HARLEYSVILLE NATIONAL CORPORATION CEO SETTLEMENT AGREEMENT AND GENERAL RELEASE

This Complete Settlement Agreement and General Release ("Agreement") by and between Gregg J. Wagner and Harleysville National Corporation, Harleysville National Bank and Trust Company, Harleysville Management Services, LLC, and each of their subsidiaries and affiliates (collectively “Corporation”) is made this 29th day of November, 2006. In this Agreement, the “Corporation” shall at all times include any and all related entities, corporations, subsidiaries, and affiliates.

           WHEREAS, Gregg J. Wagner (“Wagner”) and Harleysville Management Services LLC executed an employment agreement dated January 1, 2005 (“Employment Agreement”) wherein beginning April 1, 2005, Wagner would serve as President and Chief Executive Officer of Harleysville National Corporation;

WHEREAS, on September 26, 2006, the Board of Directors of Harleysville National Corporation terminated Wagner’s employment;

WHEREAS, Paragraph 7(a) of the Employment Agreement provides

In the event that Executive's employment is involuntarily terminated by HMS without Cause [as defined in the Employment Agreement] and no Change in Control shall have occurred as of the date of such termination, upon execution of a mutual release, HMS will provide Executive with the following pay and benefits: (i) a payment in an amount equal to the greater of: that portion of the Executive’s Agreed Compensation for the then existing Employment Period that has not been paid to Executive as of the date his employment terminates, or 1.0 times the Executive's Agreed Compensation. Such amount shall be payable in twelve (12) equal monthly installments; and (ii) subject to plan terms, Executive’s continued participation in HMS's Wagner benefit plans for twelve (12) months or until Executive secures substantially similar benefits through other employment, whichever shall first occur. If Executive is no longer eligible to participate in an employee benefit plan because he is no longer an employee, HMS will pay Executive the amount of money that it would have cost HMS to provide the benefits to Executive;

NOW, THEREFORE, in consideration of the foregoing preambles, the mutual covenants and agreements set forth below and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the parties hereto agree as follows:

     1.   Termination of Employment; Payments to Wagner .

a.   Termination of employment with Corporation shall be effective September 26, 2006. Wagner confirms his termination of service with Corporation and all of its subsidiaries, affiliates, joint ventures, partnerships, or any other business enterprises, as well as from any office or position with any trade group or any charitable organization which he holds on behalf of the Corporation. Wagner hereby confirms his resignation from any and all of the Corporation’s, its subsidiaries’ and affiliates’ Boards of Directors.

b.   In consideration of Wagner complying with the terms of this Agreement and provided that Wagner continuously and at all times complies with all of his obligations pursuant to this Agreement, Employer shall pay Wagner the following severance package:

i.   Corporation has paid an amount equal to Wagner’s salary through September 26, 2006, minus all appropriate withholdings and/or deductions on the first regularly scheduled pay date following the termination of Wagner’s employment;

ii.   Corporation has provided Wagner and his dependents with health insurance benefits through September 30, 2006;

iii.   Corporation has paid Wagner an amount equal to his unused accrued PTO;

iv.   Corporation shall transfer title to the 2005 Audi A8 which Wagner drove while employed by Corporation to Wagner;

           v.   Corporation shall pay Wagner a lump sum payment equal to $486,000 minus all appropriate withholdings and/or deductions, which represents 1.25 times his annual salary and bonus, within thirty days of the expiration of the Revocation Period as defined in Paragraph 12;

vi.   Corporation shall pay Wagner a lump sum payment equal to $30,171 minus all appropriate withholdings and/or deductions, which represents the gross-up amount of the costs of employee benefits for a fifteen month period as determined by Wagner, within thirty days of the expiration of the Revocation Period as defined in Paragraph 12;

vii.   Corporation shall pay Wagner an additional lump sum payment equal to $107,500 minus all appropriate withholdings and/or deductions within thirty days of the expiration of the Revocation Period as defined in Paragraph 12; and

viii.   Corporation shall pay $15,000 for outplacement services, which amount shall be paid directly to Career Concepts and which payment shall be made upon presentation of an invoice from Career Concepts.  

                       c. Wagner acknowledges and agrees that the benefits to be provided to Wagner by Corporation pursuant to this Paragraph are, in significant and substantial part, in addition to those benefits to which he is already or would otherwise be entitled.

2.   Costs, Including Attorneys' Fees . Wagner understands and agrees that Corporation shall not be liable to Wagner and/or any present or former attorney for any costs, expenses, or attorneys' fees of any kind or amount. Furthermore, Wagner

expressly agrees that he is not to be considered to be the "prevailing" or "successful" party within the meaning of any statute, rule, or other law.

           3.  Release by Wagner . In consideration of the payments and severance benefits set forth in this Agreement which consideration and severance benefits Wagner was not otherwise entitled to receive, and intending to be legally bound, Wagner, and all other persons or entities claiming with, by, or through him, hereby releases and forever discharges Corporation, and its predecessors, successors, affiliates, subsidiaries, parents, partners and all of their present and past shareholders, directors, officers, agents, employees and attorneys, and all other persons or entities who could be said to be jointly or severally liable with them, (individually and collectively "the Releasees") from any and all liabilities, claims, actions, causes of action, rights, judgments, obligations, demands, or suits presently asserted or not asserted, accrued or unaccrued, known or unknown, that Wagner had, now has, or may have or could claim to have against the Releasees, from the beginning of time to the date of execution of this Agreement, including, but not limited to all claims and rights in any way arising from or based upon Wagner's employment with Corporation, or which relate in any way to the termination of Wagner's employment with Corporation, and also including Title VII of Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, the Pennsylvania Human Relations Act, the Federal Age Discrimination in Employment Act, the Federal Older Workers Benefit Protection Act, the Family and Medical Leave Act, any Whistleblower provision of any statute or law, the Employee Retirement Income Security Act of 1974, and any other statute, regulation, or law or amendments thereto.

           Wagner waives any rights under the Corporation’s stock option plans, discharges the Corporation from any liabilities under Corporation stock option plans, and agrees not to initiate or institute any action, complaint, claim, charge, arbitration or lawsuit pursuant to or related to the Corporation’s stock option plans.

Wagner further agrees that the payments and benefits described in this Agreement shall be in full satisfaction of any and all claims for payments or benefits, whether express or implied, that Wagner may have against the Releasees arising out of his employment relationship or his service as an employee, officer, and director of the Corporation and the termination thereof, other than rights under the Corporation pension plan and 401(k) plan.

4.   Indemnification by Corporation . In consideration of Wagner’s waiver and release of claims set forth above and the other obligations of Wagner hereunder, to the extent that the Corporation has officers’ and directors’ liability insurance coverage covering the acts of Wagner, Corporation shall, subject to the exclusions and limitations set forth therein, indemnify and hold harmless Wagner if he is made a party, is threatened to be made a party to, or otherwise receives any other legal process in any action, suit, or proceeding by reason of the fact that he was a director, officer, or employee of the Corporation. Wagner shall be indemnified and held harmless to the fullest extent permitted or authorized under the officer’s and director’s liability insurance policy, provided that such indemnification does not violate the Corporation’s articles of incorporation, bylaws, the laws of the Commonwealth of Pennsylvania, or federal banking laws.