COMPLETE SETTLEMENT AGREEMENT AND GENERAL RELEASE READ IT CAREFULLY
Exhibit
99.1
COMPLETE
SETTLEMENT AGREEMENT
AND
GENERAL RELEASE
READ
IT CAREFULLY
NOTICE
TO XXXXX X. XXXXXX:
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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 (21)
days from
the day 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
Xxxxx X. Xxxxxx 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.
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WHEREAS,
Xxxxx X.
Xxxxxx (“Xxxxxx”) and Harleysville Management Services LLC executed an
employment agreement dated January 1, 2005 (“Employment Agreement”) wherein
beginning April 1, 2005, Xxxxxx 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 Xxxxxx’x 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 Xxxxxx 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:
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1. Termination
of Employment; Payments to Xxxxxx.
a. Termination
of employment with Corporation shall be effective September 26, 2006. Xxxxxx
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. Xxxxxx
hereby confirms his resignation from any and all of the Corporation’s, its
subsidiaries’ and affiliates’ Boards of Directors.
b. In
consideration of Xxxxxx complying with the terms of this Agreement and provided
that Xxxxxx continuously and at all times complies with all of his obligations
pursuant to this Agreement, Employer shall pay Xxxxxx the following severance
package:
i. Corporation
has paid an amount equal to Xxxxxx’x salary through September 26, 2006, minus
all appropriate withholdings and/or deductions on the first regularly scheduled
pay date following the termination of Xxxxxx’x employment;
ii. Corporation
has provided Xxxxxx and his dependents with health insurance benefits through
September 30, 2006;
iii. Corporation
has paid Xxxxxx an amount equal to his unused accrued PTO;
iv. Corporation
shall transfer title to the 2005 Audi A8 which Xxxxxx drove while employed
by
Corporation to Xxxxxx;
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v. Corporation
shall pay Xxxxxx 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 Xxxxxx 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 Xxxxxx, within thirty days of the expiration of the Revocation
Period as defined in Paragraph 12;
vii. Corporation
shall pay Xxxxxx 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.
x.
Xxxxxx
acknowledges and agrees that the benefits to be provided to Xxxxxx 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.
Xxxxxx
understands and agrees that Corporation shall not be liable to Xxxxxx and/or
any
present or former attorney for any costs, expenses, or attorneys' fees of any
kind or amount. Furthermore, Xxxxxx
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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 Xxxxxx.Xx consideration of the payments and severance benefits set
forth in this Agreement which consideration and severance benefits Xxxxxx was
not otherwise entitled to receive, and intending to be legally bound, Xxxxxx,
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 Xxxxxx 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 Xxxxxx'x employment with Corporation, or which relate
in any way to the termination of Xxxxxx'x 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.
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Xxxxxx
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.
Xxxxxx
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 Xxxxxx 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 Xxxxxx’x waiver and release of claims set forth above and the
other obligations of Xxxxxx hereunder, to the extent that the Corporation has
officers’ and directors’ liability insurance coverage covering the acts of
Xxxxxx, Corporation shall, subject to the exclusions and limitations set forth
therein, indemnify and hold harmless Xxxxxx 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. Xxxxxx 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.
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5. No
Admission of Wrongdoing.
Xxxxxx
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. Application
for Employment.
Xxxxxx
agrees that he will not seek employment from any of the Releasees, and he hereby
releases the Releasees from any and all liability on account of any denial
by
them of employment.
7. Confidential
Information.
x. Xxxxxx
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. Executive
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; 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;
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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. Xxxxxx
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.
c. If
he has
not already done so, immediately upon execution of this Agreement, Xxxxxx 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 and the Corporation’s laptop computer), materials, lists, or other
financial information, documents, and other materials or records or
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writings
of any type, including copies thereof, made, used or obtained by Xxxxxx in
connection with his relationship with Corporation.
8. Covenant
not to compete.
In
consideration of Xxxxxx’x waiver and release of claims set forth above and the
other obligations of Xxxxxx hereunder, Corporation agrees to restructure
Xxxxxx’x covenant not to compete as provided in Paragraph 8 of the Employment
Agreement as follows:
Xxxxxx
shall not:
(i)
for a period of
six months following the date of termination of Xxxxxx’x employment, in Berks,
Bucks, Xxxxxxx, and Xxxxxxxxxx counties, Pennsylvania (the “Non-Competition
Area”) be engaged, directly or indirectly, either for his own account or as
agent, consultant, employee, partner, officer, director, proprietor, investor
(except as an investor owning less than 5% of the stock of a publicly owned
company) or otherwise of any person, firm, corporation or enterprise engaged
in
the banking (including bank holding company) or financial services industry,
which engages in any activity in which Corporation or any of its subsidiaries
are engaged during Xxxxxx’x employment, as more specifically defined in Item 1
of Harleysville National Corporation’s Annual Report on SEC Form 10-K filed
March 15, 2006; or
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(ii)
for a period of one year, directly or indirectly contact, solicit
or
attempt to induce any person, corporation or other entity who or
which is
a customer or referral source of HNC, or any of its subsidiaries
or
affiliates, during the term of Executive’s employment, to become a
customer or referral source of any person or entity other than HNC
or one
of its subsidiaries or affiliates; or
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(iv)
for a period of
one year, directly or indirectly solicit, induce or encourage any employee
of
HNC or any of its subsidiaries or affiliates, who is employed during the term
of
Executive’s employment or on the date of termination of Executive’s employment,
to leave the employ of HNC or any of its subsidiaries or affiliates, or to
seek,
obtain or accept employment with any person or entity other than HNC or any
of
their subsidiaries or affiliates.
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9. Cooperation
and Non-Disparagement.
Xxxxxx
agrees that he will not disparage or make derogatory comments about the
Corporation, its subsidiaries and affiliates, Corporation’s present and former
officers, directors, employees, agents, or attorneys, or their business
practices.
10. Injunctive
Relief.
Xxxxxx
agrees that any breach of the agreements and representations set forth in
paragraphs 7 and 8 will cause the Releasees 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 shall be entitled, in addition to
and
not in lieu of any and all other remedies, 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. Xxxxxx further agrees
that in any and/or all such circumstances, all of his obligations under this
Agreement will remain in full force and effect.
11. 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 Xxxxxx 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, Xxxxxx must sign his name and date his signature at
the
end of this letter and return it to Corporation, c/o Xxxxxxxx Xxxxx, Xx.,
Esquire, Xxxxx Xxxxxxxx LLP, 0000 Xxxxx Xxxx,
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Xxxxx
000, Xxxxxxx, Xxxxxxxxxxxx 17043. 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.
12. Revocation
Period.
Xxxxxx
has the right to revoke this Agreement at any time within seven (7) days from
the date Xxxxxx signs and delivers this Agreement to the 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 Xxxxxx has signed this Agreement and delivered it to the Corporation
and, as indicated by the date Xxxxxx 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, Xxxxxx must notify the
Corporation in writing of his decision to revoke the Agreement. Xxxxxx must
ensure that the Corporation (via Xxxxxxxx Xxxxx, Xx., Esquire, at the address
indicated in Paragraph 11 above) receives his written notice of revocation
at
his 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
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day
following the Revocation Period, and such next day shall constitute the
Effective Date hereof.
13. Corporation
Not Xxxxxx’x Advisor.
Corporation makes no representation or warranty, express or implied, to Xxxxxx
regarding the treatment of this Agreement or any payments Xxxxxx 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 Xxxxxx any advice regarding the financial, investment,
or
legal desirability of his entering into this Agreement or making any elections
or granting any releases referred
to herein; and Xxxxxx 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 Xxxxxx may
subsequently make in relation to any of the subject matter of this Agreement.
Corporation makes no representation as to the applicability of Internal Revenue
Code Section 409A to the payments under this Agreement or the Employment
Agreement.
14. Agreement
Freely and Voluntarily Entered Into.
Xxxxxx
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.
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15. Representations
to Corporation.
In
connection with his entering into this Agreement, and as an inducement for
Corporation to enter into this Agreement, Xxxxxx hereby represents the following
matters to Corporation:
a. That
Xxxxxx has carefully read and fully understands all of the provisions of this
Agreement which sets forth the entire agreement between Xxxxxx and Corporation,
and that Xxxxxx has not relied upon any representations or statements, written
or oral, not set forth in this document;
b. That
Xxxxxx has had such time as Xxxxxx deemed necessary to review, consider, and
deliberate as to the terms of this Agreement; and
c. That
Exhibit A hereto sets forth in reasonable detail any instances known to Xxxxxx
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.
16. 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 Xxxxxx or Corporation, the
remainder of this Agreement shall continue in full force and
effect.
17. 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:
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A. If
to Corporation :
Xxxxxxxx
Xxxxx, Xx., Esquire
Xxxxx
Xxxxxxxx LLP,
0000
Xxxxx Xxxx
Suite
302
Lemoyne,
Pennsylvania 17043
B. If
to
Xxxxxx:
______________________________
0000
Xxx Xxxxx Xx.
[address]
Worcester,
PA 19490____[address]
Or
to any
other address as any party shall have specified for itself by notice in writing
to the other party.
18. Choice
of Law.
This
Agreement shall be governed by, construed under and enforced pursuant to the
laws of the Commonwealth of Pennsylvania.
19. Complete
Written Settlement.
This
Agreement expresses a full and complete settlement of all disputes between
Xxxxxx and the Releasees. Xxxxxx agrees that there are absolutely no agreements
or reservations relating to termination of Xxxxxx’x employment and Xxxxxx’x
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 hereto.
Xxxxxx further agrees that the payments and benefits described herein are all
he
and/or his counsel are ever to receive with regard to Xxxxxx’x 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.
20. 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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21. 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/
Xxxxx Xxxx_______________________ _/s/
Xxxxx X. Xxxxxx________________________________
Xxxxx
X. Xxxxxx
ATTEST: HARLEYSVILLE
NATIONAL
CORPORATION
_/s/
Xx Xxx X. Bynon__________________ By:_/s/
Xxxxxx X.
Xxxxxx, Xx.____________________________
Xxxxxx
X. Xxxxxx,
Xx.
Chairman
ATTEST: HARLEYSVILLE
NATIONAL
BANK
AND
TRUST
COMPANY
_/s/
Xx Xxx X. Bynon__________________ By:
_/s/
Xxxxxx X.
Xxxxxx, Xx._____________________________
Xxxxxx
X. Xxxxxx, Xx.
Chairman
ATTEST:
HARLEYSVILLE MANAGEMENT
SERVICES,
LLC
_/s/
Xx Xxx X. Bynon__________________ By:
__/s/
Xxxxxx
X. Xxxxxx, Xx.____________________________
Xxxxxx
X. Xxxxxx,
Xx.
DATED:
12-4 ,
2006
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EXHIBIT
A
Any
instances known to Xxxxxx 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:
Name:
/s/
GJW
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