accounting of
all earnings, profits and other benefits arising from any violations of Sections
2 and 3, which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 and 3 should ever be adjudicated to exceed the time,
geographic, product or service, or other limitations permitted by applicable law
in any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic, product or service, or other
limitations permitted by applicable law. Executive irrevocably and
unconditionally (i) agrees that any suit, action or other legal proceeding
arising out of this Agreement in which any party is seeking in whole or in part
any form of equitable relief, including without limitation, any action commenced
by the Company for preliminary and permanent injunctive relief and other
equitable relief, may be brought in any court of competent jurisdiction in
Dauphin County, Pennsylvania; (ii) consents to the non-exclusive jurisdiction of
any court in any such suit, action or proceeding; and (iii) waives any objection
which Executive may have to the laying of venue of any such suit, action or
proceeding in any such court. Executive also irrevocably and unconditionally
consents to the service of any process, pleadings, notices or other papers in a
manner permitted by the notice provisions of Section 10.

     5.   Termination.  The Employment Term shall terminate upon the occurrence
          -----------
of any one of the following events:

     5.1  Disability.  The Company may terminate the Employment Term if
          ----------
Executive is unable substantially to perform his duties and responsibilities
hereunder to the full extent required by the Board by reason of illness, injury
or incapacity for six consecutive months, or for more than six months in the
aggregate during any period of twelve calendar months provided that the Company
shall continue to pay the Executive his Base Salary for one year following
termination by the Company, and provided further, that any amounts actually paid
to Executive pursuant to any disability insurance or other similar program which
the Company has provided or may provide on behalf of its employees shall reduce
the compensation to be paid to Executive pursuant to this paragraph. In
addition, Executive shall be entitled to receive (i) any other amounts earned,
accrued or owing but not yet paid under Section 1 above and (ii) any other
benefits, including the extension

                                       5
<PAGE>

of the period to exercise the stock options described in Sections 1.8(b) and
(c), in accordance with the terms of any applicable plans and programs of the
Company including the health coverage described in Section 5.4. Otherwise, the
Company shall have no further liability or obligation to Executive for
compensation under this Agreement. Executive agrees, in the event of a dispute
under this Section 5. 1, to submit to a physical examination by a licensed
physician selected by the Board.

                                       6
<PAGE>

     5.2.  Death.  This Agreement shall terminate in the event of Executive's
           -----
death. In such event, the Company shall pay to Executive's executors, legal
representatives or administrators, as applicable, an amount equal to Executive's
Base Salary, on a monthly basis, at the rate in effect at the time of
Executive's death, for a period of one (1) year from the date of Executive's
death. In addition, (i) Executive's estate shall be entitled to receive any
other amounts earned, accrued or owing but not yet paid under Section 1 above
and (ii) any other benefits, including the extension of the period to exercise
the stock options described in Sections 1.8(b) and (c), in accordance with the
terms of any applicable plans and programs of the Company. Otherwise, the
Company shall have no further liability or obligation under this Agreement to
the executors, legal representatives, administrators, heirs or assigns or any
other person claiming under or through Executive.

     5.3.  Cause.  The Company may terminate this Employment Agreement at any
           -----
time for "cause", in which event all payments under this Agreement shall cease,
except for Base Salary to the extent already accrued, and Executive's right to
exercise the stock options, and/or stock awards provided by Section 1. 8 shall
immediately terminate. Executive shall remain entitled to any other benefits in
accordance with the terms of any applicable plans and programs of the Company.
For purposes of this Agreement termination for "cause" shall include termination
because of the Executive or employee's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this agreement.
For purposes of this Agreement, an act or omission on the part of Executive
shall be deemed "willful" only if it was not due primarily to an error in
judgment or negligence and was done by Executive not in good faith and without
reasonable belief that the act or omission was in the best interest of the
Company. In the case of termination or removal of the Executive by an order
issued under section 8(e)(4) of the Federal Deposit Insurance Act (12 U.S.C.
1818 (e)(4)), as amended by the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, the Company, if it deems the reinstatement of the
Executive to his former position to be in the best interest of the company,
shall use its best efforts to appeal and overturn such order.

     5.4.  Termination or Non-Renewal Without Cause.  The Company may terminate
           ----------------------------------------
Executive's employment hereunder at any time without cause, or give Executive
notice that it does not intend to renew the Agreement (in either case the
Employment Term shall be deemed to have ended), upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and subject to the provisions of Sections 2
and 3, shall be allowed to seek other employment.  In addition, Executive shall
be entitled to voluntarily terminate employment with the Company (and such
termination shall be deemed a constructive termination) upon one or more of the
following occurrences:

           (a)  any failure of the Company to comply with and satisfy any of the
terms of this Agreement, including the appointment or election of Executive to
the officer and director positions specified in Section 1.2 hereof;

                                       7
<PAGE>

           (b)  any change resulting in a reduction by the Company of the
authority, duties or responsibilities of Executive;

           (c)  any reduction by the Company of Executive's compensation level
or removal from the officer positions which Executive holds as of the Effective
Date hereof except in connection with promotions to higher office; or

           (d)  the requirement that Executive undertake business travel (or
commuting in excess of fifty miles each way) to an extent substantially greater
than is reasonable and customary for the position Executive holds.

Upon any such termination (whether actual or constructive) or non-renewal
pursuant to this Section 5.4, and assuming Executive executes (and does not
revoke) a mutual release in favor of the Company and Executive in the form
attached hereto as Exhibit A, Executive shall be entitled to receive a single
lump sum payment within 30 days (or, at Executive's discretion, payable over 24
to 36 months) equal to three times the sum of (i) his annual rate of Base Salary
and (ii) his annual short term incentive compensation otherwise payable under
             ------
Section 1.7 at the "target" level established under the Company's Annual
Incentive Plan for the full year of the removal or non-renewal, in lieu of any
amount due to Executive under the Company's then current severance pay plan for
employees. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any other benefits in accordance
with the terms of any applicable plans and programs of the Company, and all
options to purchase shares of stock of the Company shall become fully vested and
all restrictions on shares of stock of the Company previously granted to
Executive shall lapse and shall not be subject to any further conditions, and
such options shall be exercisable as provided in Section 1.8 unless in the
opinion of counsel such action would disqualify the affected plan. In such case
Company shall offer Executive alternative means to permit vesting and/or
satisfaction of restrictions.  In addition, Executive and his spouse and
dependents shall be eligible, at the Company's expense, for health coverage
under the Company's medical plan, as in effect from time to time, during the
unexpired term of this agreement or for the full year of the renewal or non-
renewal, whichever is greater.

     5.5   Required Provisions.  If the Executive or employee is suspended
           -------------------
and/or temporarily prohibited from participating in the conduct of the bank's
affairs by a notice served under section 8(e)(3) or (g)(1) of [the] Federal
Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)) the bank's obligations
under the contract shall be suspended as of the date of service unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the bank
may in its discretion (i) pay the officer or employee all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.

           If the officer or employee is removed and/or permanently prohibited
from participating in the conduct of the bank's affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(4) and (g)(1)), all obligations of the bank

                                       8
<PAGE>

under the contract shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.

           If the bank is in default (as defined in section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under the contract shall
terminate as of the date of default, but this paragraph (b)(4) shall not affect
any vested rights of the contracting parties.

           All obligations under the contract shall be terminated, except to the
extent determined that continuation of the contract is necessary [for] the
continued operation of the association:

           (i)  by the Director or his or her designee, at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of the bank under the authority contained in section 13(c) of the
Federal Deposit Insurance Act; or

           (ii) by the Director or his or her designee, at the time the Director
or his or her designee approves a supervisory merger to resolve problems related
to operation of the bank or when the bank is determined by the Director to be in
an unsafe or unsound condition.

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

     5.6.  Voluntary Termination.  Executive may voluntarily terminate the
           ---------------------
Employment Term upon 60 days' prior written notice for any reason. In such
event, no further payments shall be due under this Agreement except that
Executive shall be entitled to any benefits due in accordance with the terms of
any applicable plan and programs of the Company. A Voluntary Termination under
this Section 5.6 shall not be deemed a breach of this Agreement.

     6.    Payments Due on a Change in Control.
           -----------------------------------

     6.1.  Definitions. For all purposes of this Section 6, the following terms
           -----------
shall have the meanings specified in this Section 6.1 unless the context
otherwise clearly requires:

           (1)  "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").

           (2)  "Base Compensation" shall mean the total cash remuneration
received by Executive in all capacities with the Company and its Affiliates,
including current annualized base salary and all short-term annual incentives at
the target level, and reported (or as would be reported) for Federal income tax
purposes on Form W-2, together with any and all salary deferrals under any of
the Company's benefit plans or programs, for the most recent full calendar year
immediately

                                       9
<PAGE>

preceding the calendar year in which occurs a Change of Control, or the calendar
year in which occurs a Change of Control, whichever is higher.

           (c)  "Beneficial Owner" shall have the meaning ascribed to such term
in Section 13(d)(3) of the Exchange Act.

           (d)  "Change of Control"  shall mean an event of a nature that: (i)
would be required to be reported in response to Item 1 of the current report on
Form 8-K, as in effect on the Effective Date, pursuant to Section 13 or 15(d) of
the Exchange Act; or (ii) results in a change in control of the Bank or the
Company within the meaning of the Change in Bank Control Act and the Rules and
Regulations promulgated by the Federal Deposit Insurance Corporation ("FDIC") at
12 C.F.R. '303.4(a) with respect to the Bank and the Board of Governors of the
Federal Reserve System (the "FRB") at 12 C.F.R. '225.41(b) with respect to the
Company, as in effect on the Effective Date; or (iii) without limitation such a
Change of Control shall be deemed to have occurred at such time as (a) any
Person is or becomes the Beneficial Owner, directly or indirectly, of 20% or
more of the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
conversion of the Company to the stock form and any securities purchased by the
Bank's employee stock ownership plan and trust; or (b) individuals who
constitute the Board on the Effective Date (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the Effective Date whose election was approved
by a vote of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's stockholders was
approved by the same Nominating Committee serving under the Incumbent Board; or
(c) a plan of reorganization, merger, consolidation, sale of all or
substantially all of the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the resulting entity;
or (d) a proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of  reorganization, merger or
consolidation of the Company or Bank or similar transaction with one or more
                                        -------
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Company; or (e) a tender offer is made and completed for 20% or more of the
voting securities of the Bank or Company then outstanding.

           (e)  "Person" shall have the meaning ascribed to such term in
Sections 13(d) and 14(d) of the Exchange Act.

           (f)  "Termination Date" shall mean the date of receipt of the Notice
of Termination as described in Section 6.2 or any later date specified therein,
as the case may be.

           (g)  "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company.

                                       10
<PAGE>

          (h)  "Termination following a Change of Control" shall mean a
Termination of Employment within two years after a Change of Control either:

               (i)  initiated by the Company for any reason other than (a)
Executive's continuous illness, injury or incapacity for a period of twelve
consecutive months or (b) for "cause," as defined in Section 5.3 hereof; or

               (ii) initiated by Executive upon one or more of the following
     occurrences:

                    (1)  any failure of the Company to comply with and satisfy
     any of the terms of this Agreement;

                    (2)  any change resulting in a reduction by the Company of
     the authority, duties or responsibilities of Executive;

                    (3)  any reduction by the Company of Executive's
     compensation level or removal from the officer positions which Executive
     holds as of the Effective Date hereof except in connection with promotions
     to higher office;

                    (4)  the requirement that Executive undertake business
     travel (or commuting in excess of fifty miles each way) to an extent
     substantially greater than is reasonable and customary for the position
     Executive holds; or

                    (5)  after six months following the Change of Control only,
     Executive determines, in his sole discretion, that circumstances have so
     changed with respect to the Company that he no longer wishes to continue in
     employment.

     6.2.  Notice of Termination.  Any Termination following a Change of Control
           ---------------------
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon and (ii) if the Termination
Date is other than the date of receipt of such notice, specifies the Termination
Date (which date shall not be more than 15 days after the giving of such
notice).

     6.3.  Severance Compensation With Termination.  Subject to the provisions
           ---------------------------------------
of Section 6.6, in the event of Executive's Termination following a Change of
Control or in the event that Executive is terminated under Section 5.4 within
the six-month period immediately preceding a Change of Control (in which case
any payments made pursuant to Section 5.4 shall reduce the amount due under this
Section), the Company shall pay to Executive, within fifteen days after the
Termination Date (or as soon as possible thereafter in the event that the
procedures set forth in Section 6.6 hereof cannot be completed within 15 days),
an amount in cash equal to 2.99 times Executive's Base Compensation.

                                       11
<PAGE>

     6.4.  Other Payments, Stock Options and Stock.  The payment due under
           ---------------------------------------
Section 6.3 hereof shall be in addition to and not in lieu of any payments or
benefits due to Executive under any other plan, policy or program of the Company
(and Executive's bonus under the Company's Annual Incentive Plan shall be paid
at the target level for the fiscal year in which the Change of Control occurs),
all of which shall be paid within 15 days after the Change of Control (or as
soon as possible thereafter in the event that the procedures set forth in
Section 6.7 cannot be completed within 15 days), including the health coverage
described in Section 5.4, except that no payments shall be due to Executive
under the Company's then severance pay plan for employees, if any, and all
options to purchase shares of stock of the Company shall become fully vested and
all restrictions on shares of stock of the Company previously granted to
Executive shall lapse and shall not be subject to any further conditions, and
all such options shall be exercisable as provided in Section 1.8 unless in the
opinion of counsel such accelerated vesting or restriction lapse will result in
plan disqualification. In such case Company shall offer Executive alternative
means to permit vesting and/or satisfaction of restrictions.

     6.5.  Enforcement.
           -----------

           (a) In the event that the Company shall fail or refuse to make
payment of any amounts due Executive under Sections 6.3 and 6.4 within the
respective time periods provided therein, the Company shall pay to Executive, in
addition to the payment of any other sums provided in this Agreement, interest,
compounded monthly, on any amount remaining unpaid from the date payment is
required under Section 6.3 and 6.4, as appropriate, until paid to Executive, at
the rate from time to time specified in The Wall Street Journal as the "prime
rate" plus 2 %, each change in such rate to take effect on the effective date of
the change in such prime rate.

           (b) It is the intent of the parties that Executive not be required to
incur any expenses associated with the enforcement of his rights under this
Section 6 by arbitration, litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to Executive hereunder. Accordingly, the Company shall pay Executive on
demand the amount necessary to reimburse Executive in full for all expenses
(including all attorneys' fees and legal expenses) incurred by Executive in
enforcing any of the obligations of the Company under this Agreement.

     6.6   Certain Reductions in Payments.
           ------------------------------

           (a)  If the aggregate payments or benefits to be made or afforded to
Executive pursuant to this Agreement (and any other plans, programs and
arrangements maintained by the Company) (the "Termination Benefits") would
constitute "excess parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") or any successor thereto,
and if such Termination Benefits were reduced to an amount (the "Non Triggering
Amount"), the value of which is one dollar ($1.00) less than an amount equal to
three times Executive's "base amount" (determined in accordance with Code
Section 280G), and the Non-Triggering Amount would be greater than the aggregate
value of the Termination Benefits (without

                                       12
<PAGE>

such reduction) minus the amount of tax required to be paid by Executive thereon
by Code Section 4999, then the Termination Benefits shall be reduced to the Non-
Triggering Amount. The allocation of the reduction required hereby among the
Termination Benefits shall be determined by Executive. Notwithstanding the
foregoing, if after application of the preceding sentences of this subsection
6.6(a), it is determined that the Executive received an excess parachute payment
despite the reduction in the Executive's Termination Benefits, the excess of
such Termination Benefits paid to the Executive over 2.99 times the Executive's
"base amount," as defined in Section 280G of the Code, shall be treated as a
loan to the Executive, and the Executive shall be required to repay such amount
to the Bank or the Company, or the successor of the Bank or the Company, within
ten years of the date of such determination, with interest at the prime rate as
set forth from time to time in The Wall Street Journal.

          (b)  All determinations to be made under this Section 6 shall be made
by the Company's independent public accountant immediately prior to the Change
of Control (the "Accounting Firm"), which firm shall provide its determinations
and any supporting calculations both to the Company and Executive within 10 days
of the Termination Date. Any such determination by the Accounting Firm shall be
binding upon the Company and Executive. Within five days after the Accounting
Firm's determination, the Company shall pay (or cause to be paid) or distribute
(or cause to be distributed) to or for the benefit of Executive such amounts as
are then due to Executive under this Agreement.

          (c)  In the event that upon any audit by the Internal Revenue Service,
or by a state or local taxing authority, of the Termination Payment, a change is
finally determined to be required in the amount of taxes paid by Executive,
appropriate adjustments shall be made under this Agreement such that the net
amount which is payable to Executive after taking into account the provisions of
Section 4999 of the Code shall reflect the intent of the parties as expressed in
subsection (a) above, in the manner determined by the Accounting Firm.

          (d)  All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company.

     7.   Survivorship.  The respective rights and obligations of the parties
          ------------
hereunder shall survive any termination of Executive's employment to the extent
necessary to the intended preservation of such rights and obligations and shall
be binding on all successors and assigns to the Company which shall obtain the
affirmation of any successor or assign prior to the assignment.

     8.   Methodology.  Executive shall not be required to mitigate the amount
          -----------
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.

     9.   Arbitration and Expenses.  In the event of any dispute under the
          ------------------------
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an

                                       13
<PAGE>

injunction, the parties shall be required to have the dispute, controversy or
claim settled by arbitration in Harrisburg, Pennsylvania in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Executive, respectively, and the third
of whom shall be selected by the other two arbitrators. Any award entered by the
arbitrators shall be final, binding and nonappealable and judgment may be
entered thereon by either party in accordance with applicable law in any court
of competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrators shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. If
Executive prevails on any material issue which is the subject of such
arbitration or lawsuit, the Company shall be responsible for all of the fees of
the American Arbitration Association and the arbitrators and any expenses
relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses). Otherwise, each party shall be responsible for his or its own
expenses relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall share the fees of the American
Arbitration Association.

     10.  Notices.  All notices and other communications required or permitted
          -------
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

     If to the Company, to:

               Harris Financial, Inc
               235 N. Second Street
               Harrisburg, PA 17101
               Attention: Chairman, Compensation Committee
               Fax: (717) 231-2950

     With a required copy to:
               General Counsel
               Harris Savings Bank
               235 N. Second Street
               Harrisburg, PA 17101
               Attention:  Richard C. Ruben
               Fax: (717) 231-2950

     If to Executive, to:

               David E. Zuern

                                       14
<PAGE>

               301 Chestnut Street
               Harrisburg, PA  17101

or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

     11.  Contents of Agreement, Amendment and Assignment.
          -----------------------------------------------

          (a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.

          (b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive
hereunder are of a personal nature and shall not be assignable or delegatable in
whole or in part by Executive. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the extent
the Company would be required to perform if no such succession had taken place.

     12.  Severability. If any provision of this Agreement or application
          ------------
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.

     13.  Remedies Cumulative; No Waiver. No remedy conferred upon a party by
          ------------------------------
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by such party from time to time and
as often as may be deemed expedient or necessary by such party in its sole
discretion.

     14.  Beneficiaries.  Executive shall be entitled, to the extent permitted
          -------------
under any applicable law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit

                                       15
<PAGE>

payable hereunder following Executive's death by giving the Company written
notice thereof. In the event of Executive's death or a judicial determination of
his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.

     15.  Miscellaneous. All section headings used in this Agreement are for
          -------------
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

     16.  Withholding.  The Company may withhold from any payments under this
          -----------
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive shall
bear all expense of, and be solely responsible for, all federal, state and local
taxes due with respect to any payment received hereunder.

     17.  Governing Law.  This Agreement shall be governed by and interpreted
          -------------
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

     18.  Corporate Authority. The Company hereby represents that it has taken
          -------------------
all required corporate action in accordance with the provisions of its bylaw and
certificate of incorporation to enter into and to carry out the terms of this
Agreement.

                 [Remainder of Page Intentionally Left Blank]

                                       16
<PAGE>

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

ATTEST:                            HARRIS FINANCIAL INC.

______________________________     By:
Secretary                          Title: ________________________________

WITNESS:                           EXECUTIVE

______________________________     ____________________________________

                                       17
<PAGE>

                                   EXHIBIT A

                       CONFIDENTIAL SEPARATION AGREEMENT
                              AND GENERAL RELEASE

     THIS AGREEMENT, made and entered into on this day of by and between Harris
Financial INC., a Pennsylvania corporation (the "Company"), with its principal
office in Harrisburg, Pennsylvania, and Charles C. Pearson, Jr., a resident of
Pennsylvania ("Executive").

                                  WITNESSETH:

     WHEREAS, the Company had heretofore employed Executive under an Employment
Agreement originally entered into as of ________________, 2000 (the "Employment
Agreement"); and

     WHEREAS, Executive has terminated employment and the Employment Agreement
has been terminated as of   [Insert date and reason for termination], and

     WHEREAS, the Company and Executive wish to enter into an agreement to
provide for a mutual release as to any claims including, without limitation,
claims that might be asserted by Executive under the Employment Agreement and
the Age Discrimination in Employment Act, as further described herein, and
reaffirm Executive's right to indemnification for actions taken within the scope
of his employment;

     NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto, intending to be legally bound, hereby agree as follows:

     1.  The Company and Executive hereby agree that Executive's termination of
employment shall be effective on ______________ and that the Employment
Agreement, except as otherwise provided therein as to obligations that continue
beyond its term, shall terminate on that date.

     2.  Notwithstanding Executive's termination of employment and the
termination of the Employment Agreement, in consideration of the release
provided by Executive under paragraph 6 below, the Company shall pay or cause to
be paid or provided to Executive, subject to applicable employment and income
tax withholdings and deductions, all amounts and benefits required under Section
5.4 of the Employment Agreement.

     3.  Executive agrees and acknowledges that the Company, on a timely basis,
has paid, or has agreed to pay, to Executive all other amounts due and owing
based on his prior services in accordance with the terms of the Employment
Agreement and that the Company has no obligation, contractual or otherwise to
Executive, except as provided herein, nor does it have any obligation to hire,
rehire or re-employ Executive in the future.

                                       18
<PAGE>

     4.   Executive agrees and reaffirms that the provisions of the Employment
Agreement relating to Confidential Information shall continue to apply
notwithstanding the termination of Executive's employment and the termination of
the Employment Agreement, and that the Company shall be entitled to all remedies
available under Section 4 of the Employment Agreement in enforcing its rights
hereunder as well as under Section 2 of the Employment Agreement.

     5.   Executive further agrees and reaffirms that Section 3 of the
Employment Agreement, as to Non-Competition, shall continue to apply
notwithstanding the termination of Executive's employment and the termination of
the Employment Agreement, and that the Company shall be entitled to all remedies
available under Section 4 of the Employment Agreement in enforcing its rights
hereunder as well as under Section 3 of the Employment Agreement.

     6.   In full and complete settlement of any claims that Executive may have
against the Company, including any possible violations of the Age Discrimination
in Employment Act, 29 U.S.C. '621 et. seq. ("ADEA"), in connection with his
                                  --  ---
termination of employment, and for and in consideration of the undertakings of
the Company described herein, Executive does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE the Company, and each of its subsidiaries and affiliates, their
officers, directors, shareholders, partners, employees and agents, and their
respective successors and assigns, heirs, executors and administrators
(hereinafter all included within the term "the Company"), of and from any and
all manner of actions and causes of actions, suits, debts, claims and demands
whatsoever in law or in equity, which he ever had, now has, or hereafter may
have, or which Executive's heirs, executors or administrators hereafter may
have, by reason of any matter, cause or thing whatsoever from the beginning of
Executive's employment to the date of this Agreement; and particularly, but
without limitation of the foregoing general terms, any claims arising from or
relating in any way to Executive's employment relationship or the Employment
Agreement and his termination from that employment relationship and the
termination of the Employment Agreement, including but not limited to, any
claims which have been asserted, could have been asserted, or could be asserted
now or in the future under any federal, state or local laws, including any
claims under ADEA, Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. '2000e  et. seq. ("Title VII"), the Employee Retirement Income Security
               --  ---
Act of 1974, as amended ("ERISA"), the Rehabilitation Act of 1973, the Americans
with Disabilities Act, the Family and Medical Leave Act, Section 11(c) of the
Occupational Safety and Health Act, and any common law claims now or hereafter
recognized and all claims for counsel fees and costs; provided, however, that
nothing herein shall preclude Executive from joining the Company, and the
Company shall defend Executive, in any action brought against and for which he
would have been indemnified pursuant to the bylaws of the Company as of the date
hereof, unless later limited in accordance with applicable law, or under
applicable law (in which case he shall notify the Company within five business
days after receiving service of process as to the commencement of the action and
give the Company the right to control the defense of any such action).
Notwithstanding the foregoing, nothing contained herein shall prevent Executive
from requiring the Company to fulfill its obligations hereunder, under the
Employment Agreement or under any employee benefit plan, as defined in Section
3(3) of ERISA, maintained by the Company and in which Executive participated.

                                      B-2
<PAGE>

     7.   Executive further agrees and covenants that neither he, nor any
person, organization or other entity on his behalf, will file, charge, claim,
sue or cause or permit to be filed, charged, or claimed, any action for personal
equitable or monetary or other similar relief against the Company, involving any
matter occurring at any time in the past up to and including the date of this
Agreement, or involving any continuing effects of any actions or practices which
may have arisen or occurred prior to the date of this Agreement, including any
charge of discrimination under ADEA, Title VII, the Workers' Compensation Act or
state or local laws. In the event that Executive breaches his undertakings under
this Agreement, then the Company will be relieved of all further obligations
owed hereunder and he will forfeit all monies paid to him and the value of the
benefits due under Section 5.4 of the Employment Agreement.

     8.   In full and complete settlement of any claims that the Company may
have against Executive, other than the fulfillment of Executive's obligations
hereunder or his remaining obligations under the Employment Agreement as
provided in Sections 4 and 5 above, and for and in consideration of the
undertakings of Executive described herein, the Company does hereby REMISE,
RELEASE, AND FOREVER DISCHARGE Executive and his heirs, executors and
administrators (hereinafter all included within the term "Executive"), of and
from any and all manner of actions and causes of actions, suits, debts, claims
and demands whatsoever in law or in equity, which the Company ever had, now has,
or hereafter may have, by reason of any matter, cause or thing whatsoever within
the scope of Executive's employment by the Company from the beginning of
Executive's employment with the Company to the date of this Agreement; and
particularly, but without limitation of the foregoing general terms, any claims
arising from or relating in any way to actions taken by Executive within the
scope of his employment relationship or pursuant to the Employment Agreement and
the termination of that employment relationship with the Company and of the
Employment Agreement.

     9.   The Company further agrees and covenants that neither it, nor any
person, organization or other entity on its behalf, will file, charge, claim,
sue or cause or permit to be filed, charged, or claimed, any action for damages,
including injunctive, declaratory, monetary or other relief against Executive,
involving any matter occurring at any time in the past up to the date of this
Agreement, or involving any continuing effects of any actions or practices which
may have arisen or occurred prior to the date of this Agreement so long as
Executive meets all of his obligations under this Agreement and the Employment
Agreement. In the event that the Company breaches its undertakings under this
Agreement, then Executive will be relieved of all further obligations owed
hereunder.

     10.  Executive hereby agrees and acknowledges that under this Agreement,
the Company has agreed to provide him with compensation and benefits that are in
addition to any amounts to which he otherwise would have been entitled under the
Employment Agreement or otherwise in the absence of this Agreement, and that
such additional compensation is sufficient to support the covenants and
agreements by Executive herein.

                                      B-3
<PAGE>

     11.  Executive further agrees and acknowledges that the undertakings of the
Company as provided in this Agreement are made to provide an amicable conclusion
of Executive's employment by the Company and, further, that Executive will not
require the Company to publicize anything to the contrary. Executive and the
Company, its officers and directors, will not, disparage the name, business
reputation or business practices of the other. In addition, by signing this
Agreement, Executive agrees not to pursue any internal grievance with the
Company.

     12.  Executive hereby certifies that he has read the terms of this
Agreement, that he has been advised by the Company to consult with an attorney
and that he understands its terms and effects. Executive acknowledges further
that he is executing this Agreement of his own volition, without any threat,
duress or coercion and with a full understanding of its terms and effects and
with the intention, as expressed in Section 6 hereof, of releasing all claims
recited herein in exchange for the consideration described herein, which he
acknowledges is adequate and satisfactory to him provided the Company meets all
of its obligations under this Agreement. The Company has made no representations
to Executive concerning the terms or effects of this Agreement other than those
contained in this Agreement.

     13.  Executive hereby acknowledges that he was presented with this
Agreement on _________, and that he was informed that he had the right to
consider this Agreement and the release contained herein for a period of twenty-
one (21) days prior to execution. Executive also understands that he has the
right to revoke this Agreement for a period of seven (7) days following
execution, by giving written notice to the Company at 235 N. Second Street,
Harrisburg, PA 17101, Attention: Chairman, Compensation Committee, in which
event the provisions of this Agreement shall be null and void, and the parties
shall have the rights, duties, obligations and remedies afforded by applicable
law.

     14.  Executive and the Company agree that if any part of this Agreement is
determined to be invalid, illegal or otherwise unenforceable, the remaining
provisions of this Agreement shall not be affected and will remain in full force
and effect.

     15.  Executive agrees that he will not in any way communicate the terms of
this Agreement to any person other than his immediate family, attorney or
financial advisor unless compelled by law or administrative proceeding to do so.

     16.  This Agreement shall be interpreted and enforced under the laws of the
Commonwealth of Pennsylvania.

                                      B-4
<PAGE>

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

ATTEST:                                 HARRIS FINANCIAL, INC.

______________________________          By:_______________________________
Secretary
                                           _______________________________

WITNESS:                                EXECUTIVE

                                      B-5

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