SERVICE AGREEMENT
Exhibit (e)(46)
This SERVICE AGREEMENT made and entered into by and between ERIE FAMILY LIFE INSURANCE
COMPANY, a Pennsylvania stock insurance company (hereinafter referred to as the “Company”)
and ERIE INDEMNITY COMPANY, a Pennsylvania stock corporation (hereinafter referred to as
“Erie Indemnity”), both of which are headquartered in Erie, Pennsylvania.
WITNESSETH:
WHEREAS, the Company is a 21.6% owned subsidiary of Erie Indemnity; and
WHEREAS, Erie Indemnity has served as the attorney-in-fact for the Erie Insurance Exchange, a
Pennsylvania reciprocal inter-insurance exchange (hereinafter the “Exchange”), since the Exchange’s
inception in April, 1925, and
WHEREAS, Erie Indemnity provides the Exchange with all management services pursuant to a
Subscriber’s Agreement with power of attorney executed by each Subscriber at the Exchange, and it
is intended hereby that Erie Indemnity shall provide the same management services to the Company in
like kind and quality as Erie Indemnity provides to the Exchange.
NOW THEREFORE, in consideration of the mutual covenants contained herein and intending to be
legally bound thereby, the parties agree as follows:
ARTICLE I: MANAGEMENT SERVICES
| A. | Erie Indemnity will provide all necessary and appropriate management services to the Company, including but not limited to the following services: issuing, changing, nonrenewing or cancelling policies; obtaining reinsurance; collecting premiums, receiving notices and proofs of loss; appearing for, compromising, prosecuting, defending, adjusting and settling losses and claims under the policies; accepting service of process on behalf of the Company; and generally managing and conducting the business and affairs of the Company. |
| B. | All the underwriting, claims, and investment services provided to the Company will be based upon the written criteria, standards, and guidelines of the Company. The Company will have the ultimate and final authority over decisions and policies, including but not be limited to the acceptance, rejection or canceling of risks, the payment or non-payment of claims, and the purchase and sale of securities. |
| C. | Notwithstanding any other provisions of this Agreement, it is understood that the business and affairs of the Company shall be managed by its Board of Directors, and, to the extent delegated by such board, by its appropriately designated officers. The Board of Directors and officers of Erie Indemnity shall not have any management prerogatives with respect to the business affairs and operation of the Company. |
ARTICLE II: MANAGEMENT FEE
In consideration of Erie Indemnity’s management services, the Company will pay Erie Indemnity a
management fee, which fee shall be on a cost basis. The Company will pay such management fee on a
monthly basis no later than thirty days after the end of the month in which the costs were
incurred.
ARTICLE III: REIMBURSEMENT
In addition to paying Erie Indemnity the management fee in ARTICLE II, the Company will also fully
reimburse Erie Indemnity on an actual cost basis for all investment expenses incurred by Erie
Indemnity on behalf of the Company. The allocation method for shared expenses (facilities,
equipment, personnel, computers, etc.) shall be consistent with the provisions of New York
Regulation 30 (11.NYCRR 105, 109).
The Company will make such reimbursement to Erie Indemnity on a monthly basis no later than 30 days
after Erie Indemnity notifies the Company of such incurred investment expenses.
ARTICLE IV: RECORDS AND RIGHT TO AUDIT
Erie Indemnity shall keep sufficient records for the express purpose of recording therein the
nature and details of the management services and financial transactions performed for the Company
pursuant to this Agreement. All books and records kept by Erie Indemnity that pertain to the
management services and investment services performed by Erie Indemnity shall be owned by Erie
Indemnity, but such books and records shall be maintained in a fiduciary capacity for the Company.
The Company shall have the right to examine and audit, at the offices of Erie Indemnity at all
reasonable times, all books and records of Erie Indemnity relating to any business which is the
subject of this Agreement. This right shall survive termination of this Agreement and shall
continue so long as either party has any rights or obligations under this Agreement.
ARTICLE V: ARBITRATION
As a condition precedent to any right of action hereunder, in the event of any difference of
opinion hereafter arising with respect to this Agreement, it is hereby mutually agreed that such
dispute or difference of opinion shall be submitted to arbitration before a panel of three
arbitrators, all of whom shall be active or retired disinterested officers of property and casualty
insurance companies. One arbitrator shall be chosen by Erie Indemnity, one shall be chosen by the
Company, and the third, an umpire, to be chosen by the other two arbitrators before they enter upon
arbitration. In the event of any party refusing or neglecting to appoint an arbitrator within 90
days after the other party requests it to do so, or if the arbitrators fail to appoint an umpire
within 60 days after they have accepted their appointments, such arbitrator or umpire, as the case
may be, shall, upon the application of any party, be appointed by The American Arbitration
Association and the arbitrators and the umpire shall thereupon proceed. The arbitrators shall
consider this Agreement as an honorable engagement rather than merely as a legal obligation and
they are relieved of all judicial formalities and may abstain from following the strict rules of
law. The decision of the majority of the arbitrators shall be final and binding of all parties.
Each party shall bear the expense of its own arbitrator and shall jointly and equally
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bear the other expenses of the umpire and of the arbitration. Any such arbitration shall take
place in Erie, Pennsylvania, or such other place as may be mutually agreed.
ARTICLE VI: EFFECTIVE DATE AND TERMINATION
This Agreement shall be effective as of January 1, 1993. The Agreement shall continue in full
effect until it is amended or terminated by either party. Termination will take place 30 days
after either party delivers a written notice to terminate to the other party.
ARTICLE VII: MISCELLANEOUS
This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth
of Pennsylvania.
In any term, provision, covenant or condition of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the provision shall continue in
full force and effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF the parties hereto execute this Service Agreement and agree to be bound by the
terms and conditions herein set forth.
Dated this 21st day of June, 1993.
By
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/s/ X.X. Xxxxxxxx
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| President & Chief Financial Officer | ||||
By
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/s/ X.X. Xxxxx
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| Senior Vice President & Controller | ||||
| ERIE INDEMNITY COMPANY | ||||
By
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/s/ X.X. Xxxxx
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| Chairman of the Board & Chief Executive Officer | ||||
By
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/s/ J.R. Van Gorder
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| Executive Vice President, Secretary & General Counsel | ||||
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