Notification and Control Agreement
Exhibit 10.3
(Trust, Custody or Brokerage Accounts)
THIS NOTIFICATION AND CONTROL AGREEMENT (the “Agreement”) is made this 30th day of
January, 2008, by and among ERIE INDEMNITY COMPANY (the “Pledgor”), MELLON BANK, N.A., in its
capacity as custodian (the “Custodian”) and PNC BANK, NATIONAL ASSOCIATION, with an office at 000
Xxxxx Xxxxxx, X.X. Xxx 0000, Xxxx, Xxxxxxxxxxxx 00000, in its capacity as secured party (the
“Secured Party”).
The Pledgor has granted to the Secured Party a security interest in certain of the investment
property held in its securities account No. EIRF 0000000 maintained with the Custodian (the
“Account”), all financial assets now or hereafter credited to the Account, and all additions,
substitutions, replacements, proceeds, income, dividends and distributions thereon (collectively,
the “Collateral”), pursuant to, and more particularly described in, an Amended and Restated Pledge
Agreement dated as of even date herewith (as amended, restated or otherwise modified from time to
time, the “Pledge Agreement”) from the Pledgor to the Secured Party. The Custodian is in
possession of the Collateral pursuant to a certain Custody Agreement dated February 25, 2004 (the
“Custodian Agreement”). Pursuant to the Pledge Agreement, the Secured Party has required the
execution and delivery of this Agreement.
NOW, THEREFORE, for valuable consideration and intending to be legally bound, the parties
hereto agree and acknowledge as follows:
1. Possession of Collateral. The Custodian acknowledges that: (a) the Collateral is
in its possession or in possession of a subcustodian or clearing corporation, and (b) the Pledgor’s
interest in the Collateral appears on the Custodian’s books and records. The Custodian will treat
all property deposited or credited to the Account as financial assets under Article 8 of the
Uniform Commercial Code (as adopted and enacted and in effect from time to time in the State where
the Secured Party’s office indicated above is located) (“UCC”).
2. Notice of Security Interest. The Custodian acknowledges that this Agreement
constitutes written notification to the Custodian, pursuant to Articles 8 and 9 of the UCC and
applicable federal regulations for the Federal Reserve Book Entry System, of the Secured Party’s
security interest in the Collateral. The Pledgor, Secured Party and Custodian are also entering
into this Agreement to provide for the Secured Party’s control of the Collateral and to perfect,
and confirm the priority of, the Secured Party’s security interest in the Collateral. The
Custodian agrees to promptly make all necessary entries or notations in its books and records to
reflect the Secured Party’s security interest in the Collateral. Notwithstanding the foregoing,
the Custodian makes no representation or warranty, and shall have no responsibility or liability,
with respect to the effectiveness of this Agreement in perfecting such security interest.
3. Control. The Custodian, without further consent from the Pledgor,
hereby agrees to comply with
all entitlement orders, instructions, and directions of any kind originated by Secured Party
concerning the Collateral, to liquidate the Collateral as and to the extent directed by the Secured
Party and to pay over to the Secured Party all proceeds therefrom to the extent necessary to
satisfy the Pledgor’s obligations, without any setoff or deduction.
4. Trading and Withdrawals. Prior to receipt by the Custodian of a notice from the
Secured Party that the Secured Party is exercising exclusive control over the Collateral (a “Notice
of Exclusive Control”), the Pledgor shall have the right at any time and from time to time to
purchase and sell securities included in the Collateral and receive for its own account all cash
dividends and interest on the Collateral, provided that the Custodian retains all the Collateral
including substitutions and proceeds from the sale of securities in the Account. The Custodian
will not comply with any entitlement order originated by the Pledgor that would require the
Custodian to make a free delivery to the Pledgor or any other person. Upon the Custodian’s receipt
of a Notice of Exclusive Control, Custodian will, after having had a reasonable opportunity to act
upon such notice, cease (a) complying with entitlement orders or other directions concerning the
Collateral originated by the Pledgor, and (b) if directed by the Secured Party, distributing
interest and dividends on the Collateral to the Pledgor.
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5. Custodian Agreement. The Custodian shall simultaneously send to the Secured Party
copies of all notices given and monthly statements rendered pursuant to the Custodian Agreement and
shall notify the Secured Party of the termination of the Custodian Agreement. Notwithstanding
anything contained in the Custodian Agreement, so long as this Agreement remains in effect, neither
the Pledgor nor the Custodian shall terminate the Custodian Agreement without thirty (30) days’
prior written notice to the other party and the Secured Party. In the event of any conflict
between the provisions of this Agreement and the Custodian Agreement, the provisions hereof shall
control. Regardless of any provision in the Custodian Agreement, the State where the Secured
Party’s office indicated above is located shall be deemed to be the Custodian’s jurisdiction solely
for the purposes of this Agreement and the perfection and priority of the Secured Party’s security
interest in the Collateral. In the event the Custodian no longer serves as custodian for the
Collateral, the Collateral shall be transferred (i) to a successor custodian satisfactory to the
Secured Party, provided that prior to such transfer, such successor custodian executes an agreement
that is in all material respects the same as this Agreement, or (ii) if no satisfactory successor
has been designated, then as directed by the Secured Party.
6. Indemnity.
(a) The Pledgor shall indemnify and hold the Custodian harmless from any and all losses,
claims, damages, liabilities, expenses and fees, including reasonable attorneys’ fees, resulting
from the execution of or performance under this Agreement and the delivery by the Custodian of all
or any part of the Collateral to the Secured Party pursuant to this Agreement, unless such losses,
claims, damages, liabilities, expenses or fees are attributable to the Custodian’s gross
negligence or willful misconduct. This indemnification shall survive the termination of this
Agreement.
(b) The Secured Party shall indemnify and hold the Custodian harmless from and against any and
all losses, claims, damages, liabilities, expenses and fees (including reasonable attorneys’ fees)
arising out of the Custodian’s compliance with any instructions from the Secured Party with respect
to the Collateral unless such losses, claims, damages, liabilities, expenses or fees are
attributable to the Custodian’s gross negligence or willful misconduct. This indemnification shall
survive the termination of this Agreement.
7. Protection of Custodian. Except as required by Paragraph 3 hereof, the Custodian
shall have no duty to require any cash or securities to be delivered to it or to determine that the
amount, value and form of assets constituting Collateral comply with any applicable requirements.
The Custodian may hold the securities in bearer, nominee, federal reserve book entry, or other form
and in any securities depository or UCC clearing corporation, with or without indicating that the
securities are subject to a security interest; provided, however, that all
Collateral shall be identified on the Custodian’s books and records as subject to the Secured
Party’s security interests and shall be in a form that permits transfer to the Secured Party
without additional authorization or consent of the Pledgor. The Custodian may rely and shall be
protected in acting upon any notice, instruction, or other communication which it reasonably
believes to be genuine and authorized. As between the Pledgor and the Custodian, the terms of the
Custodian Agreement shall apply with respect to any losses or liabilities or fees, costs or
expenses of such parties arising out of matters covered by this Agreement. The Custodian shall
have no responsibility or liability to the Secured Party for making trades of financial assets held
in the Account at the direction of the Pledgor, or the Pledgor’s authorized representatives, or
(except as otherwise provided in Paragraph 4 hereof) complying with entitlement orders concerning
the Account from the Pledgor, or the Pledgor’s authorized representatives, that are received by the
Custodian before the Custodian receives a Notification of Exclusive Control. The Custodian shall
have no duty to investigate or make any determination as to whether a default exists under any
agreement between the Pledgor and the Secured Party and shall comply with a Notice of Exclusive
Control even if it believes that no such default exists. The Pledgor agrees that the Custodian
will not be liable to the Pledgor for complying with entitlement orders originated by the Secured
Party, unless the Custodian (i) takes the action after it is served with an injunction or other
legal process enjoining it from doing so issued by a court of competent jurisdiction and has had a
reasonable opportunity to act on the injunction or other legal process, or (ii) acts in collusion
with the Secured Party in violating the Pledgor’s rights. The Custodian shall have no liability to
any party for any incidental, punitive or consequential damages resulting from any breach by the
Custodian of its obligations hereunder.
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The Custodian will be excused from failing to act or delay in acting, and no such failure or
delay shall constitute a breach of this Agreement or otherwise give rise to any liability of the
Custodian, if (i) such failure or delay is caused by circumstances beyond the Custodian’s
reasonable control, including but not limited to legal constraint, emergency conditions, action or
inaction of governmental, civil or military authority, fire, strike, lockout or other labor
dispute, war, riot, theft, flood, earthquake or other natural disaster, breakdown of public or
private or common carrier communications or transmission facilities or equipment failure, or (ii)
such failure or delay resulted from the Custodian’s reasonable belief that the action would have
violated any guideline, rule or regulation of any governmental authority.
8. Termination/Release of Collateral. This Agreement shall terminate automatically
upon receipt by the Custodian of written notice executed by two officers of the Secured Party
holding titles of Vice President or higher that (a) all of the obligations secured by Collateral
have been satisfied, or (b) all of the Collateral may be released, whichever is sooner, and the
Custodian shall thereafter be relieved of all duties and obligations hereunder. In addition, any
notice from the Secured Party relating to release of all or any portion of the Collateral not
permitted by this Agreement without the consent of the Secured Party shall be effective only if
executed by two officers of the Secured Party holding titles of Vice President or higher.
9. Waiver and Subordination of Rights. The Custodian hereby waives its right to
setoff any obligations of the Pledgor to the Custodian against any or all cash, securities,
financial assets and other investment property held by the Custodian as Collateral, and hereby
subordinates in favor of the Secured Party any and all liens, encumbrances, claims or security
interests which the Custodian may have against the Collateral, either now or in the future, except
that the Custodian will retain its prior lien on the property held as Collateral only to secure
payment for property purchased for Collateral and normal commissions and fees, including overdraft
fees, relating to the property held as Collateral. The Custodian will not agree with any third
party that the Custodian will comply (and the Custodian will not comply) with any entitlement
orders, instructions or directions of any kind concerning the Collateral originated by such third
party without the Secured Party’s prior written consent. Except for the claims and interests of
the Secured Party and the Pledgor in the Collateral, the Custodian does not know of any claim to or
interest in the Collateral. The Custodian will use reasonable efforts to promptly notify the
Secured Party and the Pledgor if any other person claims that it has a property interest in any of
the Collateral.
10. Expenses. The Pledgor shall pay all fees, costs and expenses (including
reasonable fees and expenses of internal or external counsel) of enforcing any of the Secured
Party’s rights and remedies upon any breach (by the Custodian or the Pledgor) of any of the
provisions of this Agreement.
11. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder (“Notices”) must be in writing and will be effective
upon receipt. Notices may be given in any manner to which the parties may separately agree,
including electronic mail. Without limiting the foregoing, first-class mail, facsimile
transmission and commercial courier service are hereby agreed to as acceptable methods for giving
Notices. Regardless of the manner in which provided, Notices may be sent to a party’s address as
set forth below, or to such other address as any party may give to the others for such purpose in
accordance with this section.
12. Changes in Writing. No modification, amendment or waiver of, or consent to any
departure by any party from, any provision of this Agreement will be effective unless made in a
writing signed by the parties hereto, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or demand on the Pledgor
in any case will entitle the Pledgor to any other or further notice or demand in the same, similar
or other circumstance.
13. Entire Agreement. This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof.
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14. Counterparts. This Agreement may be signed in any number of counterpart copies
and by the parties
hereto on separate counterparts, but all such copies shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart. Any party so executing this
Agreement by facsimile transmission shall promptly deliver a manually executed counterpart,
provided that any failure to do so shall not affect the validity of the counterpart executed by
facsimile transmission.
15. Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, successors and
assigns; provided, however, that the Pledgor may not assign this Agreement in whole
or in part without the Secured Party’s prior written consent and the Secured Party at any time may
assign this Agreement in whole or in part.
16. Governing Law and Jurisdiction. This Agreement has been delivered to and accepted
by the Secured Party and will be deemed to be made in the State where the Secured Party’s office
indicated above is located. This Agreement will be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws of the State where the Secured Party’s
office indicated above is located, excluding its conflict of laws rules. Each of the parties
hereby irrevocably consents to the exclusive jurisdiction and venue of any state or federal court
located within the county where the Secured Party’s office indicated above is located.
17. Representations. Each party hereby represents and warrants that the individual
executing this Agreement on its behalf has the requisite power and authority to do so and to bind
it to the terms of this Agreement.
18. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO
THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
KNOWING AND VOLUNTARY.
{SIGNATURES APPEAR ON THE FOLLOWING PAGE}
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WITNESS the due execution hereof as a document under seal, as of the date first written above.
| Pledgor’s Address for Notices: | PLEDGOR: | |||||
| 000 Xxxx Xxxxxxxxx Xxxxx Xxxx, XX 00000 |
ERIE INDEMNITY COMPANY | |||||
Attention:
|
By: | /s/ Xxxxxx X. Xxxxxx | ||||
Facsimile Number
|
Print Name: Xxxxxx X. Xxxxxx Title: Executive Vice President & CFO |
|||||
| Secured Party’s Address for Notices: | SECURED PARTY: | |||||
| 000 Xxxxx Xxxxxx | PNC BANK, NATIONAL ASSOCIATION | |||||
X.X. Xxx 0000 |
||||||
Xxxx, XX 00000 |
||||||
Attention: Xxxxx X. Xxxxxxxxx, Vice President
|
By: | /s/ Xxxxx X. Xxxxxxxxx | ||||
Facsimile Number: (000) 000-0000
|
Xxxxx X. Xxxxxxxxx | |||||
| Vice President | ||||||
| Custodian’s Address for Notices: | CUSTODIAN: | |||||
| One Mellon Center | MELLON BANK, N.A. | |||||
Xxxxxxxxxx, XX 00000 |
||||||
Attention: Xxxxx Xxxx
|
By: | /s/ Xxxxx Xxxx | ||||
Facsimile Number 000-000-0000
|
Print Name: Xxxxx Xxxx | |||||
| Title: Vice President | ||||||
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