Exhibit 10.36

EMPLOYMENT AGREEMENT

NOTICE TO BRENT L.
PETERS:

This is a
very important legal document, and you should carefully review and understand
the terms and effect of this document before signing it. This Agreement is being
entered into in exchange for your entering into a termination of an existing
Employment Agreement you have with EAST PENN FINANCIAL CORPORATION and EAST PENN
BANK (the Termination Agreement). Therefore, you should consult with an
attorney before signing this Agreement or the Termination Agreement. You have
twenty one (21) days from the day of receipt of this document, May 10, 2007, to
consider this Agreement and the Termination Agreement. The twenty one (21) days
will begin to run on the day after receipt. If you choose to sign this Agreement
and the Termination Agreement, you will have an additional seven (7) days
following the date of your signature to revoke the Termination Agreement. If you
revoke the Termination Agreement within that seven (7) day period, this
Agreement and the Termination Agreement shall not become effective or
enforceable by you or any other party.

**THIS
AGREEMENT** (Agreement) is made as of
November 16, 2007, between HARLEYSVILLE
MANAGEMENT SERVICES, LLC (HMS), a
corporation having a place of business at 483 Main Street, Harleysville,
Pennsylvania 19438; and BRENT L.
PETERS ("Executive"), an individual residing
at 3837 E. View Drive, Orefield, PA 18069.

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 HARLEYSVILLE 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 as President
of the East Penn Bank Division of the Bank and Executive Vice President of HNC
and the Bank, effective the date of this Agreement, under the terms and
conditions set forth herein;

WHEREAS, Executive desires to
accept that assignment under the terms and conditions set forth
herein.

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AGREEMENT:

NOW,
THEREFORE,the parties hereto intending to be
legally bound hereby 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 and Positions of Employee.

(a) Executive shall perform and discharge well and faithfully
such duties as an executive officer of the Bank and HNC as may be assigned to
Executive from time to time by the Board of Directors of the Bank and HNC.
Executive shall be President of the East Penn Bank Division of the Bank and
Executive Vice President of HNC and the Bank and in such capacities shall report
to the chief executive officer of HNC, and shall hold such other titles as may
be given to him from time to time by the Board of Directors of the Bank and HNC.
Executive shall devote his full time, attention and energies to the business of
the Bank and HNC during the Employment Period (as defined in Section 3 of this
Agreement).

(b) During the Employment Period, so long as the Bank and HNC
maintain an Executive Council, Executive shall be a member of the Executive
Council.

(c) During the Employment Period, Executive shall be a member
of the Executive Committee of the Banks Board of Directors.

(d) During the Employment Period, Executive shall be a member
of the Banks ALCO, Senior Loan, Problem Asset, Credit Policy, Disclosure,
Senior Staff and Strategic Planning Committees, so long as the Bank and HNC
maintain them.

(e) During the Employment Period, the Bank and HNC will cause
Executive to be appointed or elected to the Boards of Directors of HNC and HNB
for at least three (3) years from the date of this Agreement.

(f) Notwithstanding any other provision of this Section 2,
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 the Bank and HNC. The
Executive shall not engage in any business or commercial activities, duties or
pursuits that compete with the business or commercial activities of HNC, or any
of its subsidiaries or affiliates, nor may the Executive serve as a director or
officer or in any other capacity in a company that competes with HNC or any of
its subsidiaries or affiliates.

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3.Term of Agreement.

(a) This Agreement shall be for a three (3) year period (the
"Employment Period") beginning on the date of this Agreement and ending three
(3) years from the date of this Agreement. On the third anniversary of the date
of this Agreement, and on the same date of each subsequent year (each, a
"Renewal Date") the Employment Period shall be automatically extended for a
period ending one (1) year from the current Renewal Date, unless either party
shall give written notice of non-renewal to the other party at least ninety (90)
days prior to that 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 the Bank and 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 willful failure to follow the good faith
lawful instructions of the Board of Directors of the Bank and HNC with respect
to the operations of the Bank and HNC; or

(iii) Executive's willful failure to perform Executive's
duties to the Bank and 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 the Bank and 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 or the Bank;

(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;

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

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

(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 the Bank or any representative of HNC or the Bank in connection with the
Executive's employment with HMS and the Bank.

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 President of the East Penn Bank Division of the Bank and Executive Vice
President of HNC and the 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 HNC and Bank's senior management, or (iii) a reassignment which
requires Executive to move his principal office more than fifty (50) miles from
Executive's office on the date of this Agreement. If such termination occurs for
Good Reason and upon execution of a mutual release, then HMS will provide
Executive with the following pay and benefits: (i) a payment in an amount equal
to the greater of: that portion of Executives Agreed Compensation, as defined
in subsection (g) of this Section 3, for the then existing Employment Period
that has not been paid to Executive as of the date his employment terminates or
1.0 times the Executive's Agreed Compensation. Such amount shall be payable in
twelve (12) equal monthly installments; and (ii) subject to plan terms,
Executives continued participation in HMS's employee benefit plans 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.

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However, in the event the payments
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'sindependent 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 Agreement 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. Notwithstanding any other
provision of this Agreement, the provisions of this paragraph of this subsection
(c) shall apply only in the event that Executive terminates this Agreement with
Good Reason more than 15 months after the effective date of this Agreement.

Executive
shall not be required to mitigate the amount of any payment provided for in this
Section 3(c) by seeking employment or otherwise. Unless otherwise agreed to in
writing, the amount of payment or benefit provided for in this section 3(c)
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 or right to
receive any retirement or other benefit after the date of termination of
employment or otherwise.

(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 Sections 5 and 6.

(g)
The term "Agreed Compensation" shall equal the Executive's highest Annual Base Salary under
the Agreement.

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

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 $296,000.00 per year, payable at the same times as
salaries are payable to other executives of the Bank and 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 the Bank and HNC or any committee of such Board in the
resolutions authorizing such increases.

(b) Incentive
Plans. Executive shall be entitled to participate in HMS
Annual and Long Term Incentive Plans which provide incentives based on goals and
objectives as specified by HMS.

(c)
Vacations. During the term of this
Agreement, Executive shall be entitled to four (4) weeks paid annual vacation in
accordance with the policies as established from time to time by the Board of
Directors of the Bank and HNC. 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 the
Bank.

(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 the Bank and 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)
Automobile. During the term
of this Agreement, HMS shall provide Executive with exclusive use of an
automobile mutually agreed upon by HMS and Executive. HMS shall be responsible
and shall pay for all costs of insurance coverage, repairs, maintenance and
other operating and incidental expenses, including license, fuel and oil. HMS
shall provide Executive with use of a replacement automobile at approximately
the time Executive's automobile reaches three (3) years of age or sixty thousand
(60,000) miles, whichever is first, and approximately every three (3) years or
sixty thousand (60,000) miles thereafter, upon the same terms and conditions.
The automobile shall at all times remain the property of HMS.

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(f) Business Expenses. During the term of this
Agreement, Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him, to the extent properly accounted for, in
accordance with the policies and procedures established by the Board of
Directors of HMS for its executive officers. HMS shall reimburse Executive for
anyand all dues and reasonable HMS related business expenses associated
with the Executive's membership in a country club, social club, or service
organization, including but not limited to, The Rotary Club, The Chamber of
Commerce and Brookside Country Club.

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
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 fifty (50) 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; or

(vii)
any requirement that Executive travel in performance of his duties on behalf of
the Bank 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 such notice in writing (the "Notice
of Termination") to HMS and the provisions of Section 6 of this Agreement shall
apply.

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

(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, upon execution of
a release satisfactory to HMS, HMS will provide Executive with the following pay
and benefits: (i) a payment in 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 twelve (12) equal monthly installments; and
(ii) subject to plan terms, Executives continued participation in HMS's
employee benefit plans 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 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 payments 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
maybe necessary to avoid the imposition of such excise tax. Notwithstanding the
foregoing or any other provision of this Agreement 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.

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(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 o£ 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 as of the date of such
termination, upon execution of a mutual release, HMS will provide Executive with
the following pay and benefits: (i) a payment in an amount equal to the greater
of: that portion of the Executives Agreed Compensation for the then existing
Employment Period that has not been paid to Executive as of the date his
employment terminates, or 1.0 times the Executives Agreed Compensation. Such
amount shall be payable in a lump sum; and (ii) subject to plan terms,
Executives continued participation in HMS's employee benefit plans 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 payments 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 Agreement 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. Notwithstanding any other provision of this Agreement, the
provisions of this paragraph of this subsection (a) shall apply only in the
event that Executive's employment is involuntarily terminated by HMS without
Cause more than 15 months after the effective date of this
Agreement.

(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 employment or
otherwise.

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(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 without cause 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 the Bank and accordingly agrees that, during his
employment and for a period of one (1) year following the date of termination of
Executives employment, regardless of the reason for termination, Executive
shall not:

(i)
in any county in which, at any time during the Employment Period or as of 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") 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 the banking
(including bank and financial holding company) or financial services industry,
or any other activity in which HNC or any of its subsidiaries are engaged during
the Employment Period; or

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

(iii)
directly or indirectly contact, solicit or attempt to 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 Executives 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.

(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.

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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 the Bank and HNC or a
person authorized thereby, knowingly disclose to any person, other than an
employee of the Bank, 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 the Bank, any material confidential information obtained by
him while in the employ of HMS with respect to any of HNC's or the Bank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 or the Bank; 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 otherwise considered confidential by persons engaged
in the same business of a business similar to that conducted by HNC or the Bank
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 the Bank, any and
all Bank, HNC or HMS 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. The Bank shall use
its best efforts to obtain insurance coverage for the Executive under an
insurance policy covering officers and directors of the Bank against lawsuits,
arbitrations or other legal or regulatory proceedings; however nothing herein
shall be construed to require the Bank to obtain such insurance, if the Board of
Directors of the Bank determines 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; to the principal
executive offices of the Bank, in the case of notices to the Bank, and to the
principal executive offices of HNC, in the case of notices to HNC.

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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 the Bank. 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 and the Bank to any successor in
interest to their respective businesses.

16.
Entire Agreement. This Agreement contains
the entire agreement of the parties and supersedes all other agreements, written
or oral, between the parties relating to the subject matter of this
Agreement.

17. Successors, Binding Agreement.

(a)
The Bank 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 the Bank to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Bank would be
required to perform it if no such succession had taken place. Failure by the
Bank 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" and
Bank shall mean HNC and Bank, 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 he has
delivered a Notice of Termination to HMS pursuant to Section 5 above, or
following HMSs termination of Executive's employment without Cause, such
amounts that would have been payable to Executive under this Agreement if
Executive had continued to live, 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. The Bank, HMS 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 maybe
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"). The Bank, HMS or Executive may initiate an
arbitration proceeding at any time by giving notice to the other in accordance
with the Rules. The Bank, HMS 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, the Bank, HMS and Executive shall be entitled to
an injunction restraining all further 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.

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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.

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

|ATTEST:                                |                           | HARLEYSVILLE
      MANAGEMENT    
|-------------------------------------- | ------------------------- | ---------------------------------
|                                       |                           |                                  
|                                      
|                                      
|By:                                    | /s/ Jo Ann M.
      Bynon |                                  
|(Signature)                            |                           | Print Name: Michael B.
      High
|Print Name: Jo Ann M.
      Bynon      |                           | Title: Vice
      President      
|Title: Sr. V.P. &
      Corp. Sec.     |                           |                                  
|                                      
|WITNESS:                               |                           |                                  
|                                      
|                                       | /s/ Erik
      Gerhard    |                                  
|(Signature)                            |                           | Brent L.
      Peters            
|Print Name: Erik
      Gerhard         |                           |                                  
|Title: _______________________________ |                           |                                  

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