Document:

Exhibit 10.3

 

FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

This
Non-Competition and Non-Solicitation Agreement (this “Agreement”) is entered
into as of this 20th day of May, 2008, by and between Harleysville
National Corporation (“HNC”) and undersigned director (the “Director”) of
Willow Financial Bancorp, Inc. (“WFB”).

 

WHEREAS,
HNC contemplates the consummation of a merger (the “Merger”) pursuant to an
Agreement and Plan of Merger dated as of May 20, 2008 by and between HNC
and WFB (the “Merger Agreement”); and

 

WHEREAS,
the Director is a well respected business person in the southeastern
Pennsylvania business community and acknowledges that his or her position with
WFB gives WFB significant presence in that community and is an important factor
in WFB’s ability to attract customers; and

 

WHEREAS,
as a condition to HNC’s willingness to enter into the Merger Agreement, HNC
wants to protect WFB’s community relationships by requiring that the Director
execute this Agreement;

 

NOW,
THEREFORE, in consideration of the premises and covenants contained in this
Agreement and intending to be legally bound hereby, the parties agree as
follows:

 

1.          Term.

 

This
Agreement will commence on the Effective Date of the Merger as defined in the
Merger Agreement and end nine months after such date (the “Term”).

 

2.          Non-Competition.

 

(a) 
For purposes of this Agreement, the term “Competitive Enterprise” means any
bank holding company or insured depository institution, including an
institution in the organizational stage or in the process of applying for or
receiving appropriate regulatory approval, including, without limitation, any
federal or state chartered bank, savings bank or savings and loan association.

 

(b) 
During the Term, the Director shall not:

 

(i) 
accept a position as director or employee of any Competitive Enterprise that is
located in Chester, Bucks, Montgomery, Delaware, Lehigh, and Philadelphia
Counties during the Term.

 

(ii) 
directly or indirectly acquire an ownership interest in a Competitive Enterprise
that enables the Director to, directly or indirectly, in a substantial manner,
control, direct, influence, affect for impact the 

 

 

operations,
services or business activities of the Competitive Enterprise in Chester,
Bucks, Montgomery, Delaware, Lehigh and Philadelphia Counties during the Term,
provided, however, that this restriction shall not apply to the direct or
indirect beneficial ownership of up to Three Percent (3%) of a class of
securities of a Competitive Enterprise, so long as the Director is not a
director or officer of such Competitive Enterprise.

 

3.          Non-Solicitation.

 

During the Term, the Director shall not:

 

(a) 
Directly or indirectly, for the purpose of selling any product or service that

 

competes
with a product or service offered by WFB or its present subsidiaries or
affiliates, solicit, divert, or entice any customer of WFB to transfer such
business to a Competitive Enterprise. 
Provided, however, that any business activity or business pursuit that
is currently undertaken or provided by a director or his or her controlled
entities or affiliates as a principal source of such Director’s income shall
not be deemed a Competitive Enterprise or a violation of this Agreement.  In addition, this Agreement shall not
prohibit a director or his or her controlled entities or affiliates from
providing any service or product that he or she or his or her controlled
entities or affiliates has provided prior to the date hereof or that may be
provided in the future as part of the Director’s or his or her controlled
entities’ or affiliates’ historical business pursuits.

 

(b) 
Employ or assist in employing any present employee of WFB or its subsidiaries
to perform services for any Competitive Enterprise.

 

(c) 
Directly or indirectly, make any oral or written statement, comments or other
communications that impugns or is intended to impugn, disparage or otherwise
malign the reputation, ethics, competency, morality or qualifications of WFB or
HNC or any of their current or former directors, officers, employees or
customers.

 

4.          Confidentiality.

 

(a) 
For purposes of this Agreement, “Proprietary Information” shall mean any
information relating to the business of WFB or any of its present subsidiaries
that has not previously been publicly released by WFB or their representatives,
and shall include, but shall not be limited to, information encompassed in all
marketing and business plans, financial information, fees, pricing information,
customer and client lists and relationships between WFB and its customers and
clients and others who have business dealings with WFB.

 

(b) 
The Director agrees to maintain the confidentiality of all Proprietary
Information that has been disclosed to the Director in the course of his
service as a director of WFB, on or before the date of consummation of the
Merger. The Director shall not, without written authorization from HNC, use for
the Director’s 

 

2

 

benefit
or purposes, nor disclose to others, at any time during the Term, any Proprietary
Information. This prohibition shall not apply after the Proprietary Information
has been voluntarily disclosed to the public, independently developed and
disclosed by others, or otherwise enters the public domain through lawful
means.

 

5.          Remedies.

 

In
addition to any other rights and remedies HNC may have if the Director violates
this Agreement, the Director agrees that a breach or threatened breach by the
Director of his or her covenants set out in Sections 2, 3, and 4 of this
Agreement is likely to cause WFB and HNC as its successor irreparable injury
and damage, and the Director hereby expressly agrees that WFB and HNC as its
successor shall be entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach or threatened breach of Sections
2, 3, and 4 of this Agreement by the Director. This provision shall not,
however, be construed as a waiver of any of the remedies which the HNC may have
for damages or otherwise.

 

6.          Successors
and  Assigns

 

This
Agreement shall be binding upon, and shall inure to the benefit of, HNC and its
successors and assigns.

 

7.          Governing
Law.

 

This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without giving effect to its conflicts of laws
principles.

 

3

 

IN
WITNESS WHEREOF, HNC and the Director hereto have executed this Agreement to be
effective as of the Effective Date of the Merger.

 

 

	
   

  	
   

  	
  HARLEYSVILLE
  NATIONAL CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Paul
  D. Geraghty

  
	
   

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  DIRECTOR

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

4Exhibit 10.4

 

May 20,
2008

 

Harleysville
National Corporation

483
Main Street

Harleysville,
Pennsylvania 19438

 

Ladies
and Gentlemen:

 

Harleysville
National Corporation (“HNC”) and Willow Financial Bancorp, Inc. (“WFB”)
are entering into concurrently herewith an Agreement and Plan of Merger to be
dated as of May 20, 2008 (the “Agreement”).

 

Pursuant
to the proposed Agreement, and subject to the terms and conditions set forth
therein:  (a) WFB will merge with
and into HNC, with HNC surviving the merger (the “Merger”); (b) shareholders
of WFB will receive shares of HNC common stock in exchange for their shares of WFB
common stock owned on the closing date plus cash in lieu of fractional share
interests; and (c) holders of WFB options will receive stock options
exercisable for common stock of HNC in exchange for options exercisable for
common stock of WFB outstanding on the closing date.

 

I
have been advised that I may be deemed to be an “affiliate” of WFB for purposes
of certain rules issued by the Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933.

 

I
understand that HNC is requiring, as a condition to its execution and delivery
to WFB of the Agreement, that I execute and deliver to HNC this WFB Letter
Agreement.

 

Intending
to be legally bound hereby, I irrevocably agree and represent as follows:

 

1.             I agree to vote or cause to be
voted for approval and adoption of the Agreement and the transactions
contemplated thereby all shares of WFB common stock over which I have or exercise
sole or shared voting power, including those held in a voting trust,
individually or, to the extent of my proportionate interest, jointly with other
persons and will use my reasonable efforts to cause any shares of WFB over
which I share voting power, including those held in a voting trust jointly with
other persons, to be voted for the approval and adoption of the Agreement and
the transactions contemplated thereby.

 

 

2.             I agree not to offer, sell,
transfer or otherwise dispose of, or to permit the offer, sale, transfer or
other disposition of, any shares of WFB common stock over which I have or exercise
sole or shared voting power or any options that I hold to acquire shares of WFB
common stock; provided, however, that (i) I may make a bona fide gift of shares or transfer of shares for estate
planning or similar purposes prior to that date as long as the recipient agrees
to vote such shares for approval and adoption of the Agreement and agrees, in
writing, to be bound by all the terms hereof as if an original signatory hereto,
and (ii) in the case of exercising any options, as part of a cashless
exercise transaction, to the extent permissible under the respective stock
options and stock option plans.

 

3.             I agree, if I am an optionholder,
to exchange my options to acquire shares of common stock of WFB for options to
acquire such number of shares of common stock of HNC, and at such per share
exercise price, as is provided in Section 2.05 of the Agreement, and
otherwise, except as provided under the terms of the Agreement, on the same
terms and conditions as the exchanged WFB options (unless I shall have
exercised any such option prior to the completion of the Merger).  I agree that if I exercise my options prior
to the completion of the Merger, any shares of WFB common stock acquired shall
be subject to this WFB Letter Agreement.

 

4.             I have sole or shared voting power
over the number of shares of WFB common stock, and hold stock options for the
number of shares of WFB common stock, if any, set forth below my signature
line.  HNC recognizes that, with respect
to any such shares which have been pledged to a third party (as specifically
identified below), I will not be able to control the voting or disposition of
such shares in the event of a default.

 

5.             I agree not to offer, sell,
transfer or otherwise dispose of any shares of HNC common stock received
pursuant to the Merger, except:

 

(a)           at such time as a registration
statement under the Securities Act of 1933, as amended (“Securities Act”),
covering sales of such HNC common stock is effective and a prospectus is made
available under the Securities Act;

 

(b)           within the limits, and in accordance
with the applicable provisions of, Rule 145 under the Securities Act (“Rule 145”)
or upon expiration of all restrictions set forth in Rule 145 applicable to
me; or

 

2

 

(c)           in a transaction which, in an opinion
of counsel reasonably satisfactory to HNC or as described in a “no-action” or
interpretive letter from the staff of the SEC, is not required to be registered
under the Securities Act;

 

and
I acknowledge and agree that HNC is under no obligation to register the sale,
transfer or other disposition of HNC common stock by me or on my behalf, or to
take any other action necessary to make an exemption from registration
available.

 

6.             HNC shall take all steps necessary
to ensure that HNC is in compliance with all those requirements of Rule 145
and Rule 144 with which HNC must comply in order for the resale provisions
of Rule 145(d) to be available to me. 
In addition, HNC shall cause its Director of SEC Compliance (in his/her
absence, outside-counsel selected by HNC) to respond promptly to any requests
from HNC’s transfer agent for the issuance of an opinion that any transfer by
me that complies with the requirements of Rule 145 and 144 may be made
provided such counsel receives customary representation letters and all other
information and documentation reasonably required by HNC from me.

 

7.             I agree that neither WFB nor HNC
shall be bound by any attempted sale of any shares of WFB common stock or HNC
common stock, respectively, and WFB ‘s and HNC’s transfer agents shall be given
appropriate stop transfer orders and shall not be required to register any such
attempted sale, unless the sale has been effected in compliance with the terms
of this WFB Letter Agreement; and I further agree that (a) any certificate
representing shares of HNC common stock received by me pursuant to the Merger
may be endorsed with a restrictive legend consistent with the terms of this WFB
Letter Agreement; and (b) any shares of HNC common stock received by me
pursuant to the Merger in the form of book-entry shares may be subject to a
stop order consistent with the terms of this WFB Letter Agreement.  If at any point in time I hold certificates
representing shares of HNC common stock received by me in the Merger and such
certificates bear a restrictive legend, upon expiration of the restrictions set
forth in Rule 145 and applicable to me, upon my request, HNC shall cause
its director of SEC compliance (in his/her absence, outside-counsel selected by
HNC) to promptly issue an opinion to the transfer agent or provide other
documentation reasonably acceptable to the transfer agent so as to cause such
certificates to be reissued without such restrictive legend.

 

3

 

8.             I represent that I have the
capacity to enter into this WFB Letter Agreement and that it is a valid and
binding obligation enforceable against me in accordance with its terms, subject
to bankruptcy, insolvency and other laws affecting creditors’ rights and
general equitable principles.

 

For
the avoidance of doubt, I acknowledge that any references herein to WFB common
stock held by me include common stock issued or issuable upon the exercise of
any or all of my options to acquire shares of WFB common stock, which occur
prior to the completion of the Merger or the termination of this WFB Letter
Agreement, whichever occurs first.

 

The
agreements contained in this WFB Letter Agreement shall apply to me solely in
my capacity as a shareholder of WFB, and as an optionholder, if applicable, and
no agreement contained in this WFB Letter Agreement shall apply to me in my
capacity as a director, officer or employee of WFB or in any other fiduciary
capacity, other than as a fiduciary or a trust of which I am a beneficiary.  In addition, nothing contained in this WFB Letter
Agreement shall be deemed to apply to, or limit in any manner, my obligations
to comply with my fiduciary duties as an officer or director, as applicable, of
WFB.

 

4

 

This
WFB Letter Agreement shall be effective upon acceptance by HNC.

 

This
WFB Letter Agreement shall terminate concurrently with, and be of no further
force and effect concurrently with, and automatically upon the earlier to occur
of (a) the consummation of the Merger, (b) March 31, 2009 or (c) any
termination of the Agreement in accordance with its terms, except that any such
termination shall be without prejudice to HNC’s rights arising out of any
willful breach of any covenant or representation contained herein.

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
  [Name]

  

 

 

Number
of shares held:

 

Sole
voting power:

 

Shared
voting power:

 

Number
of shares subject

to
stock options:

 

Number
of pledged

 shares:

 

Accepted
:

 

	
  HARLEYSVILLE
  NATIONAL CORPORATION

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Paul
  D. Geraghty

  	
   

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  	
   

  

 

5

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