8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

______________

Date of Report (Date of earliest event reported): November 15, 2004

Harleysville National Corporation

(Exact name of registrant as specified in its charter)

Pennsylvania	0-15237	23-2210237
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

483 Main Street, Harleysville, PA 19438

       (Address of principal executive offices)    (Zip Code)

Registrant’s telephone number, including area code: (215) 256-8851

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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HARLEYSVILLE NATIONAL CORPORATION

CURRENT REPORT ON FORM 8-K

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On November 12, 2005, Harleysville National Corporation (the "Corporation") and The Harleysville National Bank and Trust Company, the wholly owned subsidiary of the Corporation (the "Bank"), and Walter E. Daller, Jr., President and Chief Executive Officer of the Corporation and Chairman of the board of directors, entered into a Consulting Agreement and General Release (the "Consulting Agreement"). The parties entered into the Consulting Agreement in connection with the announcement of Mr. Daller’s retirement, which is discussed further under Item 5.02 of this Current Report.

Among the terms of the Consulting Agreement: (1) Mr. Daller agreed to a general release to the Corporation and the Bank from any potential claims he could assert pursuant to his employment or his employment agreement, dated October 26, 1998, entered into by and among Mr. Daller, the Corporation and the Bank (the "Daller Employment Agreement"); (2) Mr. Daller will continue to serve as Chairman of the board of directors of the Corporation and the Bank; (3) from April 1, 2005 through March 31, 2008, Mr. Daller will provide consulting advice to the Corporation and Bank; (4) the term of the agreement will automatically extend for one additional year at the end of the initial three years and on every anniversary of the Consulting Agreement, unless notice to terminate is given 180 days prior to renewal; (5) Mr. Daller wil l receive $107,000 per year; (6) Mr. Daller will receive continuation of all life, disability, medical insurance and other normal health and welfare benefits for a period of five (5) years after the date of retirement; (7) Mr. Daller will receive dues and other expenses for membership at a country club. He will also receive an automobile, office space, and reimbursement of certain business expenses. The Consulting Agreement contains a restrictive covenant precluding Mr. Daller from engaging in competitive activities in a certain area and a provision preventing Mr. Daller from disclosing proprietary information about the Corporation.

The Consulting Agreement is attached as Exhibit 99.2 to this Current Report.

Harleysville Management Services, LLC, the wholly owned subsidiary of the Corporation ("HMS") entered into an employment agreement with Gregg J. Wagner, the current Executive Vice President and Chief Operating Officer of the Corporation that is effective January 1, 2005 (the "Wagner Employment Agreement"). The Wagner Employment Agreement was entered into in connection with Mr. Wagner’s promotion to President and Chief Operating Officer on January 1, 2005 and Mr. Wagner’s subsequent promotion to President and Chief Executive Officer of the Corporation on April 1, 2005, which is discussed under Item 5.02 of this Current Report. The terms of the Wagner Employment Agreement is set forth below.

HMS entered into an employment agreement with Michael B. High, the current Executive Vice President and Chief Financial Officer of the Corporation that is effective April 1, 2005 (the "High Employment Agreement"). The High Employment Agreement was entered into in connection with Mr. High’s promotion to Executive Vice President and Chief Operating Officer of the Corporation on April 1, 2005, which is discussed under Item 5.02 of this Current Report. The terms of the High Employment Agreement are set forth below.

The terms of the Wagner Employment Agreement and the High Employment Agreement (together the "Employment Agreements") are three years and will automatically extend for one additional year at the end of the first three years and on every anniversary of the Employment Agreements, unless notice to terminate is given 90 days prior to renewal. The Employment Agreements will automatically terminate for "Cause," as defined in the agreements, and all rights under the agreements will terminate. The

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Employment Agreements will automatically terminate if the executives terminate the agreements for "Good Reason," as defined in the agreements, or are terminated by the Corporation without cause and the executives will receive (1) the greater of the compensation they would receive for remainder of the agreements’ terms or one year’s compensation and (2) participation in the Corporation’s benefit plans for twelve months. The Employment Agreements will automatically terminate upon the executives’ disability, as defined in the agreements, and they will receive employee benefits and an amount no greater than 70% of their compensation less amounts payable under any disability plan until they (1) return to work, (2) reach 65, or (3) die. The Employment Agreements will automatically terminate upon the d eath of the executives and any compensation remaining for the term of the agreements will be paid to the executives’ survivors. The Employment Agreements will automatically terminate upon voluntary termination of the agreements by the executives absent "Good Cause," as defined in the agreements. The executives will be entitled to participate in annual and long term incentive plans and employee benefit plans, receive four weeks of vacation each year, and receive a car allowance. If the executives are terminated or upon occurrence of other events following a "Change in Control," as defined in the agreements, the executives may receive up to 2.99 times their then current compensation and will continue participation in employee benefit plans. The Employment Agreements contain restrictive covenants precluding the executives from engaging in competitive activities in a certain area and provisions preventing the executives from disclosing proprietary information about the Corporation.

In addition to the terms above, under the terms of the Wagner Employment Agreement, Mr. Wagner agrees to resign his directorship if his employment is terminated.

The Employment Agreements are attached as Exhibits 99.3 and 99.4 to this Current Report.

ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

Pursuant to the Consulting Agreement discussed in Item 1.01 to this Current Report, on March 31, 2005, the Daller Employment Agreement will terminate. According to the terms of the Consulting Agreement, Mr. Daller agreed to a general release of the Corporation and the Bank relating to any potential claims Mr. Daller might have under the Daller Employment Agreement. However, pursuant to the Daller Employment Agreement, the Corporation will pay Mr. Daller a lump sum equal to 1.5 times his "Agreed Compensation," as defined in the Daller Employment Agreement, on the date of his retirement. The Consulting Agreement and related termination of the Daller Employment Agreement are in connection with Mr. Daller’s retirement on March 31, 2005, which is discussed under Item 5.02 to this Current Report.

ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.

On November 15, 2004, the Corporation announced that Walter E. Daller, Jr., President and Chief Executive Officer of the Corporation, will retire from active management in the Corporation as Chief Executive Officer on March 31, 2005. Mr. Daller will relinquish the position of President of the Corporation on January 1, 2005. Mr. Daller will remain the Chairman of the board of directors of the Corporation and the Bank. Further, Mr. Daller has entered into a Consulting Agreement with the Corporation, the terms of which are discussed under Item 1.01 to this Current Report and attached hereto as Exhibit 99.2.

Gregg J. Wagner, age 44, the current Executive Vice President and Chief Operating Officer of the Corporation, will be promoted to President and Chief Operating Officer on January 1, 2005, and President

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and Chief Executive Officer on April 1, 2005. Information regarding Mr. Wagner’s background and business experience is included in the press release attached hereto as Exhibit 99.1 and is incorporated by reference. Effective January 1, 2005, the Corporation and Mr. Wagner will enter into the Wagner Employment Agreement, the terms of which are discussed under Item 1.01 to this Current Report. The Wagner Employment Agreement is attached hereto as Exhibit 99.3.

Michael High, age 56, the current Executive Vice President and Chief Financial Officer of the Corporation, will be promoted to Executive Vice President and Chief Operating Officer of the Corporation on April 1, 2005. Mr. High will continue to serve as Chief Financial Officer until a replacement is hired. Information regarding Mr. High’s background and business experience is included in the press release attached hereto as Exhibit 99.1 and is incorporated by reference. Effective April 1, 2005, the Corporation and Mr. High will enter into the High Employment Agreement, the terms of which are discussed under Item 1.01 to this Current Report. The High Employment Agreement is attached hereto as Exhibit 99.4.

Further, on November 10, 2004, Mr. Wagner and Deb Takes, President and Chief Executive Officer of Harleysville National Bank, the wholly owned subsidiary of the Corporation, were elected to the board of directors of the Corporation, subject to regulatory requirements and will begin serving on the board of directors after January 1, 2005. It is not currently known on which committees they will serve.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

Exhibit Number Description

99.1   Press Release dated November 15, 2004, issued by Harleysville National Corporation.

99.2 Consulting Agreement and General Release dated November 12, 2004, between Harleysville National Corporation, The Harleysville National Bank and Trust Company and Walter E. Daller, Jr.

99.3 Employment Agreement dated January 1, 2005, between Harleysville Management Services, LLC and Gregg J. Wagner.

99.4 Employment Agreement dated April 1, 2005, between Harleysville Management Services, LLC and Michael High.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Harleysville National Corporation

Date: November 16, 2004     BY: /s/ Michael High    

 Name:  Michael High

 Title: Executive Vice President

Chief Financial Officer

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EXHIBIT INDEX

EXHIBIT NO.   

99.1     Press Release dated November 15, 2004, issued by Harleysville National Corporation.

       99.2 Consulting Agreement and General Release dated November 12, 2004, between Harleysville National Corporation, The Harleysville National Bank and Trust Company and Walter E. Daller, Jr.

       99.3 Employment Agreement dated January 1, 2005, between Harleysville Management Services, LLC and Gregg J. Wagner.

       99.4 Employment Agreement dated April 1, 2005, between Harleysville Management Services, LLC and Michael High.

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EX-99.1 RELEASE

FOR IMMEDIATE RELEASE

CONTACT: Walter E. Daller Jr., Chairman, President and CEO

PHONE: 215-256-8851 ext. 2300

Parent Company of Harleysville National Bank

Daller to Retire at Harleysville National Corporation

Succession Plan Announced

HARLEYSVILLE, PA (November 15, 2004) - Harleysville National Corporation ("HNC") announced today that Walter E. Daller, Jr., President and Chief Executive Officer, will retire from active management of the Company as CEO on March 31, 2005. He will continue as a board member and as Chairman of both the corporation and the bank supporting the transition to the new management team.

The board of directors of HNC unanimously approved a succession plan that will appoint Gregg J. Wagner, now executive vice president and chief operating officer, as president and chief operating officer on January 1, 2005, and president and chief executive officer on April 1, 2005. Wagner will join both the corporation and bank boards of directors. Deb Takes, President and Chief Executive Officer of Harleysville National Bank ("HNB") will continue in that role and will also be appointed to the board of HNC. She is already a member of the board of HNB. Additionally, Michael High, currently executive vice president and chief financial officer, will be named executive vice president and chief operating officer effective April 1, 2005. High will retain the title of chief financial officer until a replacement is hired.

Daller, a 41-plus year veteran of the $2.9 billion financial institution, said, "I believe this management succession plan provides a highly qualified, experienced and proven team leading our company. They have proven themselves as dedicated, committed, professional managers and bankers."

Wagner expressed appreciation to the board and said he looks forward to working with the strong senior management team that has been assembled. "We will not change our core strategies that have provided superior performance for our shareholders," he said. "We are dedicated to maintaining a strong focus on providing exceptional service to our customers which has been the foundation for our continued growth and financial success. Our commitment to the bottom line and shareholder value remains our highest priority."

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Daller has served as chairman, president and chief executive officer of HNC and HNB from April 1981 until January 2001, when he was chairman of HNB and chairman, president and chief executive officer of the corporation. He is currently serving a three-year term as a director of the Federal Reserve Bank of Philadelphia. In the recent past, he served a three-year term on the prestigious Federal Advisory Council where he met with Chairman Greenspan and the Board of Governors on a quarterly basis advising them on economic conditions in the region, interest rates and other banking and industry matters. He served for many years on the Board of Directors of the Independent Community Bankers of America, and also as their treasurer and on the Executive Committee. He is a past president of the Community Bankers of Pennsylvania. Within the community, Mr. Daller is currently serving on the boards of directors of the North Penn United Way, the Lower Salford Historical Society, the Muhlenberg House, Montgome ry County Lands Trust and the Perkiomen Valley Watershed.

Wagner joined Harleysville National Bank in 1994 when Security National Bank of Pottstown was acquired. Since then, he has successfully undertaken roles of increasing responsibility, including senior vice president of finance and chief financial officer. In his current role as executive vice president and chief operating officer, he directs numerous areas of the company including information technology, human resources, marketing, retail sales, customer support and facilities. He is also chairman of the Strategic Planning Committee. He is a Certified Public Accountant with a Masters of Science degree in finance from Drexel University and a Bachelor’s degree in accounting from Clarion University of Pennsylvania.

High was named executive vice president and chief financial officer in February 2004. He has over 30 years of financial experience. He most recently held the position of chief financial officer and chief operating officer at Progress Financial Corporation, Blue Bell. Prior to that, he served as senior vice president of finance at both CoreStates Financial and Meridian Bancorp. He is a Certified Public Accountant with a Bachelor of Science degree from the Pennsylvania State University.

Daller went on to say, "We have built a very strong management team within Harleysville National Corporation that will serve HNB and its subsidiaries for years to come. They share my vision of many years to build a strong independent financial institution that will serve our customers, our communities and our shareholders."

The Company also announced pursuant to the terms of Daller’s employment agreement, it will record a one time after-tax charge of $780,000 or $.03 per share during the fourth quarter of 2004. In addition, the Company entered into a new agreement with Mr. Daller to serve as Chairman of the Board and to assist the board in strategic matters.

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Harleysville National Corporation, with assets of $2.98 billion, is the holding company for Harleysville National Bank (HNB). Investment Management and Trust Services are provided through Millennium Wealth Management and Private Banking, a division of HNB, with assets under management exceeding $1.4 billion. Cumberland Advisors, Inc., a registered investment advisor specializing in fixed-income money management and equities, using exchange-traded funds, is also a part of Millennium Wealth Management and Private Banking. Harleysville National Corporation stock is traded under the symbol "HNBC" and is commonly quoted under Nasdaq National Market Issues. For more information, visit the HNC Web site at www.hncbank.com.

This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. Such factors include the possibility that increased demand or prices for the Company’s financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the company’s filings with the Securities and Exchange Commission.

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EX-99.2 CONSULT AGMT

CONSULTING AGREEMENT AND GENERAL RELEASE

THIS AGREEMENT is made as of the 12th day of November, 2004, between HARLEYSVILLE NATIONAL CORPORATION ("HNC"), a Pennsylvania business corporation having a place of business at 483 Main Street, Harleysville, Pennsylvania 19438, THE HARLEYSVILLE NATIONAL BANK AND TRUST COMPANY ("Bank") a national banking association having a place of business at 483 Main Street, Harleysville, Pennsylvania 19438, and WALTER E. DALLER, JR. ("Daller"), an individual residing at 719 Clayhor Avenue, Collegeville, Pennsylvania 19426.

W I T N E S S E T H :

WHEREAS, Daller desires to end his Daller Employment Agreement entered into by and among Daller, HNC and Bank dated October 26, 1998 (hereinafter "Employment Agreement") and retire effective as of the close of business on March 31, 2005; and

WHEREAS, Daller will continue to serve as Chairman of the Board of Directors of HNC and the Bank through the end of this Agreement and remain on the Board of Directors of HNC and the Bank through the end of this Agreement and thereafter, as decided by the Board of Directors of HNC; and

WHEREAS, Daller will provide consulting services to HNC and Bank from April 1, 2005 through March 31, 2008; and

WHEREAS, HNC, Bank and Daller desire to resolve their employment relationship in a final and definitive manner, including their mutual obligations under the Employment Agreement and to avoid any protracted issues and disputes between them; and

WHEREAS, HNC and Bank recognize Daller’s many years of loyal, dedicated, successful and distinguished service,

NOW THEREFORE, IN CONSIDERATION of the mutual covenants set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1. Release. Effective April 1, 2005, Daller will end his employment and retire from all offices and positions with HNC, Bank, and their subsidiaries and affiliates; provided, however, that he will continue to serve as Chairman of the Board of Directors of HNC and the Bank and a member of the Board of Directors of HNC and the Bank, consistent with Section 3 of this Agreement. For and in consideration of the benefits provided to Daller under his Employment Agreement and a Supplemental Executive Retirement Plan and the agreements and commitments set forth in this Agreement, Daller does hereby knowingly and voluntarily release and forever discharge, both jointly and severally, HNC and Bank and all of their subsidiaries, divisions, affiliates, and their officers, directors, employees, shareholders, servants, agents and attorneys, in their official and individual capacities, together with their predecessors, successors and/or assigns (hereinafter "HNC") from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, damages, judgments, claims and/or demands whatsoever, in law or in

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equity (hereinafter collectively referred to as "claims"), whether known or unknown to Daller, which Daller ever had, now has or may or might in the future have against HNC, based on any acts, omissions, transactions or occurrences whatsoever occurring prior to or on the date of execution of this Agreement, and specifically, but not by way of limitation, from those claims which are, or arise by reason of, or are in any way connected with, or which are or may be based in whole or in part on, or do or may arise out of, or are or may be related to or with (i) the employment relationship which existed between Daller and HNC and subsequent termination thereof; (ii) those claims arising under any state fair employment practices act and/or any law, ordinance or regulation promulgated by any county, municipality or other s tate subdivision; (iii) those claims for breach of duty and/or implied covenant of good faith and fair dealing; (iv) those claims for interference with and/or breach of contract (express or implied, in fact or in law, oral or written), including the Employment Agreement entered into by and among Daller, HNC and Bank, and dated October 26, 1998; (v) those claims for retaliatory or wrongful discharge of any kind; (vi) those claims for intentional or negligent infliction of emotional distress or mental anguish; (vii) those claims for outrageous conduct; (viii) those claims for interference with business relationships, contractual relationships or employment relationships of any kind; (ix) those claims for breach of duty, fraud, fraudulent inducement to contract, breach of right of privacy, libel, slander, or tortious conduct of any kind; (x) those claims arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e, etseq.; (xi) those claims under the National Labor Relations Act, 29 U.S.C. §51 etseq.; (xii) those claims arising under the Age Discrimination in Employment Act, 29 U.S.C. §621 etseq.; (xiii) those claims arising under the Americans with Disabilities Act, 42 U.S.C. §12101 etseq.; (xiv) those claims arising under the Civil Rights Act of 1866 or 1871, 42 U.S.C. §1981 etseq.; (xv) those claims arising under the Family and Medical Leave Act of 1993, 29 U.S.C. §2601, etseq.; (xvi) those claims arising under any state or federal handicap age or disability discrimination law or act; (xvii) those claims arising from any damages suffered at any time after the date of this Agreement by reason of the effects or continued effects of any alleged or actual discriminatory or wrongful acts which occurred on or before the date of the execution of this A greement; (xviii) those claims arising under Pennsylvania Workers’ Compensation laws; (xix) those claims arising under or in reliance upon any statute, regulation, rule or ordinance (local, state or federal), including, without limitation, any claims brought pursuant to the Pennsylvania Human Relations Act, 43 P.S. §951 etseq.; (xx) any and all other claims arising under the law or in equity; (xxi) any and all other claims asserted or which could have been asserted by Daller in any other charges or claims of alleged violation of any applicable law, rule, ordinance or regulation; and (xxii) any and all claims for any remedies w hich might otherwise be available to him including, without limitation, claims for contract or tort damages, punitive or exemplary damages, special damages, compensatory damages, consequential damages, lost benefits of any kind including, without limitation, life insurance, sick pay, severance pay or medical benefits, recovery of attorneys’ fees, costs, expenses of any kind, and reinstatement to a position of employment or reemployment with HNC. It is understood and agreed that the waiver of benefits contained in the preceding sentence does not include the waiver of any vested, non-forfeitable pension, profit sharing or other retirement benefits to which Daller is entitled through an existing or prior retirement or profit sharing program, or the benefits provided in the Employment Agreement and the Supplemental Executive Retirement Plan upon retirement after age 65, and the consideration specified in this Section. It is also understood that this Agreement does not affect any of Daller’s stock optio ns, grants or awards that exist prior to and as of March 31, 2005 and that all such stock options, grants and awards shall continue in full force and effect pursuant to their terms.

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 Daller further covenants that he has not filed any charge, complaint or action before any federal, state or local administrative agency or court against HNC and that he shall not sue HNC or participate in any way in any suit or proceeding or to execute, seek to impose, collect or recover upon or otherwise enforce or accept any judgment, decision, award, warranty or attainment upon any claim released herein.

2. Review of Agreement. Daller acknowledges and promises that he has carefully reviewed, studied and thought over the terms of this Agreement and that all questions concerning this Agreement have been answered to his satisfaction. Daller acknowledges that he has been advised to consult with his private attorney prior to executing this Agreement. Daller further agrees, acknowledges, and promises that prior to execution of this Agreement, he was encouraged and afforded th e opportunity to review it with any professional on his behalf, including his accountant or tax advisor, and that, to the extent desired, he has availed himself of that opportunity. Daller does further acknowledge and agree that he was given a period of at least twenty-one (21) days within which to consider this Agreement, that he has had this Agreement in his possession for a reasonable amount of time, and that he has had the opportunity to consider and reflect upon the terms of this Agreement before signing or executing it. Daller does further acknowledge and agree that he knowingly and voluntarily entered into and executed this Agreement after deliberate consideration and that he was not coerced, pressured or forced in any way by HNC or anyone else to accept the terms of this Agreement, and that the decision to accept the terms of this Agreement was entirely his own after an opportunity for full consultation with his attorney. Daller also acknowledges and agrees that he fully understands that he may be gi ving up certain legal rights by entering into this Agreement. Daller also acknowledges that he understands that he has seven (7) days to revoke this Agreement following its execution by mailing written notice of revocation postmarked within that seven (7) day period to: Robert Reilly, Senior Vice President, Human Resources, Harleysville National Corporation, 483 Main Street P.O. Box 195 Harleysville, PA 19438-0195.

By placing his initials at the end of this paragraph, Daller acknowledges that he has been informed about his rights and that he specifically waives any claim that he may have arising under the Older Workers Benefits Protection Act, and that he has had an opportunity to consult with his attorney regarding his rights, that he has been advised of the requirement that HNC allow him twenty-one (21) days to consider this waiver, and that he may revoke the waiver, once given, at any time during the seven (7) day period following the signing of the waiver. /s/ WED

 WED

3. Board Service. HNC and Daller agree that subject to HNC’s Board of Directors’ fiduciary duties, the rules and regulations of the Securities and Exchange Commission, the listing requirements, rules or regulations of NASDAQ, any required approval of HNC’s shareholders, and any legal prohibitions, Daller will continue to serve as Chairman of the Board of Directors of HNC and the Bank through the end of this Agreement and thereafter, as decided by the Boar d of Directors of HNC and the Bank. Subject to HNC’s Board of Directors’ fiduciary duties, the rules and regulations of the Securities and Exchange Commission, the listing requirements, rules or regulations of NASDAQ, the approval of HNC’s shareholders, and any legal prohibitions, Daller will remain on the Board of Directors of HNC and the Bank through the end of this Agreement and thereafter, as decided by the Board of Directors of HNC and the Bank. Daller shall continue to perform and discharge well and

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faithfully duties as Chairman of the Board of Directors of HNC and the Bank as may be assigned to Daller by the Board of Directors of HNC and the Bank. Daller shall be entitled to receive directors’ fees from HNC during the Consulting Period (as defined in Section 4 of this Agreement).

4. Consulting Services. For the period of April 1, 2005 through March 31, 2008 (hereinafter the "Consulting Period"), Daller shall provide consulting services to the Board of Directors of the Corporation and the Bank, the President and Chief Executive Officer and senior management team of HNC and the Bank to assist them in their new management roles, at the request of HNC’s and the Bank’s Board of Directors, and/or President and Chief Executive Officer. It i s anticipated that services provided will include business development, board development and education, corporate governance, assistance in strategic planning, clarification of company vision and merger and acquisition advice. The Consulting Period shall be automatically extended on the third anniversary date of commencement of the Consulting Period (the "Annual Renewal Date") and on the same date of each subsequent year for a period ending one (1) year from each Annual Renewal Date, unless either party shall give written notice of nonrenewal to the other party at least one hundred eighty (180) days prior to an Annual Renewal Date, in which event this Agreement shall terminate at the end of the then existing Consulting Period.

5.Payments for Services. For services performed by Daller under this Agreement, HNC shall pay Daller an annual fee of OneHundred Seven Thousand Dollars ($107,000), payable in four (4) equal quarterly installments, beginning in April 2005. Daller shall be an independent contractor; consequently, no taxes or other deductions will be withheld from the payments. HNC will provide Daller with Internal Revenue Service Form 1099, reflecting the fees that HNC pays Daller for the consulting services that Daller provides to HNC and its management team.

6.Continuation of Benefits. For and in consideration of the agreements and commitments set forth in this Agreement, including Daller’s execution of the release contained in this Agreement, HNC and Bank will continue to provide Daller with the benefits identified in Section 3 (h) of the Employment Agreement, and, in addition, HNC will continue to reimburse Daller for any and all initiation fees, membership dues, assessments, and reasonably related business expenses associated with Daller’s membership in Spring Ford Country Club. In addition, HNC shall transf er to Daller the automobile utilized by Daller at his retirement from employment with HNC. HNC will also provide Daller with continued use of the office space that he occupied at HNC’s Main Street office building during his employment with HNC,until HNC and Daller mutually designate other space in the Main Street office. Finally, HNC will continue to reimburse Daller for any and all fees, costs and reasonably related business expenses associated with his participation and attendance at the conferences that he traditionally attended during his employment with HNC, at the request of HNC.

7. Restrictive Covenant.

(a) Daller hereby acknowledges and recognizes the highly competitive nature of the business of HNC and Bank and accordingly agrees that, during and for the applicable period set forth in Section 7(c) hereof, Daller shall not:

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(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 holding company) or financial services industry, or (2) any other activity in which HNC or Bank or any of their subsidiaries are engaged during the Consulting Period, in any county in which, at any time during the Cons ulting Period or at the date of termination of the Daller's employment, a branch, office or other facility of HNC or Bank or any of their 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 holding company) or financial services industry, or (2) any other activity in which HNC or Bank or any of their subsidiaries are engaged during the Consulting Period, in the Non-Competition Area; or

(iii) solicit current and former customers of HNC, Bank or any HNC subsidiary in the Non-Competition Area; or

(iv) solicit current or former employees of HNC, Bank or any HNC subsidiary.

(b) It is expressly understood and agreed that, although Daller and HNC and Bank consider the restrictions contained in Section 7(a) hereof reasonable for the purpose of preserving for HNC and Bank 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 7(a) hereof is an unreasonable or otherwise unenforceable restriction against Daller, the provisions of Section 7(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 7 shall be applicable commencing on the date of this Agreement and ending one year after the termination of the consulting relationship.

8.Unauthorized Disclosure. During the term of the Consulting Period, or at any later time, Daller 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 or director of HNC or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by Daller of his consulting duties, any material confidential information obtained by him during his employment with HNC or the Consulting Period, with respect to any of HNC’s services, products, improvements, formulas, designs or styles, processes, customers, customer lists, 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 Daller or any person with the assistance, consent or direction of Daller) or any information of a

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type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by HNC or any information that must be disclosed as required by law.

9.Indemnification. The Corporation and/or Bank will indemnify Daller, to the fullest extent permitted under Pennsylvania and federal law, with respect to any threatened, pending or completed legal or regulatory action, suit or proceeding brought against him by reason of the fact that he is or was a director, officer, employee, consultant or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, consultant or agent of another person or e ntity. To the fullest extent permitted by Pennsylvania and federal law, the Corporation will, in advance of final disposition, pay any and all expenses incurred by Daller in connection with any threatened, pending or completed legal or regulatory action, suit or proceeding with respect to which he may be entitled to indemnification hereunder.

10. 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 Daller 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 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.

11. Assignment. This Agreement shall not be assignable by any party, except by

HNC to any successor in interest to their respective businesses.

12. Attorney’s Fees and Costs. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, each party shall bear their own attorney’s fees and costs.

13. 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.

(b)This Agreement shall inure to the benefit of and be enforceable by Daller’s personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If Daller should die and any amounts would be payable to Daller under this Agreement if Daller had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Daller’s devisee, legatee, or other designee, or, if there is no such designee, to Daller’s estate.

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.

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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.

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.

17. Pronouns. Any pronouns used in this Agreement are intended to refer to Daller, regardless of the pronoun’s gender.

18. 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, as follows:

If to Daller:     Mr. Walter E. Daller, Jr.

     719 Clayhor Avenue

Collegeville, Pennsylvania 19426

If to HNC: ****.

     President and CEO

Harleysville National Corporation

483 Main Street,

Harleysville, Pennsylvania 19438

or to such other address as either party may have furnished to the other in writing, except that notices of change of address shall be effective only upon actual receipt.

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

ATTEST:     HARLEYSVILLE NATIONAL CORPORATION

/s/ Jo Ann M. Bynon   By /s/ Harold A. Herr

Jo Ann M. Bynon, Secretary   Harold A. Herr

WITNESS: WALTER E. DALLER, JR.

/s/ Jo Ann M. Bynon          /s/ Walter E. Daller, Jr.

Jo Ann M. Bynon        Walter E. Daller, Jr.

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EX-99.3 WAGNER AGM

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") is made as of January 1, 2005, between HARLEYSVILLE MANAGEMENT SERVICES, LLC ("HMS"), a corporation having a place of business at 483 Main Street, Harleysville, Pennsylvania 19438; and GREGG J. WAGNER ("Executive"), an individual residing at 1024 Red Tail Road, Audubon, Pennsylvania 19403.

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; and

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; and

WHEREAS, HMS employs Executive as Executive Vice President and Chief Operating Officer of HNC; and

WHEREAS, HMS desires to promote Executive to the position of President and Chief Operating Officer of HNC, effective January 1, 2005, and then to the position of President and Chief Executive Officer, effective April 1, 2005, under the terms and conditions set forth herein; and

WHEREAS, Executive desires to accept those promotions under the terms and conditions set forth herein,

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 of Employee. Executive shall perform and discharge well and faithfully such duties as an executive officer of HNC as may be assigned to Executive from time to time by the Board of Directors of HNC. Effective January 1, 2005, Executive shall be President and Chief Operating Officer of HNC; and effective April 1, 2005 Executive shall be President and Chief Executive Officer of HNC; and Executive shall hold such other titles as may be given to him from time to time by the Board of Directors of HNC. Executive shall devote his full time, attention and energies to the business of HNC 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

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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. 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.

3. Term of Agreement.

(a) This Agreement shall be for a three (3) year period (the "Employment Period") beginning on January 1, 2005 and ending three (3) years later. The Employment Period shall be automatically extended on the third anniversary date of commencement of the Employment Term and on the same date of each subsequent year (the "Renewal Date") 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 willful failure to follow the good faith lawful instructions of the Board of Directors of HNC with respect to its operations;

(iii) Executive's willful 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 or any of its subsidiaries or affiliates;

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

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(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 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 President of HNC, (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 f ifty (50) 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 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

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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 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 thereduction plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstan ding 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.

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.

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(e) Notwithstanding the provisions of Section 3(a) of this Agreement, this Agreement shall terminate automatically upon Executive's death; provided however that such portion, if any, of Executive’s Annual Base Salary for the then existing Employment Period in which his death occurs that had not been paid to Executive shall be paid to Executive’s devisee, legatee or other designee, or if there is no such designee, to Executive’s estate.

(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 plus the highest annual incentive bonus paid to Executive during the previous two years.

(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.

4. Employment Period Compensation.

(a) Annual Base Salary.For services performed by Executive under this Agreement, HMS shall pay Executive an Annual Base Salary at the rate of $250,000 per year through March 31, 2005 and $287,000 per year effective April 1, 2005; 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) 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 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 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

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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 a seven hundred dollars ($700) per month car allowance and 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 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 HNC or any of its subsidiaries or affiliates for a significantly greater period of time during any year than was required of Executive

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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.

(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 2.99 times the Executive's Agreed Compensation as defined in subsection (g) of Section 3, which amount shall be payable in thirty-six (36) equal monthly installments; and (ii) subject to plan terms, Executive’s continued participation in HMS's employee benefit plans for thirty-six (36) 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.

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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'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.

(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 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 employe e 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

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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.

(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.

(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 accordingly agrees that, during his employment and for a period of one 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

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(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.

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 whic h 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 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

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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.

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; provided however, that such rights as Executive may have under HNC’s Notices of Grant of Incentive Stock Option to Executive dated October 27, 1998, December 1, 2000 and December 30, 2003 and under HNC’s Notice of Grant of Non-Qualified Stock Option to Executive dated December 30, 2003 are not affected by this Agreement.

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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 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. 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 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"). 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 proceedings in any pending or subsequently filed litigation concerning this Agreeme nt, 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 SERVICES, LLC

/s/ Robert L. Reilly /s/ Walter E. Daller, Jr.

WITNESS:EXECUTIVE

/s/ Jo Ann M. Bynon /s/ Gregg J. Wagner

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EX-99.4 HIGHAGREEMNT

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") is made as of April 1, 2005, between HARLEYSVILLE MANAGEMENT SERVICES, LLC ("HMS"), a corporation having a place of business at 483 Main Street, Harleysville, Pennsylvania 19438; and MICHAEL B. HIGH ("Executive"), an individual residing at 360 Colonial Avenue, Collegeville, Pennsylvania 19 426.

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 employs Executive as Executive Vice President and Chief Financial Officer of the Bank and HNC pursuant to an employment agreement dated February 23, 2004;

WHEREAS, HMS desires to promote Executive and employ him as Executive Vice President and Chief Operating Officer of the Bank and HNC, effective April 1, 2005, under the terms and conditions set forth herein;

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

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 of Employee. 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 Boards of Directors of HNC and Bank. Executive shall be Executive Vice President and Chief Operating Officer of the Bank and HNC, 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 fr om (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,

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with the prior approval of the Board of Directors of HNC and Bank. 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.

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 and on the same date of each subsequent year (the "Renewal Date") 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 willful failure to follow the good faith lawful instructions of the Board of Directors of HNC or the Bank with respect to the operations of HNC or the Bank; or

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

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(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;

(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, HNC 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 Executive Vice President and Chief Operating Officer of Bank and HNC, (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 require s Executive to move his principal office more than fifty (50) 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 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

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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.

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 thereduction plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstan ding 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.

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

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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; provided however that such portion, if any, of Executive’s Annual Base Salary for the then existing Employment Period in which his death occurs that had not been paid to Executive shall be paid to Executive’s devisee, legatee or other designee, or if there is no such designee, to Executive’s estate.

(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 plus the highest annual incentive bonus paid to Executive during the previous two years.

(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.

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 $235,000.00 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 amendm ents 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) 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 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 HNC.

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(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 a six hundred dollars ($600) per month car allowance and 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 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

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(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 such 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:

(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 2.99 times the Executive's Agreed Compensation as defined in subsection (g) of Section 3, which amount shall be payable in thirty-six (36) equal monthly installments; and (ii) subject to plan terms, Executive’s continued participation in HMS's employee benefit plans for thirty-six (36) months or until Executive secures substantially similar benefits through other employment, whichever shall

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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.

(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 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 em ployee 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

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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.

(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.

(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 accordingly agrees that, during his employment and for a period of one 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

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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.

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 whic h 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 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

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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.

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; provided however, that such rights as Executive may have under HNC’s Notice of Grant of Incentive Stock Options to Executive dated February 23, 2004 are not affected by 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

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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 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. 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 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"). 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 proceedings in any pending or subsequently filed litigation concerning this Agreeme nt, 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.

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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 SERVICES, LLC

/s/ Robert L. Reilly /s/ Walter E. Daller, Jr.

WITNESS:EXECUTIVE

/s/ Jo Ann M. Bynon /s/ Michael B. High

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