EMPLOYMENT AGREEMENT

    THIS AGREEMENT is made as of the 9th day of March 2004, between HARLEYSVILLE
MANAGEMENT SERVICES, LLC (HMS), a corporation having a place of business at 483
Main Street, Harleysville, Pennsylvania 19438; and MIKKALYA W. MURRAY
(“Executive”), an individual residing at 538 Sugartown Road, Pennsylvania 19355.

WITNESSETH:

    WHEREAS, HMS is a subsidiary of HARLEYSVILLE NATIONAL BANK AND TRUST COMPANY
(the “Bank”), a national bank having a place of business at 483 Main Street,
Harleysville, Pennsylvania 19438;
 

    WHEREAS, Bank is a subsidiary of HARELYSVILLE NATIONAL CORPORATION (“HNC”),
a Pennsylvania business corporation having a place of business at 483 Main
Street, Harleysville, Pennsylvania 19438;

    WHEREAS, HMS desires to employ Executive to serve in the capacity of
Executive Vice President and Chief Credit Officer of the Bank under the terms
and conditions set forth herein;

    WHEREAS, Executive desires to accept employment with the Bank under the
terms and conditions set forth herein.

AGREEMENT:

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

    1.   Employment. HMS hereby employs Executive and Executive hereby accepts
employment with HMS, on the terms and conditions set forth in this Agreement.

    2.   Duties of Employee. Executive shall perform and discharge well and
faithfully such duties as an executive officer of the Bank as may be assigned to
Executive from time to time by the Boards of Directors of HNC and the Bank.
Executive shall be employed as Executive Vice President and Chief Credit Officer
of the Bank, and shall hold such other titles as may be given to him from time
to time by the Boards of Directors of HNC and the Bank. Executive shall devote
his full time, attention and energies to the business of HNC and the Bank during
the Employment Period (as defined in Section 3 of this Agreement); provided,
however, that this Section 2 shall not be construed as preventing Executive from
(a) engaging in activities incident or necessary to personal investments so long
as such investment does not exceed 5% of the outstanding shares of any publicly
held company, (b) acting as a member of the Board of Directors of any other
corporation or as a member of the Board of Trustees of any other organization,
with the prior approval of the Board of Directors of HNC and the Bank. The
Executive shall not engage in any business or commercial activities, duties or
pursuits which compete with the business

   

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or commercial activities of HNC, nor may the Executive serve as a director or
officer or in any other capacity in a company which competes with HNC.

    3.   Term of Agreement.

        (a)   This Agreement shall be for a three (3) year period (the
“Employment Period”) beginning on the date first mentioned above and ending
three (3) years later. The Employment Period shall be automatically extended on
the third anniversary date of commencement of the Employment Term (the “Renewal
Date”) and on the same date of each subsequent year for a period ending one (1)
year from each Renewal Date unless either party shall give written notice of
non-renewal to the other party at least ninety (90) days prior to the Renewal
Date, in which event this Agreement shall terminate at the end of the then
existing Employment Period.

        (b)   Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically for Cause (as defined herein) upon
written notice from the Board of Directors of HNC to Executive. As used in this
Agreement, “Cause” shall mean any of the following:

               (i)   Executive’s conviction of or plea of guilty or nolo
contendere to a felony, a crime of falsehood or a crime involving moral
turpitude, or the actual incarceration of Executive;

               (ii)   Executive’s failure to follow the good faith lawful
instructions of the Board of Directors of HNC with respect to its operations; or

               (iii)   Executive’s failure to perform Executive’s duties to HNC
(other than a failure resulting from Executive’s incapacity because of physical
or mental illness, as provided in subsection (d) of this Section 3), which
failure results in injury to HNC, monetarily or otherwise.

               (iv)   Executive’s intentional violation of the provisions of
this Agreement;

               (v)   dishonesty or gross negligence of the Executive in the
performance of his duties;

               (vi)   conduct on the part of the Executive that brings public
discredit to HNC;

               (vii)   Executive’s breach of fiduciary duty involving personal
profit;

              (viii)  Executive’s violation of any law, rule or regulation
governing banks or bank officers or any final cease and desist order issued by a
bank regulatory authority;

   

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            (ix)  Executive’s unlawful discrimination, including harassment,
against HNC’s employees, customers, business associates, contractors or
visitors;

             (x)  Executive’s theft or abuse of HNC’s property or the property
of HNC’s customers, employees, contractors, vendors or business associates;

            (xi)  any final removal or prohibition order to which the Executive
is subject, by a federal banking agency pursuant to Section 8(e) of the Federal
Deposit Insurance Act;

            (xii) any act of fraud or misappropriation by Executive; or

            (xiii) intentional misrepresentation of a material fact, or
intentional omission of information necessary to make the information supplied
not materially misleading, in any application or other information provided by
the Executive to HNC or any representative of HNC in connection with the
Executive’s employment with HNC.

    If this Agreement is terminated for Cause, Executive’s rights under this
Agreement shall cease as of the effective date of such termination.

        (c)   Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically upon Executive’s voluntary
termination of employment (other than in accordance with Section 5 of this
Agreement) for Good Reason. The term “Good Reason” shall mean (i) the assignment
of duties and responsibilities inconsistent with Executive’s status as Executive
Vice President and Chief Credit Officer of Bank , (ii) a reduction in salary or
benefits, except such reductions that are the result of a national financial
depression or national or bank emergency when such reduction has been
implemented by the Board of Directors for the HNC and the Bank’s senior
management, or (iii) a reassignment which requires Executive to move his
principal residence more than one hundred (100) miles from HNC’s principal
executive office immediately prior to this Agreement. If such termination occurs
for Good Reason and upon execution of a mutual release, then HMS shall pay
Executive an amount equal to and no greater than 1.0 times the Executive’s
Agreed Compensation as defined in subsection (g) of this Section 3, which amount
shall be payable in twelve (12) equal monthly installments. In addition,
Executive shall be entitled to a continuation of HMS’s employee benefits for
twelve (12) months or until Executive secures substantially similar benefits
through other employment, whichever shall first occur. If Executive is no longer
eligible to participate in an employee benefit plan because he is no longer an
employee, HMS will pay Executive the amount of money that it would have cost HMS
to provide the benefits to Executive. However, in the event the payment
described herein, when added to all other amounts or benefits provided to or on
behalf of the Executive in connection

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with his termination of employment, would result in the imposition of an excise
tax under Code Section 4999, such payments shall be retroactively (if necessary)
reduced to the extent necessary to avoid such excise tax imposition. Upon
written notice to Executive, together with calculations of HMS’s independent
auditors, Executive shall remit to HMS the amount of the reduction plus such
interest as may be necessary to avoid the imposition of such excise tax.
Notwithstanding the foregoing or any other provision of this contract to the
contrary, if any portion of the amount herein payable to the Executive is
determined to be non-deductible pursuant to the regulations promulgated under
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then
HNC shall be required only to pay to Executive the amount determined to be
deductible under Section 280G.
    

        (d)   Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically upon Executive’s Disability and
Executive’s rights under this Agreement shall cease as of the date of such
termination; provided, however, that Executive shall nevertheless be absolutely
entitled to receive an amount equal to and no greater than seventy (70%) of the
Executive’s Agreed Compensation as defined in subsection (g) of this Section 3,
less amounts payable under any disability plan of HMS, until the earliest of (i)
his return to employment, (ii) his attainment of age 65, or (iii) his death. In
addition, Executive shall be entitled to a continuation of HMS’s employee
benefits for such period. If Executive is no longer eligible to participate in
an employee benefit plan because he no longer is an employee, HMS will pay the
Executive the amount of money that it would have cost HMS to provide the
benefits to Executive. For purposes of this Agreement, Disability shall mean
Executive’s incapacitation by accident, sickness or otherwise which renders
Executive mentally or physically incapable of performing all of the essential
functions of his job, taking into account any reasonable accommodation required
by law, without posing a direct threat to himself or others, for a period of six
(6) months.

        (e)   Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically upon Executive’s death and
Executive’s rights under this Agreement shall cease as of the date of such
termination.

        (f)   Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically upon Executive’s voluntary
termination of employment absent Good Reason, except for the provisions of
Section 7.

        (g)   The term “Agreed Compensation” shall equal the Executive’s highest
Annual Base Salary under the Agreement.

        (h)   Executive agrees that in the event his employment under this
Agreement is terminated, Executive shall resign as a director of HNC, or any
affiliate or subsidiary thereof, if he is then serving as a director of any such
entities.

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4.   Employment Period Compensation.

        (a)   Annual Base Salary. For services performed by Executive under this
Agreement, HMS shall pay Executive an Annual Base Salary in the aggregate during
the Employment Period at the rate of $ 147,950 per year, payable at the same
times as salaries are payable to other executives of HNC. HMS may, from time to
time, increase Executive’s Annual Base Salary, and any and all such increases
shall be deemed to constitute amendments to this Section 4(a) to reflect the
increased amounts, effective as of the date established for such increases by
the Board of Directors of HNC or any committee of such Board in the resolutions
authorizing such increases.

        (b)   Bonus. For services performed by Executive under this Agreement,
HMS may, from time to time, pay a bonus or bonuses to Executive as HMS or HNC,
in their sole discretion, deem appropriate. The payment of any such bonuses
shall not reduce or otherwise affect any other obligation of HNC to Executive
provided for in this Agreement.

        (c)   Vacations. During the term of this Agreement, Executive shall be
entitled to paid annual vacation in accordance with the policies as established
from time to time by the Board of Directors of HNB. However, Executive shall not
be entitled to receive any additional compensation from HMS for failure to take
a vacation, nor shall Executive be able to accumulate unused vacation time from
one year to the next, except to the extent authorized by the Board of Directors
of HNC.

        (d)   Employee Benefit Plans. During the term of this Agreement,
Executive shall be entitled to participate in and receive the benefits of any
Employee Benefit Plan currently in effect at HMS at the level of comparable HMS
executives, until such time that the Board of Directors of HNC authorizes a
change in such benefits. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to Executive pursuant to Section 4(a) hereof.

        (e)  Business Expenses. During the term of this Agreement, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him, which are properly accounted for, in accordance with the
policies and procedures established by the Board of Directors of HNC for its
executive officers.

    5.   Termination of Employment Following Change in Control.

        (a)   If a Change in Control (as defined in Section 5(b) of this
Agreement) shall occur and if thereafter at any time during the term of this

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Agreement there shall be:

               (i)   any involuntary termination of Executive’s employment
(other than for the reasons set forth in Section 3(b) or 3(d) of this
Agreement);

               (ii)   any reduction in Executive’s title, responsibilities,
including reporting responsibilities, or authority, including such title,
responsibilities or authority as such title, responsibilities or authority may
be increased from time to time during the term of this Agreement;

               (iii)   the assignment to Executive of duties inconsistent with
Executive’s office on the date of the Change in Control or as the same may be
increased from time to time after the Change in Control;

               (iv)   any reassignment of Executive to a location greater than
one hundred (100) miles from the location of Executive’s office on the date of
the Change in Control;

               (v)   any reduction in Executive’s Annual Base Salary in effect
on the date of the Change in Control or as the same may be increased from time
to time after the Change in Control;

               (vi)   any failure to provide Executive with benefits at least as
favorable as those enjoyed by Executive under any of HMS’s retirement or
pension, life insurance, medical, health and accident, disability or other
employee plans in which Executive participated at the time of the Change in
Control, or the taking of any action that would materially reduce any of such
benefits in effect at the time of the Change in Control;

               (vii)   any requirement that Executive travel in performance of
his duties on behalf of HNC or any of its subsidiaries or affiliates for a
significantly greater period of time during any year than was required of
Executive during the year preceding the year in which the Change in Control
occurred.

then, at the option of Executive, exercisable by Executive within one hundred
twenty (120) days of the occurrence of any of the foregoing events, Executive
may resign from employment with HMS (or, if involuntarily terminated, give
notice of intention to collect benefits under this Agreement) by delivering a
notice in writing (the “Notice of Termination”) to HMS and the provisions of
Section 6 of this Agreement shall apply.

        (b)   As used in this Agreement, “Change in Control” shall mean the
occurrence of any of the following:

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               (i)   (A) a merger, consolidation or division involving HNC only
(not the Bank), (B) a sale, exchange, transfer or other disposition of
substantially all of the assets of HNC only (not the Bank), or (c) a purchase by
HNC only (not the Bank) of substantially all of the assets of another entity,
unless (x) such merger, consolidation, division, sale, exchange, transfer,
purchase or disposition is approved in advance by seventy percent (70%) or more
of the members of the Board of Directors of HNC only (not the Bank) who are not
interested in the transaction and (y) a majority of the members of the Board of
Directors of the legal entity resulting from or existing after any such
transaction and of the Board of Directors of such entity’s parent corporation,
if any, are former members of the Board of Directors of HNC only (not the Bank);
or

               (ii)   any other change in control of HNC only (not the Bank)
similar in effect to any of the foregoing.

    6.  Rights in Event of Termination of Employment Following Change in
Control.

        (a)   In the event that Executive delivers a Notice of Termination (as
defined in Section 5(a) of this Agreement) to HMS only (not the Bank), Executive
shall be absolutely entitled to receive the compensation and benefits set forth
below:

    If, at the time of termination of Executive’s employment, a “Change in
Control” (as defined in Section 5(b) of this Agreement) has also occurred, HMS
shall pay Executive an amount equal to and no greater than 2.0 times the
Executive’s Agreed Compensation as defined in subsection (g) of Section 3, which
amount shall be payable in twenty-four (24) equal monthly installments. In
addition, Executive shall be entitled to a continuation of HMS’s employee
benefits for twenty-four (24) months or until Executive secures substantially
similar benefits through other employment, whichever shall first occur. If
Executive is no longer eligible to participate in an employee benefit plan
because he no longer is an employee, HMS will pay Executive the amount of money
that it would have cost HMS to provide the benefits to Executive. However, in
the event the payment described herein, when added to all other amounts or
benefits provided to or on behalf of the Executive in connection with his
termination of employment, would result in the imposition of an excise tax under
Code Section 4999, such payments shall be retroactively (if necessary) reduced
to the extent necessary to avoid such excise tax imposition. Upon written notice
to Executive, together with calculations of HMS’s independent auditors,
Executive shall remit to HMS the amount of the reduction plus such interest as
may be necessary to avoid the imposition of such excise tax. Notwithstanding the
foregoing or any other provision of this contract to the contrary, if any
portion of the amount herein payable to the Executive is determined to be
non-deductible pursuant to the regulations promulgated under

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Section 280G of the Code, then HMS shall be required only to pay to Executive
the amount determined to be deductible under Section 280G.

        (b)   Executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or otherwise.
Unless otherwise agreed to in writing, the amount of payment or the benefit
provided for in this Section 6 shall not be reduced by any compensation earned
by Executive as the result of employment by another employer or by reason of
Executive’s receipt of or right to receive any retirement or other benefits
after the date of termination of employment or otherwise.

    7.  Rights in Event of Termination of Employment Absent Change in Control.

        (a)   In the event that Executive’s employment is involuntarily
terminated by HMS without Cause and no Change in Control shall have occurred at
the date of such termination, upon execution of a mutual release, HMS shall pay
Executive an amount equal to and no greater than 1.0 times the Executive’s
Agreed Compensation as defined in subsection (g) of Section 3, and shall be
payable in twelve (12) equal monthly installments. In addition, Executive shall
be entitled to a continuation of HMS’s employee benefits for twelve (12) months
or until Executive secures substantially similar benefits through other
employment, whichever shall first occur. If Executive is no longer eligible to
participate in an employee benefit plan because he is no longer an employee, HMS
will pay Executive the amount of money that it would have cost HMS to provide
the benefits to Executive. However, in the payment described herein, when added
to all other amounts or benefits provided to or on behalf of the Executive in
connection with his termination of employment, would result in the imposition of
an excise tax under Code Section 4999, such payments shall be retroactively (if
necessary) reduced to the extent necessary to avoid such imposition. Upon
written notice to Executive, together with calculations of HMS’s independent
auditors, Executive shall remit to HMS the amount of the reduction plus such
interest as may be necessary to avoid the imposition of such excise tax.
Notwithstanding the foregoing or any other provision of this contract to the
contrary, if any portion of the amount herein payable to the Executive is
determined to be non-deductible pursuant to the regulations promulgated under
Section 280G of the Code, then HMS shall be required only to pay to Executive
the amount determined to be deductible under Section 280G.

         (b)   Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 by seeking other employment or otherwise.
The amount of payment or the benefit provided for in this Section 7 shall not be
reduced by any compensation earned by Executive as the result of employment by
another employer or by reason of Executive’s receipt of or right to receive any
retirement or other benefits after the date of termination of

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employment or otherwise.

        (c)   The amounts payable pursuant to this Section 7 shall constitute
Executive’s sole and exclusive remedy in the event of involuntary termination of
Executive’s employment by HMS in the absence of a Change in Control.

    8.   Covenant Not to Compete

        (a)   Executive hereby acknowledges and recognizes the highly
competitive nature of the business of HNC and accordingly agrees that, during
and for the applicable period set forth in Section 8(c) hereof, Executive shall
not:
       
               (i)   be engaged, directly or indirectly, either for his own
account or as agent consultant, employee, partner, officer, director,
proprietor, investor (except as an investor owning less than 5% of the stock of
a publicly owned company) or otherwise of any person, firm, corporation or
enterprise engaged in (1) the banking (including bank and financial holding
company) or financial services industry, or (2) any other activity in which HNC
or any of its subsidiaries are engaged during the Employment Period, in any
county in which, at any time during the Employment Period or at the date of
termination of the Executive’s employment, a branch, office or other facility of
HNC or any of its subsidiaries is located, or in any county contiguous to such a
county, including contiguous counties located outside of the Commonwealth of
Pennsylvania (the “Non-Competition Area”); or

               (ii)   provide financial or other assistance to any person, firm,
corporation, or enterprise engaged in (1) the banking (including bank and
financial holding company) or financial services industry, or (2) any other
activity in which HNC or any of its subsidiaries are engaged during the
Employment Period, in the Non-Competition Area; or

               (iii)   directly or indirectly contact, solicit or induce any
person, corporation or other entity who or which is a customer or referral
source of HNC or any of its subsidiaries or affiliates, during the term of
Executive’s employment or on the date of termination of Executive’s employment
to become a customer or referral source of any person or entity other then HNC
or one of its subsidiaries or affiliates; or

               (iv)   directly or indirectly solicit, induce or encourage any
employee of HNC or any of its subsidiaries or affiliates, who is employed during
the term of Executive’s employment or on the date of termination of Executives
employment, to leave the employ of HNC or any of its subsidiaries or affiliates,
or to seek, obtain or accept employment with any person or entity other than HNC
or any of their subsidiaries or affiliates.

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        (b)   It is expressly understood and agreed that, although Executive and
HNC consider the restrictions contained in Section 8(a) hereof reasonable for
the purpose of preserving for HNC and its subsidiaries their good will and other
proprietary rights, if a final judicial determination is made by a court having
jurisdiction that the time or territory or any other restriction contained in
Section 8(a) hereof is an unreasonable or otherwise unenforceable restriction
against Executive, the provisions of Section 8(a) hereof shall not be rendered
void but shall be deemed amended to apply as to such maximum time and territory
and to such other extent as such court may judicially determine or indicate to
be reasonable.

        (c)   The provisions of this Section 8 shall be applicable commencing on
the date of this Agreement and ending on one of the following dates, as
applicable:

            (i)   if Executive’s employment terminates in accordance with the
provisions of Section 3 (other than Section 3(b) relating to termination for
Cause), the first anniversary date of the effective date of termination of
employment; or

             (ii)   if Executive’s employment terminates in accordance with the
provisions of Section 3(b) of this Agreement (relating to termination for Cause)
or the Executive voluntarily terminates his employment other than in accordance
with the provisions of Section 5 hereof, the second anniversary date of the
effective date of termination of employment; or

            (iii)   if the Executive voluntarily terminates his employment in
accordance with the provisions of Section 5 hereof, the second anniversary date
of the effective date of termination of employment; or

            (iv)   if the Executive’s employment is involuntarily terminated in
accordance with the provisions of Section 7 hereof, the first anniversary date
of the effective date of termination of employment.

    9.   Unauthorized Disclosure.  During the term of his employment hereunder,
or at any later time, the Executive shall not, without the written consent of
the Board of Directors of HNC or a person authorized thereby, knowingly disclose
to any person, other than an employee of the HNC or a person to whom disclosure
is reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of HNC, any material confidential
information obtained by him while in the employ of HMS with respect to any of
HNC’s services, products, improvements, formulas, designs or styles, processes,
customers, methods of business or any business practices the disclosure of which
could be or will be damaging to HNC; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive or any
person with the assistance, consent or direction of the Executive) or any
information of a type not

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otherwise considered confidential by persons engaged in the same business of a
business similar to that conducted by HNC or any information that must be
disclosed as required by law.

    10.   Work Made for Hire. Any work performed by the Executive under this
Agreement should be considered a “Work Made for Hire” as that phrase is defined
by the U.S. patent laws and its subsidiaries and affiliates. In the event it
should be established that such work does not qualify as a Work Made for Hire,
the Executive agrees to and does hereby assign to HNC and its affiliates and
subsidiaries, all of his rights, title, and/or interest in such work product,
including, but not limited to, all copyrights, patents, trademarks, and property
rights.

    11.   Return of Company Property and Documents. The Executive agrees that,
at the time of termination of his employment, regardless of the reason for
termination, he will deliver to HNC and its subsidiaries and affiliates, any and
all company property, including, but not limited to, automobiles, keys, security
codes or passes, mobile telephones, pagers, computers, devices, confidential
information, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, software programs, equipment,
other documents or property, or reproductions of any of the aforementioned items
developed or obtained by the Executive during the course of his employment.

    12.   Liability Insurance. HNC shall use its best efforts to obtain
insurance coverage for the Executive under an insurance policy covering officers
and directors of HNC against lawsuits, arbitrations or other legal or regulatory
proceedings; however nothing herein shall be construed to require HNC to obtain
such insurance, if the Board of Directors of HNC determine that such coverage
cannot be obtained at a reasonable price.
 

    13.   Notices. Except as otherwise provided in this Agreement, any notice
required or permitted to be given under this Agreement shall be deemed properly
given if in writing and if mailed by registered or certified mail, postage
prepaid with return receipt requested, to Executive’s residence, in the case of
notices to Executive, and to the principal executive offices of HNC, in the case
of notices to HNC.

    14.   Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Executive and an executive officer specifically designated by the
Board of Directors of HNC. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

    15.   Assignment. This Agreement shall not be assignable by any party,
except by HNC to any successor in interest to their respective businesses.

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    16.   Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter of this Agreement.

    17.   Successors; Binding Agreement.

        (a)   HNC will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the businesses and/or assets of HNC to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that HNC would be
required to perform it if no such succession had taken place. Failure by HNC to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall constitute a breach of this Agreement and the provisions of
Section 3 of this Agreement shall apply. As used in this Agreement, “HNC” shall
mean Harleysville National Corporation, as defined previously and any successor
to its respective businesses and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law or otherwise.

        (b)   This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees. If Executive should die after a Notice of
Termination is delivered by Executive, or following termination of Executive’s
employment without Cause, and any amounts would be payable to Executive under
this Agreement if Executive had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to Executive’s devisee,
legatee, or other designee, or, if there is no such designee, to Executive’s
estate.

    18.   Arbitration.  HNC and Executive recognize that in the event a dispute
should arise
between them concerning the interpretation or implementation of this Agreement,
lengthy and expensive litigation will not afford a practical resolution of the
issues within a reasonable period of time. Consequently, each party agrees that
all disputes, disagreements and questions of interpretation concerning this
Agreement (except for any enforcement sought with respect to Sections 8, 9, 10
or 11, which may be litigated in court through an action for an injunction or
other relief) are to be submitted for resolution, in Montgomery County,
Pennsylvania, to the American Arbitration Association (the “Association”) in
accordance with the Association’s National Rules for the Resolution of
Employment Disputes or other applicable rules then in effect (“Rules”). HNC or
Executive may initiate an arbitration proceeding at any time by giving notice to
the other in accordance with the Rules. HNC and Executive may, as a matter or
right, mutually agree on the appointment of a particular arbitrator from the
Association’s pool. The arbitrator shall not be bound by the rules of evidence
and procedure of the courts of the Commonwealth of Pennsylvania but shall be
bound by the substantive law applicable to this Agreement. The decision of the
arbitrator, absent fraud, duress, incompetence or gross and obvious error of
fact, shall be final and binding upon the parties and shall be enforceable in
courts of proper jurisdiction. Following written notice of a request for
arbitration, HNC and Executive shall be entitled to an injunction restraining
all further

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proceedings in any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein or any enforcement sought with
respect to Sections 8, 9, 10 or 11, which may be litigated through an action for
injunction or other relief.

    19.   Validity.  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

    20.   Applicable Law. This Agreement shall be governed by and construed in
accordance with the domestic, internal laws of the Commonwealth of Pennsylvania,
without regard to its conflicts of laws principles.

    21.   Headings. The section headings of this Agreement are for convenience
only and shall not control or affect the meaning or construction or limit the
scope or intent of any of the provisions of this Agreement.

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    IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

       
ATTEST:                         HARLEYSVILLE MANAGEMENT
SERVICES, LLC

/s/ JoAnn Bynon                               By: /s/ Walter E. Daller Jr.
                                           Chairman of the Board       

WITNESS:                         EXECUTIVE   

/s/ JoAnn Bynon                               By: /s/ Mikkalya W. Murray
                               Mikkalya W. Murray