COMPLETE SETTLEMENT AGREEMENT AND GENERAL RELEASE READ IT CAREFULLY
Exhibit
99.1
AND
GENERAL RELEASE
READ IT CAREFULLY
NOTICE TO XXXXXXX X. HIGH:
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This
is a very important legal document, and you should carefully review and
understand the terms and effect of this document before signing
it. By signing this Complete Settlement Agreement and General
Release (“Agreement”), you are agreeing to completely release HARLEYSVILLE
NATIONAL CORPORATION, HARLEYSVILLE NATIONAL BANK AND TRUST COMPANY,
HARLEYSVILLE MANAGEMENT SERVICES, LLC, and their subsidiaries, affiliates,
directors and officers. Therefore, you should consult with an
attorney before signing this Agreement. You have twenty-one
days (21) days from the date of receipt of this document to consider the
Agreement. The twenty-one (21) days will begin to run on the
day after receipt. If you choose to sign the Agreement, you
will have an additional seven (7) days following the date of your
signature to revoke the Agreement, and the Agreement shall not become
effective or enforceable until the revocation period has
expired.
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This Complete Settlement Agreement and
General Release ("Agreement") by and between Xxxxxxx X. High (“High”) 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 17th
day of October, 2008. In this Agreement, the Corporation shall
at all times include any and all related entities, corporations, subsidiaries,
and affiliates.
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WHEREAS, Corporation and High entered
into an employment agreement dated April 1, 2005 (the “Employment
Agreement”);
WHEREAS, Corporation and High entered
into a Supplemental Executive Retirement Benefit Agreement dated February 23,
2004 as amended March 14, 2005 (collectively the “Supplemental Executive
Retirement Benefit Agreement”);
WHEREAS, High shall retire effective on
or before November 28, 2008;
WHEREAS, High and Corporation wish to
terminate the Employment Agreement under Section 7 of such Employment Agreement;
and
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 High 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.
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 and intending to be legally bound hereby, the parties hereto agree
as follows:
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1. Cessation of Employment;
Payments to Executive.
a. Cessation
of employment with Corporation shall be effective on or before November 28, 2008
as determined by High. High confirms his retirement 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. High hereby confirms his resignation from any and
all of the Corporation’s, its subsidiaries’ and affiliates’ Boards of
Directors. Xxxx further confirms the termination of his Employment
Agreement and acknowledges that Section 8 of the Employment Agreement survives
termination thereof.
b. In
consideration of High complying with the terms of this Agreement and provided
that High continuously and at all times complies with all of his obligations
pursuant to this Agreement, Corporation shall:
i. pursuant
to Section 7(a) of the Employment Agreement, provide High with one (1) year of
Executive’s base salary, in an amount equal to $296,100.00, minus all
appropriate withholdings and deductions, payable in twelve (12) equal monthly
installments;
ii. pursuant
to Section 7(a) of the Employment Agreement, provide High with a payment equal
to $71,381, minus all appropriate withholdings and deductions, which reflects
his highest annual incentive bonus during the previous two calendar years,
payable in twelve (12) equal monthly installments;
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iii. provide
High the value of any unused accrued paid annual vacation time which is held by
High on the date of cessation of employment;
iv. provide
High with COBRA benefits for the earlier of twelve months or until he is no
longer eligible for COBRA;
v provide
High with a lump sum amount equal to $13,050, minus all appropriate
withholdings and deductions, which represents the amount of money it would have
cost Corporation to provide non-COBRA eligible employee benefits to
High;
vi. provide
High with a lump sum payment equal to $356,424.00, minus all
appropriate withholdings and deductions, which represents the accrued value of
the Supplemental Executive Retirement Benefit Agreement; and
vii. provide
High with a lump sum amount equal to $6,000, minus all appropriate withholdings
and deductions, which represents a reimbursement of his country club dues for
one year.
viii. provided
that High does not violate Section 8(a) (iii) (relating to solicitation of
Corporation’s customers) or 8(a) (iv) (relating to solicitation of Corporation’s
employees) of his Employment Agreement, Corporation will release High from and
waive its rights under Sections 8 (a) (i) and 8(a) (ii) (relating to
noncompetition). In the event that High violates Sections 8(a) (iii)
or 8(a) (iv) of his Employment Agreement,
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Corporation
shall enforce all of the noncompetition provisions of Section 8.
c. High
acknowledges and agrees that the benefits to be provided to High by Corporation
pursuant to this Paragraph are, in a significant and substantial part, in
addition to those benefits to which he is already or would otherwise be
entitled.
2. Costs, Including Attorneys'
Fees. High understands and agrees that Corporation shall not
be liable to High and/or any present or former attorney for any costs, expenses,
or attorneys' fees of any kind or amount. Furthermore, High 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
High. In consideration of the payments and severance benefits
set forth in this Agreement which consideration and severance benefits High was
not otherwise entitled to receive, and intending to be legally bound, High, 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 High 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
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High's
employment with Corporation, High’s Employment Agreement, or any other agreement
between the Corporation and High, including but not limited to option plans and
other benefit plans, or which relate in any way to the termination of High's
employment with Corporation, the termination of High’s Employment Agreement,
termination of the Supplemental Executive Retirement Benefit Agreement, or the
termination of any other agreement between Corporation and High, whether written
or oral, 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, 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.
High further agrees that the
consideration described in this Agreement shall be in full satisfaction of any
and all claims for payments or benefits, whether expressed or implied, that High
may have against the Releasees arising out of his employment relationship, his
Employment Agreement, his Supplemental Executive Retirement Benefit Agreement,
any other agreement between Corporation and High, or his service as an employee,
officer, or director of the Corporation and the termination thereof, other than
his rights as specifically provided under the Corporation’s pension plan, 401(k)
plan, and the December 8, 2005, December 30, 2004, and February 23, 2004 grants
of stock options as specifically delineated on Exhibit A attached
hereto.
4. Indemnification by
Corporation. In consideration of High’s waiver and release of
claims set forth above and the other obligations of High hereunder, to
the
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extent
that the Corporation has officers’ and directors’ liability insurance coverage
covering the acts of High, Corporation shall, subject to the exclusions and
limitations set forth therein, indemnify and hold harmless High 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. High 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
laws.
5. No Admission of
Wrongdoing. High agrees that this Agreement is not to be
construed as a finding or admission of wrongdoing or liability or illegal or
unethical conduct by any party. Nothing in this Agreement shall
constitute precedent or evidence in any investigation, proceeding, or trial,
with the exception that this Agreement shall be admissible evidence in any
proceeding to enforce its terms or secure a remedy for breach of its
terms.
6. Confidential
Information.
a. Xxxx
agrees that he will not communicate the terms and conditions of this Agreement
or the negotiations preceding it to any persons other than his spouse, attorneys
and tax advisors.
b. High
hereby acknowledges that as a result of his employment, he has had access to,
obtained, or developed certain confidential, nonpublic, and/or legally
privileged information, which includes, but is not limited to: information
relating to Corporation’s past, present or future business activities; trade
secrets;
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financial
information; technical systems; new product development; acquisition prospects
and strategies; compliance matters; information contained in personnel files and
medical files; the business operations; the internal structure of Corporation;
the names of and any and all information, including personal consumer
information requiring protection under federal financial privacy laws,
respecting the past, present and prospective customers or clients of
Corporation; target customers or markets; past, present or future research done
by Corporation respecting the business or operations of Corporation; financial
information; vendor or provider contracting arrangements; funding sources,
services; systems; methods of operation; sales and marketing information;
methods; procedures; referral sources, referral source information, or referral
lists; revenues; costs; expenses; operating data; reimbursements; contracts;
contract forms; arrangements; plans; prospects; correspondence; memoranda and
office records; electronic and data processing files and records; identities,
addresses, telephone numbers, electronic mail addresses, or other methods of
contacting persons who might use or currently use the services of or who have
been customers of Corporation (“Information”). All such Information,
marketing methods, supplies, files (closed or pending), literature, policies and
procedure manuals, as well as any information regarding any and all aspects of
Corporation, or being used by Corporation, are the sole and confidential
property of Corporation and shall be treated as
confidential. High agrees to hold inviolate, not to disclose, and to
keep secret all such Information and will not for any reason or purpose use,
permit to be used, or disclose to any party any Information.
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c. If
he has not already done so, immediately upon execution of this Agreement, Xxxx
agrees to return to Corporation, and not keep a copy of, all confidential
information including, but not limited to: written information, files (including
electronic files), materials, lists, or other financial information, documents,
and other materials or records or writings of any type, including copies
thereof, made, used or obtained by High in connection with his relationship with
Corporation.
7. Cooperation and
Non-Disparagement. Xxxx agrees that he will not disparage or
make derogatory comments about Corporation, including Corporation’s present and
former officers, directors, employees, agents, or attorneys, or their business
practices. Corporation agrees that it will not make any defamatory
comments about High nor will it authorize any defamatory
comments. Corporation further agrees that it will take reasonably
necessary steps to ensure that its officers, directors, management and attorneys
do not make any defamatory comments about High.
High also agrees not to attend any of
the Corporation’s Meetings of Shareholders, submit any proposals in connection
therewith, nominate any person(s) for director, or engage in a proxy
solicitation contrary to the Board of Directors of the Corporation in connection
therewith for three (3) years from the date of this Agreement without prior
approval from Corporation. In addition, High, or any person or entity
in connection with High, shall not engage in a tender offer of shares of the
Corporation for three (3) years from the date of this Agreement.
8. Injunctive
Relief. High agrees that any breach of the agreements and
representations set forth in Paragraphs 6 and 7 will cause the Releasees and/or
High
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irreparable
harm, that such injury cannot be remedied adequately by the recovery of monetary
damages, that upon such a breach any or all of the Releasees and/or High shall
be entitled to injunctive or other equitable relief without the posting of any
bond or undertaking and that such injunctive and/or equitable relief will not
work a hardship on him. Xxxx further agrees that in any and/or all
such circumstances, all of his obligations under this Agreement will remain in
full force and effect.
9. Acceptance
Period.
The following notice is included in
this Agreement as required by the Older Workers Benefit Protection
Act:
You
have up to twenty-one (21) days from the date of receipt of this release to
accept the terms of this release, although you may accept it at any time within
those twenty-one (21) days. You are advised to consult with an
attorney regarding this release.
The
twenty-one (21) day period will begin to run on the day after High receives this
Agreement. It will then run for a full twenty-one (21) calendar days
and expire at the end of the twenty-first day (the “Acceptance
Period”). In order to accept this Agreement, Xxxx must sign his name
and date his signature at the end of this Agreement and return it to
Corporation, c/o Xxxxxxxx Xxxxx, Xx., Esquire, Xxxxx Xxxxxxxx LLP, 0000 Xxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxxxx 00000. If the twenty-first day
of the Acceptance Period falls on a Saturday, a Sunday, or a legal holiday, the
Corporation’s receipt of his acceptance by the close of business on the next
business day immediately following such Saturday, Sunday or legal holiday will
be sufficient to effect a timely acceptance of this Agreement.
10. Revocation
Period. High has the right to revoke this Agreement at any
time within seven (7) days from the date High signs and delivers this Agreement
to the
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Corporation
(the “Revocation Period”), and this Agreement will not become effective and
enforceable until the Revocation Period has
expired. (NOTE: The Revocation Period will begin on the
day after the day on
which High has delivered this Agreement to the Corporation which is indicated by
the date High affixes to his signature at the end of this
Agreement. It will then run for seven calendar days and expire at the
end of the seventh day.) In order to revoke this Agreement, High must
notify the Corporation in writing of his decision to revoke the
Agreement. High must ensure that the Corporation (via Xxxxxxxx Xxxxx,
Xx., Esquire, Xxxxx Xxxxxxxx LLP, at the address indicated in Paragraph 9 above)
receives his written notice of revocation at its counsel’s office in Lemoyne,
Pennsylvania within the aforementioned Revocation Period. If the
seventh day of the Revocation Period falls on a Saturday, a Sunday, or a legal
holiday, the Corporation’s receipt of his notice of revocation by the close of
business on the next business day immediately following such Saturday, Sunday or
legal holiday will be sufficient to effect a timely revocation of this
Agreement. Provided that the Revocation Period expires without his
having revoked this Agreement, this Agreement shall take effect on the next day
following the Revocation Period, and such next day shall constitute the
Effective Date hereof.
11. Corporation Not High’s
Advisor. Corporation makes no representation or warranty,
express or implied, to High regarding the treatment of this Agreement or any
payments High may receive by virtue of or in connection with any provision of
this Agreement, under state, federal, or local laws pertaining to income or
other taxation, nor does Corporation provide to High any advice regarding the
financial, investment, or legal desirability of his entering into this Agreement
or making any elections or granting any
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releases referred to herein; and
High acknowledges that it is and has been his sole and entire responsibility to
explore any such aspects of this Agreement with attorneys and/or other advisors
of his own selection, in connection with both his decision to enter into this
Agreement and any decisions or elections which High may subsequently make in
relation to any of the subject matter of this Agreement.
12. Agreement Freely and
Voluntarily Entered Into. High warrants and represents that he
has signed this Agreement after review and consultation with legal counsel of
his choice and that he understands this Agreement and signs it freely, knowingly
and voluntarily, without any legal reservation and fully intending to be legally
bound hereby.
13. Representations to
Corporation. In connection with his entering into this
Agreement, and as an inducement for Corporation to enter into this Agreement,
High hereby represents the following matters to Corporation:
a. That
High has carefully read and fully understands all of the provisions of this
Agreement which sets forth the entire agreement between High and Corporation,
and that High has not relied upon any representations or statements, written or
oral, not set forth in this document;
b. That
High has had such time as High deemed necessary to review, consider, and
deliberate as to the terms of this Agreement; and
c. That
Exhibit B hereto sets forth in reasonable detail any instances known to High and
not already disclosed in writing to Corporation in which the Corporation is or
may be, was or may have been, in violation either of any statute or regulation,
applicable to the Corporation.
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14. Severability. Should
any provision(s) of this Agreement be determined, in a proceeding to enforce or
interpret this Agreement, to be invalid or unenforceable, then, provided that
the provision(s) deemed to be invalid or unenforceable do not constitute all or
substantially all of the undertakings by either High or Corporation, the
remainder of this Agreement shall continue in full force and
effect.
15. Notices. Any
notice, request, claim, demand, document, or other communication hereunder to
any party shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered personally or sent by telex, telecopy, or certified or
registered mail, postage prepaid, as follows:
A. If
to Corporation:
Xxxxxxxx Xxxxx, Xx.,
Esquire,
Xxxxx Xxxxxxxx LLP
0000 Xxxxx Xxxx, Xxxxx 000
Lemoyne, Pennsylvania
17043
B. If
to High:
000 Xxxxxxxx Xxxxxx
Collegeville, Pennsylvania
19426
Or to any other address as any party
shall have specified for itself by notice in writing to the other
party.
16. Choice of
Law. This Agreement shall be governed by, construed under and
enforced pursuant to the laws of the Commonwealth of Pennsylvania.
17. Complete Written
Settlement. This Agreement expresses a full and complete
settlement of all disputes between High and the Releasees. High
agrees that there are absolutely no agreements or reservations relating to
termination of High’s employment and High’s release of the Releasees that are
not clearly expressed in writing herein. This Agreement may not be
modified except in writing signed by all parties
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hereto. Xxxx
further agrees that the consideration described herein are all he and/or his
counsel are ever to receive with regard to High’s termination of employment and
execution of this Release, and that the execution hereof is with the full
knowledge that this Agreement covers all possible claims.
18. Binding on Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
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19. Counterparts. This
Agreement may be executed in multiple counterparts, and shall be fully valid,
legally binding and enforceable whether executed in a single document or in such
counterparts.
IN WITNESS WHEREOF, the parties have
executed this Complete Settlement Agreement and General Release on the date
first written above.
WITNESS
/s/ X. X.
Xxxxxx
/s/ Xxxxxxx X.
High
Xxxxxxx X. High
ATTEST: HARLEYSVILLE
NATIONALCORPORATION
/s/ Xx Xxx X.
Xxxxx By: /s/ Xxxx X.
Xxxxxxxx
Xxxx X. Xxxxxxxx
ATTEST: HARLEYSVILLE
NATIONAL BANKAND TRUST COMPANY
/s/ Xx Xxx X.
Xxxxx By:
/s/ Xxxx X.
Xxxxxxxx
Xxxx X. Xxxxxxxx
ATTEST: HARLEYSVILLE
MANAGEMENTSERVICES, LLC
/s/ Xx Xxx X.
Xxxxx y: /s/ Xxxx X.
Xxxxxxxx
Xxxx X. Xxxxxxxx
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EXHIBIT
A
1. Grant of Incentive Stock
Options dated December 8, 2005 under the 1998 Stock Incentive Plan to purchase
shares of stock subject to the vesting schedule contained in the
grant.
2. Grant of Non-qualified
Stock Options dated December 8, 2005 under the 1998 Stock Incentive Plan to
purchase shares of stock subject to the vesting schedule contained in the
grant.
3. Grant of Incentive Stock
Options dated December 30, 2004 under the 1998 Stock Incentive Plan to purchase
shares of stock subject to the vesting schedule contained in the
grant.
4. Grant of Incentive Stock
Options dated February 23, 2004 under the 1998 Stock Incentive Plan to purchase
shares of stock subject to the vesting schedule contained in the
grant.
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EXHIBIT
B
Any
instances known to High in which the Corporation is or may be, was or may have
been, in violation either of any statute or regulation, applicable to the
Corporation other than what he may have already disclosed to Corporation in
writing:
None
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