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 - March 25, 1999
HARLEYSVILLE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 0-15237 23-2210237
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State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification Number)
483 Main Street
Harleysville, Pennsylvania 19438
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (215) 256-8851
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N/A
_____________________________________________________________
(Former name or former address, if changed since last report)
Page 1 of 45 Sequentially Numbered Pages
Index to Exhibits Found on Page 5
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Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
The Registrant files this Current Report on Form 8-K to file certain
contracts with the Commission, which are attached as exhibits to this
Current Report.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits:
99.1 Employment Agreement, dated October 26 , 1998, between Walter E.
Daller, Jr., Harleysville National Corporation and Harleysville
National Bank & Trust Company.
99.2 Employment Agreement, dated October 26, 1998, between Vernon l.
Hunsberger, Harleysville National Corporation and Harleysville
National Bank & Trust Company.
99.3 Employment Agreement, dated October 26, 1998, between Demetra M.
Takes, Harleysville National Corporation and Harleysville
National Bank & Trust Company.
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Item 8. Change in Fiscal Year.
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S
Not Applicable.
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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
(Registrant)
Dated: March 25, 1999 /s/ Walter E. Daller, Jr.
------------------------------------
Walter E. Daller, Jr.,
President and Chief Executive Officer
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EXHIBIT INDEX
Page Number
in Manually
Exhibit Signed Original
- ------- ----------------
99.1 Employment Agreement, dated October 26, 1998, 6
between Walter E. Daller, Jr., Harleysville
National Corporation and Harleysville National
Bank & Trust Company.
99.2 Employment Agreement, dated October 26, 1998, between 20
Vernon L. Hunsberger, Harleysville National Corporation
and Harleysville National Bank & Trust Company.
99.3 Employment Agreement, dated October 26, 1998, 33
between Demetra M. Takes, Harleysville
National Corporation and Harleysville National
Bank & Trust Company.
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 26th day of October, 1998, 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. ("Executive"), an individual
residing at 719 Clayhor Avenue, Collegeville, Pennsylvania 19426.
WITNESSETH:
WHEREAS, HNC and Bank desire to employ Executive to serve in the capacity
of Chairman of the Board, President and Chief Executive Officer of each of HNC
and Bank under the terms and conditions set forth herein;
WHEREAS, Executive desires to accept employment with HNC and Bank on the
terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment. HNC and Bank hereby employ Executive and Executive hereby
accepts employment with HNC and Bank, under 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 and Bank as may be
assigned to Executive from time to time by the Board of Directors of HNC
and Bank. Executive shall be employed as Chairman of the Board, President
and Chief Executive Officer of HNC and Bank, and shall hold such other
titles as may be given to him from time to time by the Board of Directors
of HNC and Bank. Executive shall devote his full time, attention and
energies to the business of HNC and Bank during the Employment Period (as
defined in Section 3 of this Agreement); provided, however, that this
Section 2 shall not be construed as preventing Executive from (a) engaging
in activities incident or necessary to personal investments, (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, or (c) being involved
in any other activity 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 which compete with the business or
commercial activities of HNC or Bank, nor may the Executive serve as a
director or officer or in any other capacity in a company which competes
with HNC or Bank.
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3. Term of Agreement.
(a) This Agreement shall be for a five (5) year period (the "Employment
Period") beginning on the 26th day of October, 1998 and if not
previously terminated pursuant to the terms of this Agreement, the
Employment Period shall end five (5) years later. The Employment
Period shall be automatically extended on the fifth anniversary date
of commencement of the Employment 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 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 each of HNC and
Bank 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 for a period
of sixty (60) consecutive days or more;
(ii) Executive's willful failure to follow the good faith lawful
instructions of the Board of Directors of HNC or Bank with
respect to their operations, after written notice from HNC or
Bank and a failure to cure such violation within ten (10) days of
said written notice, unless it is apparent under the
circumstances that Executive is unable to cure such violation; or
(iii)Executive's willful failure to substantially perform Executive's
duties to HNC or 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, after written
notice from HNC or Bank and a failure to cure such violation
within ten (10) days of said written notice, unless it is
apparent under the circumstances that Executive is unable to cure
such violation, which failure results in injury to HNC or Bank,
monetarily or otherwise.
(iv) Executive's intentional violation of the provisions of this
Agreement, after written notice from HNC or Bank and a failure to
cure such violation within ten (10) days of said written notice,
unless it is apparent under the circumstances that Executive is
unable to cure such violation;
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(v) dishonesty of the Executive in the performance of his duties;
(vi) Executive's removal or prohibition from being an
institutional-affiliated party by a final order of an appropriate
federal banking agency pursuant to Section 8(e) of the Federal
Deposit Insurance Act or by the Office of the Comptroller of the
Currency pursuant to national law.
Notwithstanding the foregoing, the Executive's employment under this
Agreement shall not be deemed to have been terminated for "Cause"
under this Section 3(b) above if such termination took place solely as
a result of:
(i) Questionable judgment on the part of the Executive;
(ii) Any act or omission believed by the Executive, in good faith, to
have been in, or not opposed to, the best interests of HNC or
Bank (or its affiliated companies); or
(iii)Any act or omission in respect of which a determination could
properly be made that the Executive met the applicable standard
of conduct prescribed for indemnification or reimbursement or
payment of expenses under the Charter or By-laws of HNC or Bank
or the directors' and officers' liability insurance of HNC or
Bank, in each case as in effect at the time of such act or
omission.
If this Agreement is terminated for Cause, all of 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 Chairman of the Board, President and Chief
Executive Officer of HNC and Bank, (ii) a reassignment which requires
Executive to move his principal residence, (iii) any removal of the
Executive from office or any adverse change in the terms and
conditions of the Executive's employment, except for any termination
of the Executive's employment under the provisions of Section 3(b)
hereof, (iv) any reduction in the Executive's Annual Base Salary as in
effect on the date hereof or as the same may be increased from time to
time, (v) any failure of HNC and Bank to provide the Executive with
benefits at least as favorable as those enjoyed by the Executive under
any of the pension, life insurance, medical, health and accident,
disability or other employee plans of HNC and Bank, or the taking of
any action that would materially reduce any of such benefits unless
such reduction is part of a reduction applicable to all employees, or
(vi) the failure to extend the
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Agreement beyond the initial five (5) year Employment Period. If such
termination occurs for Good Reason, then HNC and Bank shall pay
Executive an amount equal to the greater of the remaining balance of
the Agreed Compensation otherwise due to the Executive for the
remainder of the then existing Employment Period or 2.99 times the
Executive's Agreed Compensation as defined in subsection (g) of this
Section 3, which amount shall be payable in thirty-six (36) equal
monthly installments and shall be subject to federal, state and local
tax withholdings. In addition, for a period of five (5) years from the
date of termination of employment, or until Executive secures
substantially similar benefits through other employment, whichever
shall first occur, Executive shall receive a continuation of all life,
disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if HNC and Bank cannot
provide such benefits because Executive is no longer an employee, a
dollar amount equal to the cost to Executive of obtaining such
benefits (or substantially similar benefits). If permitted under the
terms of the plan, Executive shall receive the additional retirement
benefits to which he would have been entitled had his employment
continued through the then remaining term of the Agreement. However,
in the event the payment described herein, when added to all other
amounts or benefits provided to or on behalf of the Executive in
connection with the termination of his employment, would result in the
imposition of an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), such payments shall be
retroactively (if necessary) increased to the extent necessary to
cover such excise tax imposition and any incremental income taxes he
may be required to pay by reason of the receipt of additional amounts
under this Agreement.
At the option of the Executive, exercisable by the Executive within
ninety (90) days after the occurrence of the event constituting "Good
Reason," the Executive may resign from employment under this Agreement
by a notice in writing (the "Notice of Termination") delivered to HNC
and Bank and the provisions of this Section 3(c) hereof shall
thereupon apply.
(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 70% of the Executive's Agreed Compensation as defined
in subsection (g) of this Section 3, less amounts payable under any
disability plan of HNC and Bank, until the earliest of (i) Executive's
return to employment, (ii) his attainment of age 65, or (iii) his
death. In addition, Executive shall receive for such period a
continuation of all life, disability, medical insurance and other
normal health and welfare benefits in effect with respect to Executive
during the two (2) years prior to his disability, or, if HNC and Bank
cannot provide
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such benefits because Executive is no longer an employee, a dollar
amount equal to the cost to Executive of obtaining such benefits (or
substantially similar benefits). For purposes of this Agreement, the
Executive shall have a Disability if, as a result of physical or
mental injury or impairment, Executive is unable to perform all of the
essential job functions of his position on a full time basis with or
without a reasonable accommodation and without posting a direct threat
to himself and others, for a period of ninety (90) days.
(e) Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive's death and
Executive's rights under this Agreement shall cease as of the date of
such termination; provided, however, that HNC and Bank shall pay to
the Executive's designated beneficiary an amount equal to 2.99 times
the Executive's Annual Base Salary, as defined in subsection (a) of
Section 4, over a period of thirty-six (36) months.
(f) Executive agrees that in the event his employment under this Agreement
is terminated, Executive shall resign as a director of HNC and Bank,
or any affiliate or subsidiary thereof, if he is then serving as a
director of any of such entities.
(g) The term "Agreed Compensation" shall equal the sum of (A) the
Executive's highest Annual Base Salary under the Agreement, and (B)
the average of the Executive's annual bonuses with respect to the
three (3) calendar years immediately preceding the Executive's
termination.
(h) If the Executive elects to retire prior to the expiration of this
Agreement, then HNC and Bank shall pay to Executive a lump sum amount
equal to 1.5 times Executive's Agreed Compensation on the date of his
retirement. In addition, for a period of five (5) years from the date
of retirement, Executive shall receive a continuation of all life,
disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to his early retirement or, if HNC and Bank cannot provide such
benefits because Executive is no longer an employee, a dollar amount
equal to the cost to Executive of obtaining such benefits (or
substantially similar benefits).
4. Employment Period Compensation.
(a) Annual Base Salary. For services performed by Executive under this
Agreement, HNC and Bank shall pay Executive an Annual Base Salary
during the Employment Period at the rate of $340,000.00 per year,
minus applicable withholdings and deductions, payable at the same
times as salaries are payable to other executive employees of HNC or
Bank. HNC and/or Bank may, from time to time, increase Executive's
Annual Base Salary, and any and all such increases shall be deemed to
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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 Bank or any committee of such Board
in the resolutions authorizing such increases.
(b) Bonus. For services performed by Executive under this Agreement, HNC
and/or Bank may, from time to time, pay a bonus or bonuses to
Executive as HNC and/or Bank, in their sole discretion, deem
appropriate. The payment of any such bonuses shall not reduce or
otherwise affect any other obligation of HNC and/or Bank to Executive
provided for in this Agreement.
(c) Vacations. During the term of this Agreement, Executive shall be
entitled to paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of HNC and
Bank. However, Executive shall not be entitled to receive any
additional compensation from HNC and Bank 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
Boards of Directors of HNC and Bank.
(d) Automobile. During the term of this Agreement, HNC and Bank shall
provide Executive with exclusive use of an automobile mutually agreed
upon by HNC and Bank. HNC and Bank shall be responsible and shall pay
for all costs of insurance coverage, repairs, maintenance and other
operating and incidental expenses, including license, fuel and oil.
HNC and Bank shall provide Executive with a replacement automobile at
approximately the time Executive's automobile reaches three (3) years
of age or 50,000 miles, whichever is first, and approximately every
three (3) years or 50,000 miles thereafter, upon the same terms and
conditions.
(e) Employee Benefit Plans. During the term of this Agreement, Executive
shall be entitled to participate in or receive the benefits of any
employee benefit plan currently in effect at HNC and Bank, subject to
the terms of said plan, until such time that the Boards of Directors
of HNC and Bank authorize a change in such benefits. HNC and Bank
shall not make any changes in such plans or benefits which would
adversely affect Executive's rights or benefits thereunder, unless
such change occurs pursuant to a program applicable to all executive
officers of HNC and Bank and does not result in a proportionately
greater adverse change in the rights of or benefits to Executive as
compared with any other executive officer of HNC and Bank. 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.
(f) Business Expenses. During the term of this Agreement, Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him, which
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are properly accounted for, in accordance with the policies and
procedures established by the Boards of Directors of HNC and Bank for
their 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 or 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 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 HNC or
Bank's retirement or pension, life insurance, medical, health and
accident, disability or other employee plans in which Executive
participated at the time of the Change in Control, or the taking
of any action that would materially reduce any of such benefits
in effect at the time of the Change in Control;
(vii)any requirement that Executive travel in performance of his
duties on behalf of HNC or Bank 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; or
(viii) any sustained pattern of interruption or disruption of
Executive for matters substantially unrelated to Executive's
discharge of Executive's duties on behalf of HNC and Bank;
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then, at the option of Executive, exercisable by Executive
within one hundred twenty (120) days of the Change in Control
or occurrence of any of the foregoing events, Executive may
resign from employment with HNC and Bank (or, if involuntarily
terminated, give notice of intention to collect benefits under
this Agreement) by delivering a notice in writing (the "Notice
of Termination") to HNC and Bank 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 or Bank,
(B) a sale, exchange, transfer or other disposition of
substantially all of the assets of HNC or Bank, or (C) a purchase
by HNC or Bank of substantially all of the assets of another
entity, unless (y) 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 or Bank who are not interested in the
transaction and (z) 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 or Bank; or
(ii) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")), other
than HNC or Bank or any "person" who on the date hereof is a
director or officer of HNC or Bank is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of HNC or Bank representing
twenty-five (25%) percent or more of the combined voting power of
HNC or Bank's then outstanding securities, or
(iii)during any period of two (2) consecutive years during the term
of Executive's employment under this Agreement, individuals who
at the beginning of such period constitute the Board of Directors
of HNC or Bank cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two-thirds of the
directors then in office who were directors at the beginning of
the period; or
(iv) any other change in control of HNC and Bank similar in effect to
any of the foregoing.
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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 HNC and 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, HNC and Bank shall pay Executive a lump sum amount equal to
and no greater than 2.99 times the Executive's Agreed Compensation as
defined in subsection (g) of Section 3, minus applicable taxes and
withholdings. In addition, for a period of three (3) years from the
date of termination of employment, or until Executive secures
substantially similar benefits through other employment, whichever
shall first occur, Executive shall receive a continuation of all life,
disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if HNC and Bank cannot
provide such benefits because Executive is no longer an employee, a
dollar amount equal to the cost to Executive of obtaining such
benefits (or substantially similar benefits). If permitted under the
terms of the plan, Executive shall receive additional retirement
benefits to which he would have been entitled had his employment
continued through the then remaining term of the Agreement. However,
if the payment described herein, when added to all other amounts or
benefits provided to or on behalf of the Executive in connection with
his termination of employment, would result in the imposition of an
excise tax under Code Section 4999, such payments shall be
retroactively (if necessary) increased to the extent necessary to
cover such excise tax imposition and any incremental income taxes he
may be required to pay by reason of the receipt of additional amounts
under this Agreement.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or
otherwise. Unless otherwise agreed to in writing, the amount of
payment or the benefit provided for in this Section 6 shall not be
reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive's receipt of
or right to receive any retirement or other benefits after the date of
termination of employment or otherwise.
7. Rights in Event of Termination of Employment Absent Change in Control.
(a) In the event that Executive's employment is involuntarily terminated
by HNC and/or Bank without Cause and no Change in Control shall have
occurred at the date of such termination, HNC and Bank shall pay
Executive an amount equal to and no greater than 2.99 times the
Executive's Agreed Compensation as defined in subsection (g)
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of Section 3, and shall be payable in thirty-six (36) equal monthly
installments and shall be subject to federal, state and local tax
withholdings. In addition, for a period of three (3) years from the
date of termination of employment, or until Executive secures
substantially similar benefits through other employment, whichever
shall first occur, Executive shall receive a continuation of all life,
disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if HNC and Bank cannot
provide such benefits because Executive is no longer an employee, a
dollar amount equal to the cost to Executive of obtaining such
benefits (or substantially similar benefits). In addition, if
permitted pursuant to the terms of the plan, Executive shall receive
additional retirement benefits to which he would have been entitled
had his employment continued through the then remaining term of the
Agreement. However, if the payment described herein, when added to all
other amounts or benefits provided to or on behalf of the Executive in
connection with his termination of employment, would result in the
imposition of an excise tax under Code Section 4999, such payments
shall be retroactively (if necessary) increased to the extent
necessary to cover such imposition and any incremental income taxes he
may be required to pay by reason of the receipt of additional amounts
under this Agreement.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 7 by seeking other employment or
otherwise. Unless otherwise agreed to in writing, 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.
8. Covenant Not to Compete.
(a) Executive 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 8(c) hereof,
Executive shall not:
(i) be engaged, directly or indirectly, either for his own account or
as agent, consultant, employee, partner, officer, director,
proprietor, investor (except as an investor owning less than 5%
of the stock of a publicly owned company) or otherwise of any
person, firm, corporation or enterprise engaged in (1) the
banking (including bank 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 Employment Period,
in any county in which, at any time during the Employment Period
or at the date of
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termination of the Executive'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 Employment 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 Executive and HNC
and Bank consider the restrictions contained in Section 8(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 8(a)
hereof is an unreasonable or otherwise unenforceable restriction
against Executive, the provisions of Section 8(a) hereof shall not be
rendered void but shall be deemed amended to apply as to such maximum
time and territory and to such other extent as such court may
judicially determine or indicate to be reasonable.
(c) The provisions of this Section 8 shall be applicable commencing on the
date of this Agreement and ending on one of the following dates, as
applicable:
(i) if Executive's employment terminates in accordance with the
provisions of Section 3 (other than Section 3(b) relating to
termination for Cause), the first anniversary date of the
effective date of termination of employment; or
(ii) if Executive's employment terminates in accordance with the
provisions of Section 3(b) of this Agreement (relating to
termination for Cause), the second anniversary date of the
effective date of termination of employment; or
(iii)if the Executive voluntarily terminates his employment in
accordance with the provisions of Section 5 hereof, the first
anniversary date of the effective date of termination of
employment; or
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(iv) if the Executive's employment is involuntarily terminated in
accordance with the provisions of Section 7 hereof, the second
anniversary date of the effective date of termination of
employment.
9. Unauthorized Disclosure. During the term of his employment hereunder, or at
any later time, the Executive shall not, without the written consent of the
Boards of Directors of HNC and Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of HNC or Bank 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 and Bank, any material confidential information obtained
by him while in the employ of HNC and Bank with respect to any of HNC and
Bank's services, products, improvements, formulas, designs or styles,
processes, customers, methods of business or any business practices the
disclosure of which could be or will be damaging to HNC or Bank; provided,
however, that confidential information shall not include any information
known generally to the public (other than as a result of unauthorized
disclosure by the Executive or any person with the assistance, consent or
direction of the Executive) or any information of a type not otherwise
considered confidential by persons engaged in the same business of a
business similar to that conducted by HNC and Bank or any information that
must be disclosed as required by law.
10. Liability Insurance. HNC and Bank shall use their best efforts to obtain
insurance coverage for the Executive under an insurance policy covering
officers and directors of HNC and Bank against lawsuits, arbitrations or
other legal or regulatory proceedings; however, nothing herein shall be
construed to require HNC and/or Bank to obtain such insurance, if the Board
of Directors of the HNC and/or Bank determine that such coverage cannot be
obtained at a reasonable price.
11. 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 and Bank, in the case of notices to HNC and Bank.
12. 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 Boards of Directors of HNC and Bank. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Assignment. This Agreement shall not be assignable by any party, except by
HNC and Bank to any successor in interest to their respective businesses.
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14. Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter of this Agreement.
15. Successors; Binding Agreement.
(a) HNC and Bank will require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or
substantially all of the businesses and/or assets of HNC and Bank to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that HNC and Bank would be required to
perform it if no such succession had taken place. Failure by HNC and
Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 of this Agreement shall
apply. As used in this Agreement, "HNC" and "Bank" shall mean HNC and
Bank, as defined previously and any successor to their respective
businesses and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die after a Notice of Termination is delivered by
Executive, or following termination of Executive's employment without
Cause, and any amounts would be payable to Executive under this
Agreement if Executive had continued to live, all such amounts shall
be paid in accordance with the terms of this Agreement to Executive's
devisee, legatee, or other designee, or, if there is no such designee,
to Executive's estate.
16. Arbitration. HNC, Bank 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 are to be submitted
for resolution, in Philadelphia, 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, Bank or Executive may
initiate an arbitration proceeding at any time by giving notice to the
other in accordance with the Rules. HNC and Bank 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, Bank and
Executive
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shall be entitled to an injunction restraining all further proceedings in
any pending or subsequently filed litigation concerning this Agreement,
except as otherwise provided herein.
17. 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.
18. 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.
19. 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 NATIONALCORPORATION
/s/ Jo Ann Bynon By /s/ Martin E. Fossler
- ---------------------------- ----------------------------------
Jo Ann Bynon, Secretary Martin E. Fossler, Chairman of the
Compensation Committee
THE HARLEYSVILLE NATIONAL BANK
AND TRUST COMPANY
/s/ Jo Ann Bynon By /s/ Martin E. Fossler
- ----------------------------- ----------------------------------
Jo Ann Bynon, Secretary Martin E. Fossler, Chairman of the
Compensation Committee
WITNESS:
/s/ Walter E. Daller, Jr.
- ----------------------------- ---------------------------------
Walter E. Daller, Jr.
"Executive"
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 26th day of October, 1998, 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 VERNON L. HUNSBERGER ("Executive"), an individual
residing at 1109 Cressman Road, Creamery, Pennsylvania 19430.
WITNESSETH:
WHEREAS, Bank desires to employ Executive to serve in the capacity of
Treasurer of HNC and Senior Vice President and Chief Financial Officer of Bank
under the terms and conditions set forth herein;
WHEREAS, Executive desires to accept employment with Bank on the terms and
conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment. Bank hereby employs Executive and Executive hereby accepts
employment with Bank, under 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 and Bank as may be
assigned to Executive from time to time by the Board of Directors of HNC
and Bank. Executive shall be employed as Treasurer of HNC and Senior Vice
President and Chief Financial Officer of Bank, and shall hold such other
titles as may be given to him from time to time by the Board of Directors
of HNC and Bank. Executive shall devote his full time, attention and
energies to the business of HNC and Bank during the Employment Period (as
defined in Section 3 of this Agreement); provided, however, that this
Section 2 shall not be construed as preventing Executive from (a) investing
Executive's personal assets in enterprises that do not compete with HNC and
Bank or (b) being involved in any other activity with the prior written
approval of the Board of Directors of HNC and Bank. The Executive shall not
engage in any business or commercial activities, duties or pursuits which
compete with the business or commercial activities of HNC or Bank, nor may
the Executive serve as a director or officer or in any other capacity in a
company which competes with HNC or Bank.
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3. Term of Agreement.
(a) This Agreement shall be for a three (3) year period (the AEmployment
Period@) beginning on the 26th day of October, 1998 and if not
previously terminated pursuant to the terms of this Agreement, the
Employment Period shall end three (3) years later. The Employment
Period shall be automatically extended on the third anniversary date
of commencement of the Employment Period (the AAnnual 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 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 each of HNC and
Bank 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 for a period
of thirty (30) consecutive days or more;
(ii) Executive's failure to follow the good faith lawful instructions
of the Board of Directors of HNC or Bank with respect to their
operations following written notice of such instructions; or
(iii)Executive's failure to substantially perform Executive's duties
to HNC or 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 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 which brings public
discredit to HNC or Bank;
(vii)Executive's breach of fiduciary duty involving personal profit;
or
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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.
If this Agreement is terminated for Cause, all of 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 Treasurer of HNC and Senior Vice President and
Chief Financial Officer of Bank, (ii) a reduction in salary or
significant reduction in benefits, except in cases of a national
financial depression or 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 residence more than one hundred (100) miles from HNC and
Bank's principal executive office immediately prior to this Agreement.
If such termination occurs for Good Reason, then Bank shall pay
Executive an amount equal to the greater of the remaining balance of
the Agreed Compensation otherwise due to the Executive for the
remainder of the then existing Employment Period or 1.0 times the
Executive's Agreed Compensation as defined in subsection (g) of this
Section 3, which amount shall be payable in twelve (12) equal monthly
installments and shall be subject to federal, state and local tax
withholdings. In addition, for a period of one (1) year from the date
of termination of employment, or until Executive secures substantially
similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability,
medical insurance and other normal health and welfare benefits in
effect with respect to Executive during the two (2) years prior to his
termination of employment, or, if Bank cannot provide such benefits
because Executive is no longer an employee, a dollar amount equal to
the cost to Executive of obtaining such benefits (or substantially
similar benefits). If permitted under the terms of the plan, Executive
shall receive the additional retirement benefits to which he would
have been entitled had his employment continued through the then
remaining term of the Agreement. However, in the event the payment
described herein, when added to all other amounts or benefits provided
to or on behalf of the Executive in connection with his termination of
employment, would result in the imposition of an excise tax under Code
Section 4999, such payments shall be retroactively (if necessary)
reduced to the extent necessary to avoid such excise tax imposition.
Upon written notice to Executive, together with calculations of HNC's
independent auditors, Executive shall remit to HNC the amount of the
reduction plus such interest as may be necessary to avoid the
imposition of such excise tax. Notwithstanding the foregoing or any
other provision of this contract to the contrary, if any portion of
the amount herein payable to the
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Executive is determined to be non-deductible pursuant to the
regulations promulgated under Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), then HNC shall be required only
to pay to Executive the amount determined to be deductible under
Section 280G.
(d) Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive's Disability
and Executive's rights under this Agreement shall cease as of the date
of such termination; provided, however, that Executive shall
nevertheless be absolutely entitled to receive an amount equal to and
no greater than 70% of the Executive's Agreed Compensation as defined
in subsection (g) of this Section 3, less amounts payable under any
disability plan of HNC and Bank, until the earliest of (i) the
expiration of this Agreement, (ii) Executive's return to employment,
(iii) his attainment of age 65, or (iv) his death. In addition,
Executive shall receive for such period a continuation of all life,
disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to his disability, or, if HNC and Bank cannot provide such
benefits because Executive is no longer an employee, a dollar amount
equal to the cost to Executive of obtaining such benefits (or
substantially similar benefits). For purposes of this Agreement, the
Executive shall have a Disability if, as a result of physical or
mental injury or impairment, Executive is unable to perform all of the
essential job functions of his position on a full time basis with or
without a reasonable accommodation and without posting a direct threat
to himself and others, for a period of one hundred eighty (180) days.
(e) Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive's death and
Executive's rights under this Agreement shall cease as of the date of
such termination.
(f) Executive agrees that in the event his employment under this Agreement
is terminated, Executive shall resign as a director of HNC and Bank,
or any affiliate or subsidiary thereof, if he is then serving as a
director of any of such entities.
(g) The term "Agreed Compensation" shall equal the Executive's highest
Annual Base Salary under the Agreement.
4. Employment Period Compensation.
(a) Annual Base Salary. For services performed by Executive under this
Agreement, Bank shall pay Executive an Annual Base Salary during the
Employment Period at the rate of $104,500.00 per year, minus
applicable withholdings and deductions, payable at the same times as
salaries are payable to other executive employees of Bank. Bank 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
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4(a) to reflect the increased amounts, effective as of the date
established for such increases by the Board of Directors of HNC or
Bank or any committee of such Board in the resolutions authorizing
such increases.
(b) Bonus. For services performed by Executive under this Agreement, HNC
and/or Bank may, from time to time, pay a bonus or bonuses to
Executive as HNC and/or Bank, in their sole discretion, deem
appropriate. The payment of any such bonuses shall not reduce or
otherwise affect any other obligation of HNC and/or Bank to Executive
provided for in this Agreement.
(c) Vacations. During the term of this Agreement, Executive shall be
entitled to paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of HNC and
Bank. However, Executive shall not be entitled to receive any
additional compensation from HNC and Bank 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
Boards of Directors of HNC and Bank.
(d) Employee Benefit Plans. During the term of this Agreement, Executive
shall be entitled to participate in or receive the benefits of any
employee benefit plan currently in effect at Bank, subject to the
terms of said plan, until such time that the Boards of Directors of
HNC and Bank authorize a change in such benefits.
(e) Business Expenses. During the term of this Agreement, Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him, which are properly accounted for, in
accordance with the policies and procedures established by the Boards
of Directors of HNC and Bank for their 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 may be increased from time
to time during the term of this Agreement;
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(iii)the assignment to Executive of duties inconsistent with
Executive's office on the date of the Change in Control or as the
same may be increased from time to time after the Change in
Control;
(iv) any reassignment of Executive to a location greater than one
hundred (100) miles from the location of Executive's office on
the date of the Change in Control;
(v) any reduction in Executive's Annual Base Salary in effect on the
date of the Change in Control or as the same may be increased
from time to time after the Change in Control;
(vi) any failure to provide Executive with benefits at least as
favorable as those enjoyed by Executive under any of HNC or
Bank's retirement or pension, life insurance, medical, health and
accident, disability or other employee plans in which Executive
participated at the time of the Change in Control, or the taking
of any action that would materially reduce any of such benefits
in effect at the time of the Change in Control;
(vii)any requirement that Executive travel in performance of his
duties on behalf of HNC or Bank 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; or
(viii) any sustained pattern of interruption or disruption of
Executive for matters substantially unrelated to Executive's
discharge of Executive's duties on behalf of HNC and Bank.
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 Bank (or, if
involuntarily terminated, give notice of intention to collect benefits
under this Agreement) by delivering a notice in writing (the "Notice
of Termination") to HNC and Bank 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, (B) a
sale, exchange, transfer or other disposition of substantially
all of the assets of HNC, or (C) a purchase by HNC of
substantially all of the assets of another entity, unless (y)
such merger, consolidation, division, sale, exchange, transfer,
purchase or disposition is approved in advance by seventy percent
(70%) or more of
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the members of the Board of Directors of HNC who are not
interested in the transaction and (z) 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; or
(ii) any other change in control of HNC 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 HNC and 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, Bank shall pay Executive an amount equal to and no greater
than 2.0 times the Executive's Agreed Compensation as defined in
subsection (g) of Section 3, minus applicable taxes and withholdings,
which shall be payable in twenty-four (24) equal monthly installments.
In addition, for a period of two (2) years from the date of
termination of employment, or until Executive secures substantially
similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability,
medical insurance and other normal health and welfare benefits in
effect with respect to Executive during the two (2) years prior to his
termination of employment, or, if Bank cannot provide such benefits
because Executive is no longer an employee, a dollar amount equal to
the cost to Executive of obtaining such benefits (or substantially
similar benefits). If permitted under the terms of the plan, Executive
shall receive additional retirement benefits to which he would have
been entitled had his employment continued through the then remaining
term of the Agreement. However, in the event the payment described
herein, when added to all other amounts or benefits provided to or on
behalf of the Executive in connection with his termination of
employment, would result in the imposition of an excise tax under Code
Section 4999, such payments shall be retroactively (if necessary)
reduced to the extent necessary to avoid such excise tax imposition.
Upon written notice to Executive, together with calculations of HNC's
independent auditors, Executive shall remit to HNC the amount of the
reduction plus such interest as may be necessary to avoid the
imposition of such excise tax. Notwithstanding the foregoing or any
other provision of this contract to the contrary, if any portion of
the amount herein payable to the Executive is determined to be
non-deductible pursuant to the regulations promulgated under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"),
then HNC shall be required only to pay to Executive the amount
determined to be deductible under Section 280G.
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(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or
otherwise. Unless otherwise agreed to in writing, the amount of
payment or the benefit provided for in this Section 6 shall not be
reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive's receipt of
or right to receive any retirement or other benefits after the date of
termination of employment or otherwise.
7. Rights in Event of Termination of Employment Absent Change in Control.
(a) In the event that Executive's employment is involuntarily terminated
by Bank without Cause and no Change in Control shall have occurred at
the date of such termination, HNC and Bank shall pay Executive an
amount equal to and no greater than 1.0 times the Executive's Agreed
Compensation as defined in subsection (g) of Section 3, and shall be
payable in twelve (12) equal monthly installments and shall be subject
to federal, state and local tax withholdings. In addition, for a
period of one (1) year from the date of termination of employment, or
until Executive secures substantially similar benefits through other
employment, whichever shall first occur, Executive shall receive a
continuation of all life, disability, medical insurance and other
normal health and welfare benefits in effect with respect to Executive
during the two (2) years prior to his termination of employment, or,
if Bank cannot provide such benefits because Executive is no longer an
employee, a dollar amount equal to the cost to Executive of obtaining
such benefits (or substantially similar benefits). In addition, if
permitted pursuant to the terms of the plan, Executive shall receive
additional retirement benefits to which he would have been entitled
had his employment continued through the then remaining term of the
Agreement. However, in the event the payment described herein, when
added to all other amounts or benefits provided to or on behalf of the
Executive in connection with his termination of employment, would
result in the imposition of an excise tax under Code Section 4999,
such payments shall be retroactively (if necessary) reduced to the
extent necessary to avoid such excise tax imposition. Upon written
notice to Executive, together with calculations of HNC's independent
auditors, Executive shall remit to HNC the amount of the reduction
plus such interest as may be necessary to avoid the imposition of such
excise tax. Notwithstanding the foregoing or any other provision of
this contract to the contrary, if any portion of the amount herein
payable to the Executive is determined to be non-deductible pursuant
to the regulations promulgated under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then Bank 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. Unless otherwise agreed to in writing, the amount of
payment or the benefit provided for in this
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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.
8. Covenant Not to Compete.
(a) Executive 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 8(c) hereof,
Executive shall not:
(i) be engaged, directly or indirectly, either for his own account or
as agent, consultant, employee, partner, officer, director,
proprietor, investor (except as an investor owning less than 5%
of the stock of a publicly owned company) or otherwise of any
person, firm, corporation or enterprise engaged in (1) the
banking (including bank 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 Employment Period,
in any county in which, at any time during the Employment Period
or at the date of termination of the Executive's employment, a
branch, office or other facility of HNC or 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 Employment Period, in the Non-Competition
Area;
(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 Executive and HNC
and Bank consider the restrictions contained in Section 8(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 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
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amended to apply as to such maximum time and territory and to such
other extent as such court may judicially determine or indicate to be
reasonable.
(c) The provisions of this Section 8 shall be applicable commencing on the
date of this Agreement and ending on one of the following dates, as
applicable:
(i) if Executive's employment terminates in accordance with the
provisions of Section 3 (other than Section 3(b) relating to
termination for Cause), the first anniversary date of the
effective date of termination of employment; or
(ii) if Executive's employment terminates in accordance with the
provisions of Section 3(b) of this Agreement (relating to
termination for Cause), the second anniversary date of the
effective date of termination of employment; or
(iii)if the Executive voluntarily terminates his employment in
accordance with the provisions of Section 5 hereof, the second
anniversary date of the effective date of termination of
employment; or
(iv) if the Executive's employment is involuntarily terminated in
accordance with the provisions of Section 7 hereof, the first
anniversary date of the effective date of termination of
employment.
9. Unauthorized Disclosure. During the term of his employment hereunder, or at
any later time, the Executive shall not, without the written consent of the
Boards of Directors of HNC and Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of HNC or Bank 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 and Bank, any material confidential information obtained
by him while in the employ of HNC and Bank with respect to any of HNC and
Bank's services, products, improvements, formulas, designs or styles,
processes, customers, methods of business or any business practices the
disclosure of which could be or will be damaging to HNC or Bank; provided,
however, that confidential information shall not include any information
known generally to the public (other than as a result of unauthorized
disclosure by the Executive or any person with the assistance, consent or
direction of the Executive) or any information of a type not otherwise
considered confidential by persons engaged in the same business of a
business similar to that conducted by HNC and Bank or any information that
must be disclosed as required by law.
10. Liability Insurance. HNC and Bank shall use their best efforts to obtain
insurance coverage for the Executive under an insurance policy covering
officers and directors of HNC and Bank against lawsuits, arbitrations or
other legal or regulatory proceedings; however, nothing herein shall be
construed to require HNC and/or Bank to obtain such insurance, if the Board
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of Directors of the HNC and/or Bank determine that such coverage cannot be
obtained at a reasonable price.
11. 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 and Bank, in the case of notices to HNC and Bank.
12. 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 Boards of Directors of HNC and Bank. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Assignment. This Agreement shall not be assignable by any party, except by
HNC and Bank to any successor in interest to their respective businesses.
14. Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter of this Agreement.
15. Successors; Binding Agreement.
(a) HNC and Bank will require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or
substantially all of the businesses and/or assets of HNC and Bank to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that HNC and Bank would be required to
perform it if no such succession had taken place. Failure by HNC and
Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 of this Agreement shall
apply. As used in this Agreement, "HNC" and "Bank" shall mean HNC and
Bank, as defined previously and any successor to their respective
businesses and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die after a Notice of Termination is delivered by
Executive, or following termination of Executive's employment without
Cause, and any amounts would be payable to Executive under this
Agreement if Executive had continued to live, all such amounts shall
be paid in accordance with
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the terms of this Agreement to Executive's devisee, legatee, or other
designee, or, if there is no such designee, to Executive's estate.
16. Arbitration. HNC, Bank 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 are to be submitted
for resolution, in Philadelphia, 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, Bank or Executive may
initiate an arbitration proceeding at any time by giving notice to the
other in accordance with the Rules. HNC and Bank 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, Bank and
Executive shall be entitled to an injunction restraining all further
proceedings in any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein.
17. 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.
18. 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.
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19. 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 NATIONAL CORPORATION
/s/Jo Ann Bynon By /s/Walter E. Daller, Jr.
- --------------------------- -----------------------------------
Jo Ann Bynon, Secretary Walter E. Daller, Jr., President
THE HARLEYSVILLE NATIONAL BANK
AND TRUST COMPANY
/s/ Jo Ann Bynon By /s/ Walter E. Daller, Jr.
- ---------------------------- ---------------------------------
Jo Ann Bynon, Secretary Walter E. Daller, Jr., President
WITNESS:
/s/ Vernon L. Hunsberger
- ---------------------------- ----------------------------------
Vernon L. Hunsberger
"Executive"
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 26th day of October, 1998, 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, and DEMETRA M. TAKES ("Executive"), an individual residing at 398
Park Avenue, Harleysville, Pennsylvania 19438.
WITNESSETH:
WHEREAS, Bank desires to employ Executive to serve in the capacity of Vice
President of HNC and Executive Vice President and Chief Operating Officer of
Bank under the terms and conditions set forth herein;
WHEREAS, Executive desires to accept employment with Bank on the terms and
conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment. Bank hereby employs Executive and Executive hereby accepts
employment with Bank, under 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 and Bank as may be
assigned to Executive from time to time by the Board of Directors of HNC
and Bank. Executive shall be employed as Vice President of HNC and
Executive Vice President and Chief Operating Officer of Bank, and shall
hold such other titles as may be given to her from time to time by the
Board of Directors of HNC and Bank. Executive shall devote her full time,
attention and energies to the business of HNC and Bank during the
Employment Period (as defined in Section 3 of this Agreement); provided,
however, that this Section 2 shall not be construed as preventing Executive
from (a) investing Executive's personal assets in enterprises that do not
compete with HNC and Bank or (b) being involved in any other activity with
the prior written approval of the Board of Directors of HNC and Bank. The
Executive shall not engage in any business or commercial activities, duties
or pursuits which compete with the business or commercial activities of HNC
or Bank, nor may the Executive serve as a director or officer or in any
other capacity in a company which competes with HNC or Bank.
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3. Term of Agreement.
(a) This Agreement shall be for a three (3) year period (the "Employment
Period") beginning on the 26th day of October, 1998 and if not
previously terminated pursuant to the terms of this Agreement, the
Employment Period shall end three (3) years later. The Employment
Period shall be automatically extended on the third anniversary date
of commencement of the Employment 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 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 each of HNC and
Bank 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 for a period
of thirty (30) consecutive days or more;
(ii) Executive's failure to follow the good faith lawful instructions
of the Board of Directors of HNC or Bank with respect to their
operations following written notice of such instructions; or
(iii)Executive's failure to substantially perform Executive's duties
to HNC or 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 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 her duties;
(vi) conduct on the part of the Executive which brings public
discredit to HNC or Bank;
(vii)Executive's breach of fiduciary duty involving personal profit;
or
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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.
If this Agreement is terminated for Cause, all of 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 Vice President of HNC and Executive Vice
President and Chief Operating Officer of Bank, (ii) a reduction in
salary or significant reduction in benefits, except in cases of a
national financial depression or 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
her principal residence more than one hundred (100) miles from HNC and
Bank's principal executive office immediately prior to this Agreement.
If such termination occurs for Good Reason, then Bank shall pay
Executive an amount equal to the greater of the remaining balance of
the Agreed Compensation otherwise due to the Executive for the
remainder of the then existing Employment Period or 1.0 times the
Executive's Agreed Compensation as defined in subsection (g) of this
Section 3, which amount shall be payable in twelve (12) equal monthly
installments and shall be subject to federal, state and local tax
withholdings. In addition, for a period of one (1) year from the date
of termination of employment, or until Executive secures substantially
similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability,
medical insurance and other normal health and welfare benefits in
effect with respect to Executive during the two (2) years prior to her
termination of employment, or, if Bank cannot provide such benefits
because Executive is no longer an employee, a dollar amount equal to
the cost to Executive of obtaining such benefits (or substantially
similar benefits). If permitted under the terms of the plan, Executive
shall receive the additional retirement benefits to which she would
have been entitled had her employment continued through the then
remaining term of the Agreement. However, in the event the payment
described herein, when added to all other amounts or benefits provided
to or on behalf of the Executive in connection with her 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 HNC's
independent auditors, Executive shall remit to HNC the amount of the
reduction plus such interest as may be necessary to avoid the
imposition of such excise tax. Notwithstanding the foregoing or any
other provision of this contract to the contrary, if any portion of
the amount herein payable to the
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Executive is determined to be non-deductible pursuant to the
regulations promulgated under Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), then HNC shall be required only
to pay to Executive the amount determined to be deductible under
Section 280G.
(d) Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive's Disability
and Executive's rights under this Agreement shall cease as of the date
of such termination; provided, however, that Executive shall
nevertheless be absolutely entitled to receive an amount equal to and
no greater than 70% of the Executive's Agreed Compensation as defined
in subsection (g) of this Section 3, less amounts payable under any
disability plan of HNC and Bank, until the earliest of (i) the
expiration of this Agreement, (ii) Executive's return to employment,
(iii) her attainment of age 65, or (iv) her death. In addition,
Executive shall receive for such period a continuation of all life,
disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to her disability, or, if HNC and Bank cannot provide such
benefits because Executive is no longer an employee, a dollar amount
equal to the cost to Executive of obtaining such benefits (or
substantially similar benefits). For purposes of this Agreement, the
Executive shall have a Disability if, as a result of physical or
mental injury or impairment, Executive is unable to perform all of the
essential job functions of her position on a full time basis with or
without a reasonable accommodation and without posting a direct threat
to herself and others, for a period of one hundred eighty (180) days.
(e) Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive's death and
Executive's rights under this Agreement shall cease as of the date of
such termination.
(f) Executive agrees that in the event her employment under this Agreement
is terminated, Executive shall resign as a director of HNC and Bank,
or any affiliate or subsidiary thereof, if she is then serving as a
director of any of such entities.
(g) The term "Agreed Compensation" shall equal the Executive's highest
Annual Base Salary under the Agreement.
4. Employment Period Compensation.
(a) Annual Base Salary. For services performed by Executive under this
Agreement, Bank shall pay Executive an Annual Base Salary during the
Employment Period at the rate of $165,000.00 per year, minus
applicable withholdings and deductions, payable at the same times as
salaries are payable to other executive employees of Bank. Bank 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
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4(a) to reflect the increased amounts, effective as of the date
established for such increases by the Board of Directors of HNC or
Bank or any committee of such Board in the resolutions authorizing
such increases.
(b) Bonus. For services performed by Executive under this Agreement, HNC
and/or Bank may, from time to time, pay a bonus or bonuses to
Executive as HNC and/or Bank, in their sole discretion, deem
appropriate. The payment of any such bonuses shall not reduce or
otherwise affect any other obligation of HNC and/or Bank to Executive
provided for in this Agreement.
(c) Vacations. During the term of this Agreement, Executive shall be
entitled to paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of HNC and
Bank. However, Executive shall not be entitled to receive any
additional compensation from HNC and Bank 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
Boards of Directors of HNC and Bank.
(d) Automobile. During the term of this Agreement, Bank shall provide
Executive with exclusive use of an automobile mutually agreed upon by
HNC and Bank. Bank shall be responsible and shall pay for all costs of
insurance coverage, repairs, maintenance and other operating and
incidental expenses, including license, fuel and oil. Bank shall
provide Executive with a replacement automobile at approximately the
time Executive's automobile reaches four (4) years of age or 75,000
miles, whichever is first, and approximately every four (4) years or
75,000 miles thereafter, upon the same terms and conditions.
(e) Employee Benefit Plans. During the term of this Agreement, Executive
shall be entitled to participate in or receive the benefits of any
employee benefit plan currently in effect at Bank, subject to the
terms of said plan, until such time that the Boards of Directors of
HNC and Bank authorize a change in such benefits.
(f) Business Expenses. During the term of this Agreement, Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by her, which are properly accounted for, in
accordance with the policies and procedures established by the Boards
of Directors of HNC and Bank for their 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:
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(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 may be increased from time
to time during the term of this Agreement;
(iii)the assignment to Executive of duties inconsistent with
Executive's office on the date of the Change in Control or as the
same may be increased from time to time after the Change in
Control;
(iv) any reassignment of Executive to a location greater than one
hundred (100) miles from the location of Executive's office on
the date of the Change in Control;
(v) any reduction in Executive's Annual Base Salary in effect on the
date of the Change in Control or as the same may be increased
from time to time after the Change in Control;
(vi) any failure to provide Executive with benefits at least as
favorable as those enjoyed by Executive under any of HNC or
Bank's retirement or pension, life insurance, medical, health and
accident, disability or other employee plans in which Executive
participated at the time of the Change in Control, or the taking
of any action that would materially reduce any of such benefits
in effect at the time of the Change in Control;
(vii)any requirement that Executive travel in performance of her
duties on behalf of HNC or Bank 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; or
(viii) any sustained pattern of interruption or disruption of
Executive for matters substantially unrelated to Executive's
discharge of Executive's duties on behalf of HNC and Bank.
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 Bank (or, if
involuntarily terminated, give notice of intention to collect benefits
under this Agreement) by delivering a notice in writing (the "Notice
of Termination") to HNC and Bank and the provisions of Section 6 of
this Agreement shall apply.
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(b) As used in this Agreement, "Change in Control" shall mean the
occurrence of any of the following:
(i) (A) a merger, consolidation or division involving HNC, (B) a
sale, exchange, transfer or other disposition of substantially
all of the assets of HNC, or (C) a purchase by HNC of
substantially all of the assets of another entity, unless (y)
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 who
are not interested in the transaction and (z) 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; or
(ii) any other change in control of HNC 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 HNC and 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, Bank shall pay Executive an amount equal to and no greater
than 2.0 times the Executive's Agreed Compensation as defined in
subsection (g) of Section 3, minus applicable taxes and withholdings,
which shall be payable in twenty-four (24) equal monthly installments.
In addition, for a period of two (2) years from the date of
termination of employment, or until Executive secures substantially
similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability,
medical insurance and other normal health and welfare benefits in
effect with respect to Executive during the two (2) years prior to her
termination of employment, or, if Bank cannot provide such benefits
because Executive is no longer an employee, a dollar amount equal to
the cost to Executive of obtaining such benefits (or substantially
similar benefits). If permitted under the terms of the plan, Executive
shall receive additional retirement benefits to which she would have
been entitled had her employment continued through the then remaining
term of the Agreement. However, in the event the payment described
herein, when added to all other amounts or benefits provided to or on
behalf of the Executive in connection with her 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 HNC's
independent auditors, Executive shall
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remit to HNC the amount of the reduction plus such interest as may be
necessary to avoid the imposition of such excise tax. Notwithstanding
the foregoing or any other provision of this contract to the contrary,
if any portion of the amount herein payable to the Executive is
determined to be non-deductible pursuant to the regulations
promulgated under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), then HNC shall be required only to pay to
Executive the amount determined to be deductible under Section 280G.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or
otherwise. Unless otherwise agreed to in writing, the amount of
payment or the benefit provided for in this Section 6 shall not be
reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive's receipt of
or right to receive any retirement or other benefits after the date of
termination of employment or otherwise.
7. Rights in Event of Termination of Employment Absent Change in Control.
(a) In the event that Executive's employment is involuntarily terminated
by Bank without Cause and no Change in Control shall have occurred at
the date of such termination, HNC and Bank shall pay Executive an
amount equal to and no greater than 1.0 times the Executive's Agreed
Compensation as defined in subsection (g) of Section 3, and shall be
payable in twelve (12) equal monthly installments and shall be subject
to federal, state and local tax withholdings. In addition, for a
period of one (1) year from the date of termination of employment, or
until Executive secures substantially similar benefits through other
employment, whichever shall first occur, Executive shall receive a
continuation of all life, disability, medical insurance and other
normal health and welfare benefits in effect with respect to Executive
during the two (2) years prior to her termination of employment, or,
if Bank cannot provide such benefits because Executive is no longer an
employee, a dollar amount equal to the cost to Executive of obtaining
such benefits (or substantially similar benefits). In addition, if
permitted pursuant to the terms of the plan, Executive shall receive
additional retirement benefits to which she would have been entitled
had her employment continued through the then remaining term of the
Agreement. However, in the event the payment described herein, when
added to all other amounts or benefits provided to or on behalf of the
Executive in connection with her 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 HNC's independent
auditors, Executive shall remit to HNC the amount of the reduction
plus such interest as may be necessary to avoid the imposition of such
excise tax. Notwithstanding the foregoing or any other provision of
this contract to the contrary, if any portion of the amount herein
payable to the
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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 Bank 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. Unless otherwise agreed to in writing, 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.
8. Covenant Not to Compete.
(a) Executive 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 8(c) hereof,
Executive shall not:
(i) be engaged, directly or indirectly, either for her own account or
as agent, consultant, employee, partner, officer, director,
proprietor, investor (except as an investor owning less than 5%
of the stock of a publicly owned company) or otherwise of any
person, firm, corporation or enterprise engaged in (1) the
banking (including bank 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 Employment Period,
in any county in which, at any time during the Employment Period
or at the date of termination of the Executive's employment, a
branch, office or other facility of HNC or 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 Employment Period, in the Non-Competition
Area;
(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.
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(b) It is expressly understood and agreed that, although Executive and HNC
and Bank consider the restrictions contained in Section 8(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 8(a)
hereof is an unreasonable or otherwise unenforceable restriction
against Executive, the provisions of Section 8(a) hereof shall not be
rendered void but shall be deemed amended to apply as to such maximum
time and territory and to such other extent as such court may
judicially determine or indicate to be reasonable.
(c) The provisions of this Section 8 shall be applicable commencing on the
date of this Agreement and ending on one of the following dates, as
applicable:
(i) if Executive's employment terminates in accordance with the
provisions of Section 3 (other than Section 3(b) relating to
termination for Cause), the first anniversary date of the
effective date of termination of employment; or
(ii) if Executive's employment terminates in accordance with the
provisions of Section 3(b) of this Agreement (relating to
termination for Cause), the second anniversary date of the
effective date of termination of employment; or
(iii)if the Executive voluntarily terminates her employment in
accordance with the provisions of Section 5 hereof, the second
anniversary date of the effective date of termination of
employment; or
(iv) if the Executive's employment is involuntarily terminated in
accordance with the provisions of Section 7 hereof, the first
anniversary date of the effective date of termination of
employment.
9. Unauthorized Disclosure. During the term of her employment hereunder, or at
any later time, the Executive shall not, without the written consent of the
Boards of Directors of HNC and Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of HNC or Bank or
a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of her duties as an
executive of HNC and Bank, any material confidential information obtained
by her while in the employ of HNC and Bank with respect to any of HNC and
Bank's services, products, improvements, formulas, designs or styles,
processes, customers, methods of business or any business practices the
disclosure of which could be or will be damaging to HNC or Bank; provided,
however, that confidential information shall not include any information
known generally to the public (other than as a result of unauthorized
disclosure by the Executive or any person with the assistance, consent or
direction of the Executive) or any information of a type not otherwise
considered confidential by persons engaged in the same business of a
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business similar to that conducted by HNC and Bank or any information that
must be disclosed as required by law.
10. Liability Insurance. HNC and Bank shall use their best efforts to obtain
insurance coverage for the Executive under an insurance policy covering
officers and directors of HNC and Bank against lawsuits, arbitrations or
other legal or regulatory proceedings; however, nothing herein shall be
construed to require HNC and/or Bank to obtain such insurance, if the Board
of Directors of the HNC and/or Bank determine that such coverage cannot be
obtained at a reasonable price.
11. 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 and Bank, in the case of notices to HNC and Bank.
12. 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 Boards of Directors of HNC and Bank. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Assignment. This Agreement shall not be assignable by any party, except by
HNC and Bank to any successor in interest to their respective businesses.
14. Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter of this Agreement.
15. Successors; Binding Agreement.
(a) HNC and Bank will require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or
substantially all of the businesses and/or assets of HNC and Bank to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that HNC and Bank would be required to
perform it if no such succession had taken place. Failure by HNC and
Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession shall constitute a breach of this
Agreement and the provisions of Section 3 of this Agreement shall
apply. As used in this Agreement, "HNC" and "Bank" shall mean HNC and
Bank, as defined previously and any successor to their respective
businesses and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
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(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die after a Notice of Termination is delivered by
Executive, or following termination of Executive's employment without
Cause, and any amounts would be payable to Executive under this
Agreement if Executive had continued to live, all such amounts shall
be paid in accordance with the terms of this Agreement to Executive's
devisee, legatee, or other designee, or, if there is no such designee,
to Executive's estate.
16. Arbitration. HNC, Bank 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 are to be submitted
for resolution, in Philadelphia, 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, Bank or Executive may
initiate an arbitration proceeding at any time by giving notice to the
other in accordance with the Rules. HNC and Bank 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, Bank and
Executive shall be entitled to an injunction restraining all further
proceedings in any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein.
17. 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.
18. 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.
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19. 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 NATIONAL CORPORATION
/s/ Jo Ann Bynon By /s/ Walter E. Daller, Jr.
- --------------------------- ---------------------------------
Jo Ann Bynon, Secretary Walter E. Daller, Jr., President
THE HARLEYSVILLE NATIONAL BANK
AND TRUST COMPANY
/s/ Jo Ann Bynon By /s/ Walter E. Daller, Jr.
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Jo Ann Bynon, Secretary Walter E. Daller, Jr., President
WITNESS:
/s/ Demetra M. Takes
- --------------------------- -----------------------------------
Demetra M. Takes
"Executive"
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