AGREEMENT
EXHIBIT 10.19
AGREEMENT
THIS AGREEMENT (“Agreement”) made as of the 1st day of September, 2003, by and between LEBANON
MUTUAL INSURANCE COMPANY, a Pennsylvania corporation (the “Company”), and Xxxxxxxxx X. Xxxxxx, an
individual (the “Executive”).
WITNESSETH:
WHEREAS, the Executive is presently employed by the Company in a position of substantial
responsibility; and
WHEREAS, the Company desires to induce the Executive to remain in the employ of the Company on
an impartial and objective basis in the event of a transaction pursuant to which a Change in
Control (as defined in Section 2(c)) of the Company occurs.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Term of Agreement.
(a) In General. Except as otherwise provided herein, the term of this
Agreement will be for a period commencing on the date of this Agreement and ending on
August 31, 2005; provided, however, that this Agreement will automatically be renewed on
September 1, 2004 for the two-year period commencing on such date and ending on August 31,
2006, unless either the Executive or the Company gives written notice of nonrenewal to the
other on or before July 1, 2004 (in which case this Agreement will continue in effect
through August 31, 2005); and provided further, that if this Agreement is renewed on
September 1, 2004, it will automatically be renewed on September 1st of each subsequent
year (the “Annual Renewal Date”) for a period ending two years from each Annual Renewal
Date unless either the Executive or the Company gives written notice of nonrenewal to the
other at least 60 days prior to an Annual Renewal Date (in which case this Agreement will
continue in effect for a term ending one year from the Annual Renewal Date immediately
following such notice).
(b) Termination for Cause. Notwithstanding the provisions of Section 1(a),
this Agreement will terminate automatically upon termination of the Executive’s employment
for Cause. As used in this Agreement, the term “Cause” means:
(i) prior to a Change in Control, termination for any reason; and
(ii) concurrent with or following a Change in Control, termination
(iii) following (A) the Executive’s conviction of, or plea of guilty or nolo
contendere to, a crime classified as a felony within the relevant jurisdiction, (B)
the Executive’s willful breach of her fiduciary duty involving personal profit, or
engagement in an act of personal dishonesty, in the performance of her duties, or (C)
the Executive’s willful failure to follow the lawful instructions, with respect to
material matters, of the Company’s board of directors (“Board”) or her supervisor
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after her receipt of written notice of such instructions, other than a failure
resulting from her incapacity because of physical or mental illness.
If the Executive’s employment is terminated for Cause, her rights under this Agreement will
cease as of the effective date of such termination.
(c) Voluntary Termination, Retirement, or Death. Notwithstanding the
provisions of Section 1(a), this Agreement will terminate automatically upon the voluntary
termination of the Executive’s employment (other than in accordance with Section 2), her
retirement or her death. In any such event, the Executive’s rights under this Agreement
will cease as of the effective date of such termination; provided, however, that if the
Executive dies after a Notice of Termination (as defined in Section 2(b)) is delivered by
her in accordance with such section, the payments described in Section 3 will nonetheless
be made to the person or persons determined pursuant to Section 9(b).
(d) Disability. Notwithstanding the provisions of Section 1(a), this
Agreement will terminate automatically upon the termination of the Executive’s employment
by reason of her Disability. In such event, the Executive’s rights under this Agreement
will cease as of the effective date of such termination; provided, however, that if the
Executive becomes disabled after a Notice of Termination is delivered by her in accordance
with Section 2(b), she will nonetheless be entitled to receive the payments described in
Section 3. As used in this Agreement, the term “Disability” means incapacitation, by
accident, sickness or otherwise, so as to render the Executive mentally or physically
incapable of performing the essential duties required of her by her then position with her
employer for a period of six months.
2. Termination Following a Change in Control.
(a) Events Giving Right To Terminate For Good Reason. If a Change in Control
occurs and, concurrently therewith or thereafter during the term of this Agreement, an
event constituting Good Reason also occurs with respect to the Executive, she may terminate
her employment in accordance with the provisions of Section 2(b) and, thereupon, will
become entitled to the payments described in Section 3. As used in this Agreement, the term
“Good Reason” means any of the following events:
(i) the involuntary termination of the Executive, other than an involuntary
termination permitted in Section 1(b) or (d);
(ii) any reduction in the Executive’s title, responsibility (including reporting
responsibility) or authority as in effect immediately prior to the Change in Control;
provided, however, that the assignment of the Executive to a position with a
reasonably similar title, responsibility and authority will not constitute an event of
Good Reason if the Executive’s actual or targeted compensation in such new position is
not less than the Executive’s actual and targeted compensation immediately prior to
the Change in Control;
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(iii) any assignment to the Executive of duties inconsistent with her position
immediately prior to the Change in Control, except for an assignment of duties
consistent with a position permitted in Clause (ii);
(iv) any reassignment of the Executive to a principal place of
employment which requires her to move her principal residence and is more than 50
miles from the Company’s principal executive office on the date of the Change in
Control;
(v) any reduction in the Executive’s annual base salary as in effect on
the date of the Change in Control;
(vi) any failure by the Company to provide the Executive with benefits
at least as favorable as those enjoyed by her under any of the pension, life
insurance, medical, health and accident, disability or other employee benefit plans of
the Company in which the Executive participated on the date of the Change in Control,
or the taking of action that would materially reduce any of such benefits, unless such
reduction is part of a reduction applicable in each case to all or substantially all
of the participating employees; or
(vii) any other material breach of this Agreement on the part of the Company.
(b) Notice of Termination. Upon the occurrence of a Change in Control and an
event of Good Reason, the Executive may, within 90 days of the occurrence of any such
event, resign from employment by a notice in writing (“Notice of Termination”) delivered to
the Company, whereupon she will become entitled to the payments described in Section 3. In
the case of a termination described in Clause (i) of Section 2(a), the Executive will
confirm her involuntary termination, in writing, within 90 days of the date of such
termination, and such confirmation will be deemed a Notice of Termination.
(c) Change in Control Defined. As used in this Agreement, the term “Change in
Control” means any of the following:
(i) any event described in Section 280G(b)(2)(A)(i) of the Internal Revenue Code
of 1986, as amended; or
(ii) any event or the onset of any event, either of which is declared as such by
the Board.
Neither the conversion or demutualization of the Company, without more, shall be deemed an
event described in Clause (i).
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3. Rights in the Event of Certain Terminations Following Change in Control. In the
event the Executive validly and timely delivers a Notice of Termination to the Company, she will be
entitled to receive the following payment:
(a) Over a period of 12 months following the date of termination of employment, the
Executive shall be paid an amount equal to her Highest Annual Compensation.
(i) For purposes of this Agreement, the term “Highest Annual Compensation” means
a dollar amount equal to the highest of the Executive’s annualized base salary amount
payable to her by the Company during the term of this Agreement.
(ii) The amount required to be paid to the Executive under Section 3(a)(i) shall
be paid in equal monthly installments, beginning 30 days following the date of
termination of employment.
4. Legal Expenses. If the Executive obtains a judgment or settlement which enforces a
right or benefit under this Agreement, the Company shall pay to the Executive all reasonable legal
fees and expenses incurred by her in seeking to obtain or enforce such right or benefit.
5. Notices. Any notice required or permitted to be given under this Agreement shall
be deemed properly given if in writing and if mailed by express, registered or certified mail,
postage prepaid with return receipt requested, to the residence of the Executive, in the case of
notices to the Executive, and to the principal office of the Company, in the case of notices to the
Company. Either party may change her or its address for such notification by giving written notice
to such effect to the other party.
6. 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 the Executive
and an executive officer of the Company, such officer being specifically designated by the Board
for such purpose. No waiver by any 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 be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
7. Assignment. This Agreement shall not be assignable by any party hereto, except by
the Company to any successor in interest to the business of the Company.
8. Entire Agreement. This Agreement contains the entire agreement of the parties
relating to the subject matter of this Agreement and supersedes any prior agreement of the parties
relating to the same.
9. Successors Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
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and/or
assets of the Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession had taken place; provided, however, that no such assumption shall be required in
the case of the conversion or demutualization of the Company. Failure by the Company to
obtain such assumption and agreement prior to the effectiveness of any such succession
shall constitute a material breach of this Agreement. As used in this Agreement, the
“Company” shall mean the Company as hereinbefore defined and any successor to the business
and/or assets of the Company 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 the Executive’s
personal or legal representatives, executors, administrators, heirs, distributees,
devisees, and legatees.
10. Continuation of Certain Provisions. Any termination of the Executive’s employment
under this Agreement or of this Agreement will not affect the benefit provisions of Section 3 or 4,
which will, if relevant, survive any such termination and remain in full force and effect in
accordance with their respective terms.
11. Other Rights. Nothing herein will be construed as limiting, restricting or
eliminating any rights the Executive may have under any plan, contract or arrangement to which she
is a party or in which she is a vested participant; provided, however, that any termination
payments required hereunder will be in lieu of any severance benefits to which she may be entitled
under a severance plan or arrangement of the Company; and provided further, that if the benefits
under any such plan or arrangement may not legally be eliminated, then the payments hereunder will
be correspondingly reduced in such equitable manner as the Board may determine.
12. No Mitigation or Offset. The Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking employment or otherwise.
Further, there shall be no offset against any amount payable or provided hereunder following the
Executive’s termination of employment solely by reason of her employment with another employer.
13. Severability. The invalidity or unenforceability of any provisions 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.
14. Applicable Law. This Agreement shall be governed by and construed in accordance
with the law (but not the law of conflict of laws) of the Commonwealth of Pennsylvania.
15. Headings. The headings of the sections of this Agreement are for convenience of
reference 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.
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16. Number. Words used herein in the singular form shall be construed as being used
in the plural fowl, as the context requires, and vice versa.
17. Payments By Reason of Death. In the event any amounts becomes payable hereunder
following the death of the Executive, such payments shall be made to her surviving spouse, if any,
or if none, to her estate.
18. Tax Withholding. All payments made hereunder shall be subject to such federal,
state and local tax withholding as may be required by law.
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be executed, as
of the date first above written.
| LEBANON MUTUAL INSURANCE COMPANY | ||||||
| By | ||||||
[CORPORATE SEAL]
|
Attest: | |||||
| (“Company”) | ||||||
Witness: |
||||||
Asst. Secretary |
||||||
| (“Executive”) |
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AMENDMENT
TO CHANGE IN CONTROL AGREEMENT
TO CHANGE IN CONTROL AGREEMENT
AGREEMENT made this ___ day of 2008, by and between LEBANON MUTUAL INSURANCE
COMPANY, a Pennsylvania corporation (the “Company”), and XXXXXXXXX X. XXXXXX, an individual (the
“Executive”).
WITNESSETH:
WHEREAS, the Company and the Executive entered into an agreement effective September 1, 2003,
relating, among other things, to the Executive’s rights and obligations in the event of a Change in
Control of the Company (the “Change in Control Agreement”); and
WHEREAS, the Company and the Executive desire to amend the Change in Control Agreement to
comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), by
executing this document (the “Amendment”).
NOW, THEREFORE, the parties, intending to be legally bound hereby, further agree as follows:
1. A new Section 3(b) is added to the Change in Control Agreement reading as follows—
(b) Notwithstanding the foregoing, if the Executive is a “specified
employee” (as defined in Code Section 409A(a)(2)(B)(i) and the
underlying regulations), all distributions under this Section shall
be subject to a delay of six months following the Executive’s
termination of employment. The initial payment shall be made as soon
as administratively feasible after the first day of the seventh
month that follows the month in which the termination of employment
occurs. The initial payment shall include any payments that would
otherwise have been paid under this Section during the six month
delay.
2. A new Section 3(c) is added to the Change in Control Agreement reading as follows—
(c) Notwithstanding the foregoing, and anything herein to the
contrary, the receipt of any benefits under this Section 3 shall be
subject to satisfaction of the condition precedent that the
Executive undergo a “separation from service” within the meaning of
Treas. Reg. § 1.409A-1(h) or any successor thereto.
IN WITNESS WHEREOF, the parties have executed this Amendment, or caused it to
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be executed, on , 2008.
| LEBANON MUTUAL INSURANCE COMPANY | ||||||
| By | ||||||
| Date: , 2008 | ||||||
| Attest | ||||||
| Date: , 2008 | ||||||
| Xxxxxxxxx X. Xxxxxx |
||||||
| Date: , 2008 | ||||||
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