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EXHIBIT 3
INDEMNIFICATION AGREEMENT
AGREEMENT dated as of December __, 1999 between Xxxxx Xxxx
Xxxxx ("Xxx. Xxxxx") and the undersigned nominee (the "Indemnitee").
WHEREAS, Xxx. Xxxxx has asked and the Indemnitee has agreed to
be a nominee for election to the Board of Directors of Erie Indemnity Company
(the "Company") at the 2000 annual meeting of stockholders of the Company (the
"Annual Meeting"); and
WHEREAS, Xxx. Xxxxx and/or her affiliates may, in appropriate
circumstances, solicit proxies from the stockholders of Erie Indemnity Company
in support of the Indemnitee's election as a director of Erie Indemnity Company
at the Annual Meeting;
NOW, THEREFORE, in consideration of the foregoing and with the
understanding on the part of Xxx. Xxxxx that the Indemnitee is relying on this
Agreement in agreeing to be a nominee as aforesaid and for other and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Claim" means any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative,
formal or informal investigative or other), whether instituted
by Xxx. Xxxxx, any stockholder of the Company, the Company or
any other party, or any inquiry or investigation that the
Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding.
"Expenses" means all reasonable attorney's fees and all other
reasonable fees, costs, expenses and obligations paid or
incurred in connection with the election of directors at the
Annual Meeting or related matters, including without
limitation, investigating, defending or participating (as a
party, witness or otherwise) in (including on appeal), or
preparing to defend or participate in, any Claim relating to
any Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence relating
to or directly or indirectly arising out of, or any action
taken or omitted to be taken in connection with the election
of directors at the Annual Meeting or related matters, but not
in the Indemnitee's capacity as a director of the Company if
the Indemnitee is so elected.
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"Loss" means any and all damages, judgments, fines, penalties,
amounts paid or payable in settlement, deficiencies, losses
and Expenses (including all interest, assessments, and other
charges paid or payable in connection with or respect of such
Losses).
2. Agreement to Serve as a Nominee. (a) The Indemnitee hereby
consents to being named as a nominee for election as a director of the Company
at the Annual Meeting (or any special meeting of the stockholders of the Company
called for that purpose) in any materials submitted by on or behalf of Xxx.
Xxxxx to the Company or filed by on or behalf of Xxx. Xxxxx or the Company with
the Securities and Exchange Commission, and further consents to serve as a
director of the Company if elected at the Annual Meeting (or any special meeting
of the stockholders of the Company called for that purpose).
(b) Notwithstanding anything to the contrary contained in
paragraph (a) above, the Indemnitee hereby agrees with Xxx. Xxxxx that the
Indemnitee does not and will not (unless previously approved by Xxx. Xxxxx in
writing) consent to serve as a nominee for election as a director of the
Company, or to otherwise stand for election as or become a director of the
Company, as part of a slate of nominees proposed by any party (including the
Board of Directors of the Company or its Nominating Committee) other than Xxx.
Xxxxx unless such slate includes a number of nominees proposed by Xxx. Xxxxx
sufficient to constitute a majority of the members of the Board of Directors of
the Company.
3. Indemnification. (a) In the event the Indemnitee in his
capacity as nominee for election to the Company's Board of Directors at the
Annual Meeting was, is or becomes a party to or other participant in, or is
threatened to be made a party to or other participant in, a Claim by reason of
(or arising or allegedly arising in any manner out of or relating to in whole or
in part) an Indemnifiable Event or Idemnitee's being a nominee for election to
the Company's Board of Directors at the Annual Meeting, Xxx. Xxxxx to the
fullest extent permitted by applicable law shall indemnify and hold harmless the
Indemnitee from and against any and all Losses suffered, incurred or sustained
by the Indemnitee or to which the Indemnitee becomes subject, resulting from,
arising out of or relating to such Claim (it being understood that except as
provided in Section 3(c) with respect to Expenses, reimbursements of any such
Losses shall be made as soon as practicable but in any event no later than 15
days after written request (a "Claim Notice") is made to Xxx. Xxxxx accompanied
by supporting documentation). The Indemnitee shall give Xxx. Xxxxx written
notice of any Claim (accompanied by such reasonable supporting documentation as
may be in the Indemnitee's possession) as soon as practicable after the
Indemnitee becomes aware thereof; provided that the failure of the Indemnitee
give such notice shall not relieve Xxx. Xxxxx of her indemnification obligations
under this Agreement, except to the extent that such failure materially
prejudices the rights of Xxx. Xxxxx.
(b) In the case of the commencement of any action against the
Indemnitee in respect of which the Indemnitee may seek indemnification from Mrs.
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Xxxxx hereunder, Xxx. Xxxxx will be entitled to participate therein, including,
without limitation, the negotiation and approval of any settlement of such
action and, to the extent that Xxx. Xxxxx may wish to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee, and after
notice from Xxx. Xxxxx to the Indemnitee of Xxx. Xxxxx'x election so to assume
the defense thereof, together with Xxx. Xxxxx'x written acknowledgement and
agreement that she will fully indemnify the Indemnitee under the terms of this
Agreement with regard to such Claim, Xxx. Xxxxx will not be liable to the
Indemnitee under this Agreement for any Expenses subsequently incurred by the
Indemnitee in connection with the defense thereof other than reasonable costs of
investigation and preparation therefor (including, without limitation, appearing
as a witness and reasonable fees and expenses of legal counsel in connection
therewith). If in any action for which indemnity may be sought hereunder Xxx.
Xxxxx shall not have timely assumed the defense thereof with counsel reasonably
satisfactory to the Indemnitee, or the Indemnitee shall have been advised by
counsel that it would constitute a conflict of interest for the same counsel to
represent both the Indemnitee and Xxx. Xxxxx in such action, or if the
Indemnitee may have separate or additional defenses with regard to such action,
the Indemnitee shall have the right to employ counsel for the Indemnitee
reasonably satisfactory to Xxx. Xxxxx in such action, in which event Xxx. Xxxxx
shall reimburse the Indemnitee for all reasonable legal fees and expenses
incurred by the Indemnitee in connection with the defense thereof. Xxx. Xxxxx
shall in no event be liable for any settlement of any action effected without
her prior written consent (which consent shall not be unreasonably withheld).
Xxx. Xxxxx shall not settle any Claim in any manner that would impose any
expense, penalty, obligation or limitation on the Indemnitee, or would contain
language other than a recitation of any amounts to be paid in settlement, that
could reasonably be viewed as an acknowledgement of wrongdoing on the part of
the Indemnitee or as materially detrimental to the reputation of the Indemnitee,
without the Indemnitee's prior written consent (which consent shall not be
unreasonably withheld).
(c) The Indemnitee's right to indemnification in Section 3 of
this Agreement shall include the right of the Indemnitee to be advanced by Xxx.
Xxxxx any Expenses incurred in connection with any Indemnifiable Event as such
Expenses are incurred by the Indemnitee; provided, however, that all amounts
advanced in respect of such Expenses shall be repaid to Xxx. Xxxxx by the
Indemnitee if it shall ultimately be determined in a final judgment without
further right to appeal by a court of appropriate jurisdiction that the
Indemnitee is not entitled to be indemnified for such Expenses because their
Loss arose as a result of the Indemnitee's gross negligence or willful
misconduct.
4. Partial Indemnity, etc. If the Indemnitee is entitled under
any provision of this Agreement to indemnification by Xxx. Xxxxx for some or a
portion of any Loss, but not for all of the total amount thereof, Xxx. Xxxxx
shall nevertheless indemnify the Indemnitee for the portion thereof to which the
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that the Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter
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therein, including dismissal without prejudice, the Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
5. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law.
6. Nonexclusivity, etc. The rights of the Indemnitee hereunder
shall be in addition to any other rights the Indemnitee may have under any
bylaw, insurance policy, Pennsylvania corporate law or otherwise. To the extent
that a change in applicable law (whether by statute or judicial decision) would
permit greater indemnification by agreement than would be afforded currently
under this Agreement, it is the intent of the parties hereto that the Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by such change.
7. Amendment, etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
8. Subrogation. In the event of any payment under this
Agreement, Xxx. Xxxxx shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, and the Indemnitee shall execute
all papers reasonably required and shall take such action that may be reasonably
necessary to secure such rights, including the execution of such documents
necessary to enable Xxx. Xxxxx effectively to bring suit to enforce such rights.
9. No Duplication of Payments. Xxx. Xxxxx shall not be liable
under this Agreement to make any payment in connection with a Claim made against
the Indemnitee to the extent the Indemnitee has otherwise actually received
payment (under any insurance policy, bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder; provided that, if the Indemnitee for any
reason is required to disgorge any payment actually received, Xxx. Xxxxx shall
be obligated to pay such amount to the Indemnitee in accordance with the other
terms of this Agreement (i.e., disregarding the terms of this Section 9).
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to principles of conflicts of laws.
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11. Counterparts. This Agreement may be executed in one or
more counterparts for the convenience of the parties hereto, all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
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Xxxxx Xxxx Xxxxx
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