EXHIBIT 99.3 - FIRST AMENDMENT TO SECOND RESTATED AGREEMENT
H.O. XXXX TRUST
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Article I Lifetime Trust 1
Article II Payment of Taxes, Debts, Legacies and
Expenses After Settlor's Death 2
Article III Administration of Trust Estate 3
Article IV Powers of Trustees 8
Article V Successor Trustees 12
Article VI General Provisions 13
Article VII Certain Rules of Construction 15
FIRST AMENDMENT TO SECOND RESTATED AGREEMENT
H. O. XXXX TRUST
Dated the 22nd day of December, 1980.
The Trust Agreement dated April 7, 1967, as restated by a Trust Agreement
dated December 17, 1970 and amended thereafter, between XXXXX XXXX XXXX, of
Erie, Pennsylvania, as the Settlor, his children, XXXXX XXXXXXX XXXX and XXXXX
XXXX XXXXX, as the individual Trustees and MELLON BANK, N.A., as the corporate
Trustee and again restated by a Second Restated Agreement dated the 20th day of
January, 1978 (and pursuant to the power to amend as contained in paragraph 7.03
of the said Second Restated Agreement) is hereby amended and restated again to
read as set forth herein ("this Agreement").
The Settlor has heretofore transferred and delivered certain property to
the Trustees, together with all his interest therein. The Trustees shall
continue to hold said property, together with any additions thereto as
hereinafter provided, as a Trust Estate, shall invest and reinvest the same and
shall distribute the net income (hereinafter called "Income") and principal as
set forth in the following provisions.
Article I
Lifetime Trust
1.01. During Settlor's lifetime:
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(A) To pay to the Settlor the Income quarter-annually or to apply
the same to his use as directed by him,
(B) To pay over to Settlor free of trust any amount of principal
which he may at any time request in writing,
(C) To pay to Settlor or apply for his benefit any amounts of
principal as Trustees in their discretion may from time to time deem advisable
for the welfare and comfortable support of Settlor,
(D) To make gifts from principal to individuals and organizations
consistent with Settlor's previous pattern of gifts.
Article II
Payment of Certain Taxes, Debts, Legacies and
Expenses After Settlor's Death
2.01. Upon the Settlor's death, the Trustees shall pay all estate,
inheritance and other taxes in the nature thereof, together with any interest
and penalties thereon, becoming payable because of the Settlor's death with
respect to the property constituting his gross estate for death tax purposes,
whether or not such property passes under this Agreement; PROVIDED, however,
that no assets which are not subject to such taxes shall be used for this
purpose and that the death taxes on future interests may be paid at such time or
times as the Trustees in their sole discretion deem advisable. The
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Trustees shall not seek contribution or reimbursement from anyone receiving or
having a beneficial interest in any part of said gross estate. The Trustees
shall also pay to the Settlor's personal representative or shall expend directly
such sums as said personal representative shall certify as necessary to
supplement the Settlor's probate estate in order to pay debts, funeral expenses,
legacies and administration expenses; PROVIDED, however, that no assets shall be
used for this purpose which are not otherwise included in the Settlor's gross
taxable estate. Subject to such payments, the principal remaining at the
Settlor's death and any accrued or undistributed Income shall be divided and
held as is provided in Article III below.
Article III
Administration of Trust Estate
3.01. The Trust Estate shall be held and administered as hereinafter
stated.
(A) The Trustees shall divide the Trust Estate into two equal shares
for the Settlor's children, XXXXX XXXXXXX XXXX and XXXXX XXXX XXXXX, and shall
hold each share as a separate trust.
(1) During the lifetime of each of the Settlor's children, the
Trustees shall pay the Income from his or her trust quarter-annually to or for
the benefit of said child, and if the corporate Trustee considers the Income to
be insufficient, in view of other income of said child of which it has
knowledge, to provide for the welfare and comfortable support of said child
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and his or her family, including educational and funeral expenses, the corporate
Trustee is authorized in its discretion to use such sums from the principal as
it deems advisable therefor; PROVIDED, however, that no shares of Class B
capital stock of ERIE INDEMNITY COMPANY may be used for this purpose. In
addition, said child shall have the right to withdraw any or all of the
principal, exclusive of shares of Class B capital stock of ERIE INDEMNITY
COMPANY. Upon the death of said child, if the trust has not already terminated,
the remaining principal, exclusive of any shares of Class B capital stock of
ERIE INDEMNITY COMPANY, shall be transferred and delivered to or for the benefit
of such one or more persons, corporations or other organizations, in such
portions or amounts and subject to such trusts, terms and conditions as said
child may appoint by specific reference to this power in his or her will.
(2) Upon the death of each child, or upon the Settlor's death in the
case of either child who is not then living, the shares of Class B capital stock
of ERIE INDEMNITY COMPANY in said child's trust and any principal not appointed
by said child as aforesaid, shall be held and distributed as follows:
(a) During the lifetime of the surviving spouse of the
deceased child, the Income shall be paid quarter-annually to said spouse, and if
the Trustees consider the Income to be insufficient, in view of other income of
said spouse and children of which they have knowledge, to provide for the
welfare and comfortable support of said child's spouse and children, including
educational and funeral expenses, the Trustees are authorized in
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their discretion to use such sums from principal, exclusive of shares of Class B
stock of ERIE INDEMNITY COMPANY, as they deem advisable therefor; PROVIDED,
however, that a child of Settlor shall have the right and power exercisable by
specific reference to this power in his or her Will, to direct that the trust
shall not continue for the benefit of his or her surviving spouse, or shall
continue for a shorter time than the life of said surviving spouse, and in the
event of the exercise of said power the trust shall terminate as thus directed.
(b) Upon the termination of said spouse's interest, the
principal shall be divided into as many equal shares as said child has children
then living and deceased children with issue then living, and each said share
shall be held as a separate trust. The Settlor's son now has two living
children, XXXXXXXXX XXX XXXXXXXX and XXXXXX XXX XXXX, and his daughter also has
two living children, XXXXX XXXXXXXXX XXXXX and XXXXXXXX XXXX XXXXX.
(i) Until the termination of the trust, as
provided in subparagraph (ii) below, the Trustees shall pay the Income from each
grandchild's trust quarter-annually to or for the benefit of said grandchild or,
if he or she is deceased, to his or her issue living at the time of payment per
stirpes, and if the corporate Trustee considers the Income to be insufficient,
in view of other income of which it has knowledge, to provide for the welfare,
comfortable support and education of said grandchild and his or her family, the
corporate Trustee is authorized in its discretion to use such sums from
principal, exclusive of shares of Class B capital stock of ERIE INDEMNITY
COMPANY, as it deems advisable therefor; PROVIDED, however, that prior to said
grandchild's
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twenty-first (21st) birthday, the Trustees may pay to him or her or to the
person having custody of him or her, without liability on the part of the
Trustees to see to the application thereof, or may expend directly such sums
from Income or principal as the corporate Trustee deems advisable for such
purpose and shall add any excess Income to principal and invest it as such. The
Trustees may pay any other minor's share of Income to his or her natural
guardian or such other person as may have custody of him or her or to any adult
as Custodian for him or her under the Pennsylvania Uniform Gifts to Minors Act
or may deposit the same in an interest-bearing account in said minor's name in
the banking department of the corporate Trustee or elsewhere.
(ii) Each trust shall terminate upon the first to
occur of (a) the sale or other disposition of all the shares of capital stock of
ERIE INDEMNITY COMPANY held under this Agreement or (b) the expiration of a
period of twenty-one (21) years following the death of the survivor of all the
Settlor's descendants living at the Settlor's death. Upon such termination, the
principal shall be transferred and delivered to the Settlor's respective
grandchild or, if he or she is deceased, to his or her then living issue per
stirpes.
(iii) Should any grandchild become deceased
without issue at any time prior to such termination, the then principal of his
or her trust shall be added equally to the shares of the other children of his
or her parent, the Settlor's child, who are either then living or deceased with
issue then living.
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(iv) Should all the issue of either of the
Settlor's children die before the termination of the trusts, the then principal
of said child's share shall be added to the other child's share and held as part
thereof.
(B) If any remainderman under the foregoing provisions is a minor
and is entitled to a share in excess of the amount which may be paid to his or
her natural guardian, such share shall be retained by the corporate Trustee in a
separate trust until the eighteenth (18th) birthday of said remainderman, at
which time the trust shall terminate and the principal shall be transferred and
delivered to him or her free of trust. During such minority period, the Trustee
shall pay to the person having custody of said remainderman, without liability
on the part of the Trustee to see to the application thereof, or may expend
directly so much of the Income and principal as it deems advisable for the
welfare, comfortable support and education of said remainderman and shall add
any excess Income to principal and invest it as such. In the event of the death
of said remainderman during minority, the Trustee is authorized in its
discretion to pay part or all of the funeral expenses, and the remaining
principal shall be transferred and delivered to said remainderman's estate.
(C) The interest of any beneficiary hereunder, including a
remainderman, in Income or principal, shall not be subject to assignment,
alienation, pledge, attachment or claims of creditors until after payment has
actually been made by the Trustees as hereinbefore provided.
(D) Upon the death of any Income beneficiary, any Income accrued or
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received by the Trustees subsequent to the last Income payment date shall be
paid to the person or persons for whose benefit the principal producing such
Income is continued in trust or to whom such principal is distributed under the
terms hereof.
(E) Corporate distributions received in shares of the distributing
corporation shall be allocated to principal, regardless of the number of shares
and however described or designated by the distributing corporation.
Article IV
Powers of Trustees
4.01. The Trustees hereunder shall have the following powers, in
addition to and not in limitation of those granted by law: to accept assets in
kind from the Settlor, his estate or elsewhere, to purchase assets from the
estate and to retain such assets in kind; to sell assets and to invest and
reinvest the proceeds and any other cash in any kind of property, real or
personal, or part interest therein, without being restricted to investments
which are listed as legal for trust funds; to pledge, exchange or mortgage real
or personal property and to lease the same for terms exceeding five (5) years;
to give options for sales, leases and exchanges; to borrow money; to compromise
claims, to vote shares of corporate stock, in person or by proxy, in favor of or
against management proposals, except that they shall vote any bank or bank
holding company stock only as directed by an individual Trustee or, if there is
none, by a competent adult Income beneficiary of the trust in which said shares
are held; in the sole discretion of the corporate Trustee, to
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carry securities in the name of a nominee; to make division or distribution
hereunder either in cash or in kind; and to allot different kinds of or
interests in property to different shares. The Trustees are specifically
authorized to accept in kind and to retain any shares of MELLON NATIONAL
CORPORATION stock, with no duty on the part of the corporate Trustee to review
the same for investment purposes.
4.02. As among the Trustees, the corporate Trustee shall perform all
ministerial and administrative duties, including the keeping of books and
records, acting as custodian of the trust property and preparing all necessary
tax returns. Each individual Trustee named herein but not including any
Successor Trustee may delegate from time to time to his or her spouse, to any
person eligible to be a successor individual trustee, or to the corporate
Trustee, by an instrument in writing, (which instrument shall remain in effect
as long as the individual Trustee shall remain in office unless sooner revoked
or until expiring according to its terms) any and all of his or her rights,
powers and duties hereunder and may also retain such agents as he or she deems
advisable in the performance of his or her duties.
4.03. Notwithstanding the foregoing paragraphs 4.01 and 4.02 and any
other provision of this Agreement, the following shall apply while any shares of
capital stock of ERIE INDEMNITY COMPANY are held hereunder:
(A) At least one of the individual Trustees shall always be a member
of the Board of Directors of said Company.
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(B) The Settlor hereby declares that the purpose of this Trust is to
create and preserve unified ownership and control of ERIE INDEMNITY COMPANY as a
means of preserving the existence of ERIE INSURANCE EXCHANGE and ERIE INDEMNITY
COMPANY as viable entities capable of furnishing insurance to subscribers at the
Exchange and employment to loyal employees of the Exchange and the Company. The
Settlor further declares that in his experience in the insurance business over
half a century, including the Great Depression of the 1930's, World War II, the
Korean and Viet Nam wars and several recessions, he has never lost sight of the
fact that ERIE INSURANCE EXCHANGE, as a reciprocal insurer, was organized and
exists primarily for the benefit of its subscribers or policyholders and that
therefore the interests of the people who put their trust in the Exchange for
the protection of their personal and business affairs must come first. However,
when the Exchange is healthy, its managing attorney-in-fact, ERIE INDEMNITY
COMPANY, will necessarily be prosperous and healthy, to the benefit of the
stockholders of the latter. The Settlor therefore urges that the Trustees
familiarize themselves with the nature of reciprocal insurers in general and the
ERIE INSURANCE EXCHANGE in particular; that in the discharge of their trust
duties they concentrate, in cooperation with the Board of Directors of ERIE
INDEMNITY COMPANY and the individual whom the Board designates from time to time
as "Manager" of the Exchange and Company, to keep ERIE INSURANCE EXCHANGE in the
best of health; and that only when the task proves impossible shall they
consider what then appears to them to be a logical change to prevent
deterioration and possible disaster to the interests of all concerned.
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(C) The Trustees will therefore maintain and preserve ownership of
all shares of class B capital stock of ERIE INDEMNITY COMPANY unless and until
they shall determine, subject to the specific provisions of paragraph 4.04, that
the sale, exchange in a corporate combination or reorganization, or other
disposition by the Trust of such ownership will best serve said purpose, in
which event they are authorized to sell, exchange in a corporate combination or
reorganization, or otherwise dispose of the ownership of all, but not less than
all, of said shares, for whatever consideration and upon whatever terms they may
determine. In the exercise of their unlimited discretion and in making any
determination or decision relative to the ultimate purpose stated herein, the
Trustees shall be entitled to assume that whatever best serves to preserve the
existence of the Exchange and the Company also serves the best interest of any
and all beneficiaries and recipients entitled at any time to receive
distribution of any Income or principal hereunder.
4.04. In the absence of anything herein contained to the contrary,
all powers pertaining to the administration of the trust shall be exercised only
by a majority of the Trustees in office; PROVIDED, however, that in the exercise
of the power and authority to sell, exchange in a corporate combination or
reorganization, or otherwise dispose of shares of ERIE INDEMNITY COMPANY granted
in paragraph 4.03 and referred to in paragraph 4.01, or in the taking of any
action to terminate the trust or to distribute any part of the corpus to either
individual Trustee as a beneficiary other than pursuant to withdrawal as stated
in paragraph 3.01(A)(1), the affirmative vote of the corporate Trustee shall be
required, and the affirmative or negative vote of either or
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both of the individual Trustees, although constituting a majority, shall not be
sufficient to authorize any such action.
4.05. The corporate Trustee shall be entitled to receive annual
compensation for its services hereunder in accordance with its schedule in
effect when the services are performed, but not in excess of such compensation
as would be approved by a court of competent jurisdiction. During the Settlor's
lifetime, such compensation shall be charged wholly against income, unless the
Settlor directs otherwise in writing. For any services performed by it in
connection with the Settlor's estate, which services are normally performed by
the personal representative, the corporate Trustee shall be entitled to such
additional compensation as may be fair and reasonable under the circumstances,
not to exceed seventy-five (75%) percent of the additional compensation to which
it would be entitled as Executor if the assets of this Trust Estate were to be
superimposed upon the testamentary estate of the Settlor. The corporate Trustee
is authorized in its discretion to sell securities to the extent necessary to
pay any portion of such compensation which is chargeable against principal. The
individual Trustees shall also be entitled to reasonable compensation for their
services hereunder.
Article V
Successor Trustees
5.01. Upon the occurrence of any vacancy in the office of individual
Trustee due to death, incapacity, removal, resignation or any other cause, a
Successor Trustee shall be elected by a majority vote of the remaining Trustees
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and the Board of Directors of Erie Indemnity Company, with each remaining
Trustee and said Board of Directors each having one vote, provided that after
such election, as required by paragraph 4.03(1), at least one Trustee shall be a
member of said Board of Directors. If no successor is thus elected within thirty
(30) days after occurrence of the vacancy, the remaining Trustees and said Board
shall petition the Common Pleas Court of Erie County, Pennsylvania, to fill said
vacancy by appointment from a list of not fewer than three (3) persons furnished
with said petition; and the President Judge of the Orphans Court Division of
said Common Pleas Court is hereby empowered to fill said vacancy.
5.02. The corporate Trustee may resign at any time during the
Settlor's lifetime by written notice to him. After the Settlor's death, the
corporate Trustee may resign at any time, without stating cause, by petitioning
a court of competent jurisdiction in Erie County to designate and appoint a
successor corporate Trustee. In case of the merger or consolidation of the
corporate Trustee, the resulting company shall become successor corporate
Trustee hereunder without notice to any party.
Article VI
General Provision
6.01. The Settlor or others may add hereto, by Will, inter vivos
transfer or beneficiary designation, cash or such property in kind as is
acceptable to the corporate Trustee.
6.02. The Settlor reserves the right to terminate this Agreement,
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in whole or in part, by written notice delivered to the Trustees during the
Settlor's lifetime.
6.03. The Settlor reserves the right to amend this Agreement at any
time by a proper instrument in writing, executed by the Settlor, delivered to
the Trustees during the Settlor's lifetime and accepted by the Trustees.
6.04. The Settlor may delegate to F. XXXXXXX XXXX and XXXXX XXXX
XXXXX jointly or to the survivor of them, the right to terminate this Agreement
as reserved in paragraph 6.02 above and the right to amend this Agreement as
reserved in paragraph 6.03 above, only by a Special Power of Attorney in
writing, duly executed and acknowledged by the Settlor before an officer
empowered by law to take acknowledgments, and specifically referring to said
rights and said portions of this Agreement.
6.05. If the Settlor designates the Trustees as beneficiaries of the
proceeds of any policies of insurance on his life, the duty and responsibility
for the payment of premiums and other charges on such policies during the
Settlor's lifetime shall rest solely upon him, unless he shall expressly direct
the Trustees in writing to pay the same from Income or principal; otherwise, the
only duty of the Trustees shall be the safekeeping of such policies as are
deposited with them, and the Trustees shall be under no duty to notify the
Settlor that any such premium or other charge is due and payable. All options,
rights, privileges and benefits exercisable by or accruing to the Settlor during
his lifetime by the terms of the policies shall be for his sole
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benefit and shall not be subject to this trust; the Settlor agrees, however, not
to exercise any options whereby the proceeds would be payable to the Trustees
other than in one sum. Upon the written request of the Settlor, the Trustees
shall execute and deliver such consents and instruments as may be requisite to
enable the Settlor to exercise or avail himself of any option, right, privilege
or benefit granted by any of the policies. Upon the Settlor's death, or at such
later time as may be specified in the policies, the net proceeds of any policies
then payable to the Trustees hereunder shall be collected by the Trustees; the
receipt of the Trustees for such proceeds shall release the insurance companies
from liability on the policies, and the insurance companies shall be under no
duty to see to the application of such proceeds. The Trustees may take all steps
necessary in their opinion to enforce payment of said policies and shall be
entitled to indemnify themselves out of any property held hereunder against all
expenses incurred in taking such action.
Article VII
Certain Rules of Construction
7.01. As used in this Agreement, the singular may include the plural
and the plural the singular, and the use of any gender shall be applicable to
all genders.
7.02. This Agreement has been delivered to and accepted by the
corporate Trustee in the Commonwealth of Pennsylvania and shall be governed in
all respects by the laws of said Commonwealth.
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year aforesaid.
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx Xxxx Xxxx (SEAL)
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Witness Xxxxx Xxxx Xxxx
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx Xxxxxxx Xxxx (SEAL)
------------------------------------ -------------------------------
Witness Xxxxx Xxxxxxx Xxxx
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx Xxxx Xxxxx (SEAL)
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Witness Xxxxx Xxxx Xxxxx
(SEAL)
ATTEST MELLON BANK, N.A.
/s/ Trust Officer By: /s/ Xxxxx Xxxxxx
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Trust Officer Asst. Vice-President
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