Document:

Exhibit 10.1

 

TERMINATION OF EMPLOYMENT AGREEMENT

AND RELEASE AGREEMENT

 

READ IT CAREFULLY

 

NOTICE TO DONNA M. COUGHEY

 

This is a very important legal document, and you should carefully
review and understand the terms and effect of this document before signing
it.  By signing this Acknowledgement and
Release (“Agreement”), you are agreeing to completely release Willow Financial
Bancorp, Inc., Willow Financial Bank, Harleysville National Corporation,
Harleysville National Bank and Trust, and their subsidiaries, affiliates,
directors and officers.  Therefore, you
should consult with an attorney before signing this Agreement.  You have twenty-one (21) days from the day of
receipt of this document to consider the Agreement. The twenty-one (21) days
will begin to run on the day after receipt. 
If you choose to sign the Agreement, you will have an additional seven (7) days
following the date of your signature to revoke the Agreement, and the Agreement
shall not become effective or enforceable until the revocation period has
expired.

 

This Termination of
Employment Agreement and Release Agreement (the “Release Agreement”) is entered
into as of May 20, 2008, by and among Willow Financial Bancorp, Inc.
(“WFB”), Willow Financial Bank (“WFB Bank”), Harleysville National Corporation
(“HNC”), Harleysville National Bank and Trust (“HNC Bank”) and each of their
subsidiaries and affiliates, and Donna M. 
Coughey (“Executive”).

 

WHEREAS, Executive, WFB and
WFB Bank entered into an employment agreement dated July 15, 2005 and amended
on October 23, 2007 (“WFB Employment Agreement”);

 

WHEREAS, HNC and WFB will
enter into an Agreement and Plan of Merger dated May 20, 2008 (“Merger
Agreement”) pursuant to which WFB shall merge with and into HNC (the “Merger”);

 

WHEREAS, pursuant to the
Merger Agreement, WFB has agreed to make the payments set forth herein in
exchange for the termination of the WFB Employment Agreement on the Effective
Date (as defined in the Merger Agreement), and in exchange for the execution of
this Release Agreement and an employment agreement between Harleysville
Management Services, Inc. (“HMS”) and Executive (“HMS Employment Agreement”);

 

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WHEREAS, HNC is only willing
to enter into the Merger Agreement on the condition that Executive provides the
inducements set forth in this Agreement by executing this Release Agreement and
entering into the HMS Employment Agreement.

 

NOW THEREFORE, in
consideration of the foregoing and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, and intending to be legally
bound, it is agreed as follows:

 

1.             Termination of WFB Employment Agreement.  Executive, HNC, HNC Bank, HMS, WFB, and WFB
Bank hereby mutually agree that the WFB Employment Agreement shall terminate
and be cancelled absolutely at the Effective Time of the Merger, as defined in
the Merger Agreement.  At the time that
the WFB Employment Agreement terminates, neither Executive nor WFB or WFB Bank
nor their successors shall have any further rights or obligations under the WFB
Employment Agreement.

 

2.             Consideration.

 

(a)           On the Effective Date of the Merger, as defined in the
Merger Agreement, in full satisfaction of the benefits that would otherwise be
payable under the WFB Employment Agreement and in consideration of signing this
Release Agreement, WFB shall pay Executive a lump sum payment in the amount of $1,540,960,
representing $1,500,000 cash severance and $40,960 in lieu of continued benefits
(other than the benefits provided in Section 2(b) below).

 

(b)           HNC and HNC Bank shall provide Executive, her spouse and
any dependents covered as of the Effective Date of the Merger for a period
ending at the earlier of (i) three years subsequent to the Effective Date
of the Merger or (ii) the date of Executive’s full-time employment by
another employer (provided that Executive, her spouse and/or dependents is
entitled under the terms of such employment to substantially similar benefits
as those described in this section), at no cost to Executive, continued
participation in  the life, disability, health
and dental insurance plans and any other group insurance plans offered by HNC
and HNC Bank to their employees, with any insurance premiums payable by HNC or
HNC Bank pursuant to this Section 2(b) to be payable at such times
and in such amounts as if Executive was still an employee of HNC and HNC Bank,
subject to any increases in such amounts imposed by the insurance company or
COBRA, and the amount of insurance premiums required to be paid by HNC and HNC
Bank in any taxable year shall not affect the amount of insurance premiums
required to be paid by them in any other taxable year; provided that if the
participation of Executive or other covered dependents in any of the life,
disability, health, dental and other insurance plans is barred, then HNC and
HNC Bank shall either arrange to provide such persons with insurance benefits
substantially similar to those which Executive and other covered persons were
otherwise entitled to receive or, if such coverage cannot be obtained, pay a
lump sum cash equivalency amount within thirty (30) days following the date
coverage ceases based on the annualized rate of premiums being paid by HNC and
HNC Bank as of such date.

 

2

 

3.             Release and Waiver.

 

(a)           Executive hereby agrees that the payments will be in full
satisfaction of all obligations of HNC, HMS, HNC Bank, WFB, and WFB Bank and
any of their subsidiaries under the WFB Employment Agreement.

 

(b)           Executive, on behalf of herself, her
heirs and assigns, irrevocably and unconditionally releases HNC, HNC Bank, HMS,
WFB, and WFB Bank and their respective predecessors, successors, affiliates,
subsidiaries, parents, partners, shareholders, directors, officers, agents,
employees, attorneys, and all other persons or entities who could be said to be
jointly or severally liable with them from all claims, controversies,
liabilities, demands, causes of action, debts, obligations, promises, acts,
agreements, and damages of whatever kind or nature, whether known or unknown,
suspected or unsuspected, foreseen or unforeseen, liquidated or contingent, related
to Executive’s employment, termination of employment, WFB Employment Agreement
or termination thereof, including but not limited to, any and all claims for
breach of express or implied contract or covenant of good faith and fair
dealing (whether written or oral), all claims for retaliation or violation of
public policy, breach of promise, detrimental reliance or tort (e.g. intentional
infliction of emotional distress, defamation, wrongful termination,
interference with contractual or advantageous relationship, etc), whether based
on common law or otherwise; all claims arising under Title VII of the Civil
Rights Act of 1964, as amended; the Age Discrimination in Employment Act; the
Federal Older Workers Benefit Protection Act, the Family and Medical Leave Act,
any Whistleblower provision of any statute or law, the Americans with
Disabilities Act; the Employee Retirement Income Security Act of 1974, any
other statute, regulation or law or amendments thereto, claims for emotional
distress, mental anguish, personal injury, loss of consortium; any and all
claims that may be asserted on Executive’s behalf by others (including the Equal
Employment Opportunity Commission); or any other federal, state or local laws
or regulations relating to employment or benefits associated with Executive’s employment,
excepting only:

 

(i)            the rights of Executive with respect
to the exercise of her outstanding stock options and restricted stock awards to
the common stock of WFB and her rights to the merger consideration as provided
in the Merger Agreement;

 

(ii)           the rights of Executive under the HMS
Employment Agreement between her and HMS dated May 20, 2008;

 

(iii)          the right of Executive to receive continued
insurance coverage pursuant to Section 2(b) above and COBRA
continuation coverage in accordance with applicable law;

 

(iv)          the rights to indemnification
Executive may have under (A) applicable corporate law, (B) the
articles of incorporation, charter or bylaws of WFB, WFB Bank or 

 

3

 

any
of their subsidiaries or affiliates, (C) as an insured under any director’s
and officer’s liability insurance policy, or (D) the Merger Agreement;  and

 

(v)           claims for benefits under any health,
disability, retirement, life insurance or other similar “employee benefit plan”
(within the meaning of Section 3(3) of ERISA, as defined in the
Merger Agreement) of WFB, WFB Bank or any of their subsidiaries provided
Executive is entitled to those benefits in accordance with the terms of the
respective plan.

 

(c)           EXECUTIVE ACKNOWLEDGES AND
AGREES THAT THIS RELEASE IS A FULL AND FINAL BAR TO ANY AND ALL CLAIM(S) OF
ANY TYPE THAT SHE MAY NOW HAVE AGAINST HNC, HNC BANK, HMS, WFB, AND WFB
BANK TO THE EXTENT PROVIDED ABOVE BUT THAT IT DOES NOT RELASE ANY CLAIMS THAT MAY ARISE
AFTER THE DATE OF THIS AGREEMENT.

 

4.             Acceptance Period.

 

The following notice is included in this
Agreement as required by the Older Workers Benefit Protection Act:

 

You
have up to twenty-one (21) days from the date of receipt of this release to
accept the terms of this release, although you may accept it at any time within
those twenty-one (21) days.  You are advised
to consult with an attorney regarding this release.

 

The
twenty-one (21) day period will begin to run on the day after Executive
receives this Agreement.  It will then
run for a full twenty-one (21) calendar days and expire at the end of the
twenty-first day (the “Acceptance Period”). 
In order to accept this Agreement, Executive must sign her name and date
her signature at the end of this letter and return it to HNC via Renee Lieux,
Bybel Rutledge LLP, 1017 Mumma Road, Suite 302, Lemoyne, Pennsylvania
17043.  If the twenty-first day of the
Acceptance Period falls on a Saturday, a Sunday, or a legal holiday, Ms. Lieux’s
receipt of her acceptance by the close of business on the next business day
immediately following such Saturday, Sunday or legal holiday will be sufficient
to effect a timely acceptance of this Agreement.

 

5.             Revocation Period.  Executive has the right to revoke this
Agreement at any time within seven (7) days from the date Executive signs
and delivers this Agreement to HNC (the “Revocation Period”), and this
Agreement will not become effective and enforceable until the Revocation Period
has expired.  (NOTE:  The Revocation Period will begin on the day after the day on which Executive has signed this Agreement
and delivered it to HNC and, as indicated by the date Executive affixes to her signature
at the end of this Agreement.  It will
then run for seven calendar days and expire at the end of the seventh
day.)  In order to revoke this Agreement,
Executive must notify HNC in writing of her decision to revoke the
Agreement.  Executive must ensure that HNC
(via Ms. Lieux, at the address indicated in Paragraph 4 above) receives
her written notice of revocation at her office in Lemoyne, Pennsylvania within
the aforementioned Revocation 

 

4

 

Period. 
If the seventh day of the Revocation Period falls on a Saturday, a
Sunday, or a legal holiday, HNC’s receipt of her notice of revocation by the
close of business on the next business day immediately following such Saturday,
Sunday or legal holiday will be sufficient to effect a timely revocation of
this Agreement.  Provided that the
Revocation Period expires without Executive having revoked this Agreement, this
Agreement shall take effect on the next day following the Revocation Period,
and such next day shall constitute the Effective Date hereof.

 

Executive
further agrees that the consideration described in this Release Agreement shall
be in full satisfaction of any and all claims for payments or benefits, whether
expressed or implied, that Executive may have arising out of her employment
relationship, or her service as an employee or officer of WFB or WFB Bank, the
termination of such employment relationship, the WFB Employment Agreement or
the termination of the WFB Employment Agreement, except as set forth in Sections
2(b) and 3(b) above.

 

6.             Cooperation and
Non-Disparagement.  Executive agrees
that she will not disparage or make derogatory comments about WFB, WFB BANK,
HNC, HNC BANK or any of their subsidiaries or affiliates and including their
present and former officers, directors, employees, agents, or attorneys, or
their business practices.

 

7.             HNC, HNC Bank, HMS, WFB, and WFB
Bank Not Executive’s Advisor.  HNC,
HNC Bank, HMS, WFB, and WFB Bank make no representation or warranty, express or
implied, to Executive regarding the treatment of this Release Agreement or any
payments Executive may receive by virtue of or in connection with any provision
of this Release Agreement, under state, federal, or local laws pertaining to
income or other taxation, nor do they 
provide to Executive any advice regarding the financial, investment, or
legal desirability of her entering into this Release Agreement or making any
elections or granting any releases  referred to herein;
and Executive acknowledges that it is and has been her sole and entire
responsibility to explore any such aspects of this Release Agreement with
attorneys and/or other advisors of her own selection, in connection with both
her decision to enter into this Agreement and any decisions or elections which
Executive may subsequently make in relation to any of the subject matter of
this Release Agreement.

 

8.             Agreement Freely and Voluntarily
Entered Into.  Executive warrants and
represents that she has signed this Release Agreement after review and
consultation with legal counsel of her choice and that she understands this
Release Agreement and signs it freely, knowingly and voluntarily, without any
legal reservation and fully intending to be legally bound hereby.

 

9.             Executive’s Representations.  In connection with her entering into this
Release Agreement, and as an inducement for HNC, HNC Bank, HMS, WFB, and WFB
Bank to enter into this Release Agreement as well as the Merger Agreement,
Executive hereby represents the following matters:

 

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a.             That Executive has carefully read
and fully understands all of the provisions of this Release Agreement which
sets forth the entire agreement between Executive and HNC, HNC Bank, HMS, WFB,
and WFB Bank regarding the termination of Executive’s employment and WFB Employment
Agreement and Executive’s releasing HNC, HNC Bank, HMS, WFB, and WFB Bank, and
that Executive has not relied upon any representations or statements, written
or oral, not set forth in this document;

 

b.             That Executive has had such time as
Executive deemed necessary to review, consider, and deliberate as to the terms
of this Release Agreement; and

 

c.             That
to Executive’s best knowledge, all of the representations and warranties made
by WFB and WFB Bank in the Merger Agreement are true and correct in all
material respects as of the date of the Merger Agreement (or, if earlier, the
date specified in the representation or warranty).

 

10.           Severability.  Should any provision(s) of this
Agreement be determined, in a proceeding to enforce or interpret this
Agreement, to be invalid or unenforceable, then, provided that the provision(s) deemed
to be invalid or unenforceable do not constitute all or substantially all of
the undertakings by either Executive or HNC, HNC Bank, HMS, WFB, and WFB Bank,
the remainder of this Release Agreement shall continue in full force and
effect.

 

11.           Notices. 
Unless otherwise provided in this Release Agreement, any notice required
or permitted to be given under this Release 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, HNC Bank
and HMS in the case of notices to HNC, HNC Bank and HMS.

 

12.           Choice of Law.  This Agreement shall be governed by,
construed under and enforced pursuant to the laws of the Commonwealth of
Pennsylvania.

 

13.           Complete Written Settlement.  This Release Agreement expresses a full and
complete settlement of all disputes between Executive and HNC, HNC Bank, HMS,
WFB, and WFB Bank and their subsidiaries. 
Executive agrees that there are absolutely no agreements or reservations
relating to termination of Executive’s employment and Executive’s release of
HNC, HNC Bank, HMS, WFB, and WFB Bank that are not clearly expressed in writing
herein, other than the HMS Employment Agreement entered into between HMS and
Executive as of May 20, 2008.  This
Agreement may not be modified except in writing signed by all parties
hereto.  Executive further agrees that
the consideration described herein are all she and/or her counsel are ever to
receive with regard to the WFB Employment Agreement.

 

14.           Binding on Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.

 

6

 

15.           Counterparts.  This Agreement may be executed in multiple
counterparts, and shall be fully valid, legally binding and enforceable whether
executed in a single document or in such counterparts.

 

16.           Termination.  This Agreement shall terminate and be null
and void upon a termination of the Merger Agreement in accordance with its
terms.

 

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

 

 

	
  ATTEST:

  	
   

  	
  HARLEYSVILLE
  NATIONAL

  
	
   

  	
   

  	
   

  	
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  /s/
  Jo Ann M. Bynon 

  	
   

  	
  By:

  	
  /s/
  Paul D. Geraghty

  
	
   

  	
   

  	
   

  	
  Paul
  D. Geraghty

  
	
   

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  
					

 

 

	
   

  	
   

  	
  HARLEYSVILLE
  NATIONAL BANK

  
	
   

  	
   

  	
   

  	
  AND
  TRUST

  
	
   

  	
   

  	
   

  
	
  /s/
  Jo Ann M. Bynon 

  	
   

  	
  By:

  	
  /s/
  Paul D. Geraghty

  
	
   

  	
   

  	
   

  	
  Paul
  D. Geraghty

  
					

 

 

	
   

  	
   

  	
  HARLEYSVILLE
  MANAGEMENT

  
	
   

  	
   

  	
  SERVICES,
  LLC

  

 

 

	
  /s/
  Jo Ann M. Bynon 

  	
   

  	
  By:

  	
  /s/
  Paul D. Geraghty

  
	
   

  	
   

  	
   

  	
  Paul
  D. Geraghty

  
	
   

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  

 

 

	
  WITNESS:

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
  /s/
  Donna Coughey

  
	
  /s/
  Gerard F. Griesser 

  	
   

  	
   

  	
  Donna
  Coughey

  

 

 

7Exhibit
10.2

 

EMPLOYMENT
AGREEMENT

 

THIS
AGREEMENT is made
as of the 20th day of May 2008, between Harleysville
Management Services LLC (“HMS”), a Pennsylvania business corporation
having a place of business at 483 Main Street, Harleysville, Pennsylvania 19438,
and Donna M. Coughey (“Executive”), an individual residing in Pennsylvania.

 

WITNESSETH:

 

WHEREAS, HMS is a subsidiary of Harleysville
National Bank and Trust Company (the “HNC Bank”), a national bank having a
place of business at 483 Main Street, Harleysville, Pennsylvania 19438;

 

WHEREAS, HNC 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, HNC and Willow Financial Bancorp, Inc.
(“WFB”) will enter into an Agreement and Plan of Merger dated May 20, 2008
(“Merger Agreement”), wherein WFB will merge into HNC;

 

WHEREAS, Executive is the President and Chief
Executive Officer of WFB;

 

WHEREAS, Executive, WFB and Willow Financial
Bank entered into an employment agreement dated July 15, 2005 and amended
on October 23, 2007 (“Employment Agreement”);

 

WHEREAS, as inducement for HNC to enter into the
Merger Agreement, Executive agreed to terminate her Employment Agreement and
execute a Termination of Employment Agreement and Release Agreement, which
agreement is being executed contemporaneously with this Agreement;

 

WHEREAS, as further inducement for HNC to enter
into the Merger Agreement, Executive has agreed to assist with the integration
of WFB into HNC by acting as an employee in the position of Executive Vice
President to HNC and HNC Bank for a one year period commencing on the Effective
Date (as defined in the Merger Agreement) and terminating one year later;

 

1

 

WHEREAS, Executive desires to serve HNC and HNC
Bank as an Executive Vice President under the terms and conditions set forth herein;

 

AGREEMENT:

 

NOW THEREFORE, in consideration of the foregoing and
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound, it is agreed as
follows:

 

1.                                       Executive Relationship.  HMS hereby
engages Executive and Executive hereby agrees to serve HMS, under the terms and
conditions set forth in this Agreement.

 

2.                                       Duties of Executive.  Executive
shall perform and discharge well and faithfully such duties as Executive Vice
President as necessary to assist HMS with the operations and continued
integration of WFB into HNC.

 

3.                                       Term of Agreement. 
This
Agreement shall commence on the Effective Date (as defined in the Merger
Agreement) and shall expire one year later (“Term”).  Upon the expiration or termination of this
Agreement for any reason, HMS, HNC, and HNC Bank or any of their subsidiaries
or affiliates shall have no further obligations under this Agreement other than
payment of any earned but unpaid compensation.

 

4.                                       Compensation. 
For her
services under this Agreement, HMS shall pay Executive an annual salary equal
to her current base salary of $350,000, minus applicable withholdings and
deductions, payable at the same times as salaries are payable to other
executive employees.

 

5.                                       Unauthorized Disclosure.  During the
Term, or at any later time, the Executive shall not, without the written
consent of the President and Chief Executive Officer of HNC or a person
authorized thereby, knowingly disclose to any person, other than an employee of
HNC or HNC Bank or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of her duties,
any material confidential information obtained by her while performing services
for HNC and HNC Bank with respect to any of HNC and HNC 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 HNC 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 or a business similar to that conducted by HNC and HNC Bank; and
provided further that nothing contained herein shall prevent Executive, with or
without the consent referenced above, from participating in or disclosing 

 

2

 

documents or information
in connection with any judicial or administrative investigation, inquiry or
proceeding to the extent that such participation or disclosure is required
under applicable law.

 

6.             Covenant Not to Compete.

 

(a)                                  Executive hereby acknowledges and
recognizes the highly competitive nature of the business of HNC and HNC Bank
and accordingly agrees that, during and for the applicable period set forth in Section 6(c) hereof,
Executive shall not, except as otherwise permitted in writing by HNC and the
HNC Bank:

 

(i)            be engaged, directly or indirectly, either
for her 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 or
thrift holding company), thrift or financial services industry, or (2) any
other activity in which HNC or HNC Bank or any of their subsidiaries are
engaged during the Term, in any county and contiguous county in which, during the
Term, a branch location, office, loan production office, or trust or asset and
wealth management office of HNC, HNC Bank, WFB or any of their subsidiaries is located
(“Non-Competition Area”);

 

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

 

(iii)          directly or indirectly solicit persons
or entities who were customers, clients, or referral sources of HNC, HNC Bank, WFB,
or their subsidiaries to become a customer, client, or referral source of a
person or entity other than HNC, HNC Bank, WFB or their subsidiaries; or

 

(iv)          directly or indirectly solicit
employees of HNC, HNC Bank, WFB or their subsidiaries who were employed during the
Term or within the one-year period preceding the Term to work for anyone other
than HNC, HNC Bank or their subsidiaries.

 

(b)                                 It is expressly understood and agreed
that, although Executive and HMS, HNC and HNC Bank consider the restrictions
contained in Section 6(a) hereof reasonable for the purpose of
preserving for HNC and HNC Bank 

 

3

 

and their 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 6(a) hereof is an unreasonable or otherwise
unenforceable restriction against Executive, the provisions of Section 6(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 6
shall be applicable commencing on the Effective Date (as defined in the Merger
Agreement) and ending on the second anniversary of the Effective Date.

 

(d)                                 The provisions of this Section 6
shall survive the termination of the Agreement, regardless of the reason for
termination.

 

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

 

8.                                       Return of Company
Property and Documents.  Executive
agrees that, at the time of termination of this Agreement, regardless of the
reason for termination, she will deliver to HMS, HNC, HNC Bank and their
subsidiaries and affiliates, any and all company property, including, but not
limited to, keys, security codes or passes, mobile telephones, 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 this Agreement.

 

9.                                       Indemnification.  To the extent
that the HNC and HNC Bank has officers’ and directors’ liability insurance
coverage covering the acts of Executive, HNC and HNB shall, subject to the
exclusions and limitations set forth therein, indemnify and hold harmless Executive
if she is made a party, is threatened to be made a party to, or otherwise
receives any other legal process in any action, suit, or proceeding by reason
of the fact that she was an officer or employee of HMS, HNC, or HNC Bank.  Executive shall be indemnified and held
harmless to the fullest extent permitted or authorized under HNC’s, HNC Bank’s
or HMS’ articles of incorporation, bylaws, the laws of the Commonwealth of
Pennsylvania, or federal banking laws.

 

4

 

10.                                 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 HMS, HNC and HNC Bank, in the case of notices to
HMS, HNC and HNC Bank.

 

11.                                 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 the
President and Chief Executive Officer 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 be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

 

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

 

13.                                 Entire Agreement.  This Agreement
supersedes any and all agreements, either oral or in writing, between the
parties regarding Executive’s services and contains all the covenants and
agreements between the parties with respect to her employment by HMS.

 

14.                                 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.

 

15.                                 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.

 

5

 

16.                                 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

  
	
   

  	
   

  	
  SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jo Ann M. Bynon 

  	
   

  	
  By:

  	
  /s/ Paul D. Geraghty

  
	
   

  	
   

  	
   

  	
  Paul D. Geraghty

  
	
   

  	
   

  	
   

  	
  President and Chief
  Executive Officer

  

 

 

	
  WITNESS:

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
  /s/ Gerard F. Griesser 

  	
   

  	
  /s/ Donna M. Coughey

  
	
   

  	
   

  	
   

  	
  Donna M. Coughey

  

 

6

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