EXHIBIT 10.8
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1999 by and between OLD
GUARD INSURANCE MANAGEMENT CO., a Pennsylvania corporation, OLD
GUARD GROUP, INC., a Pennsylvania corporation, and XXXXX X.
XXXXXX.
Old Guard Insurance Management Co. and Old Guard Group, Inc.
both desire to employ Xx. Xxxxxx and Xx. Xxxxxx is willing to
serve Old Guard Insurance Management Co. and Old Guard Group,
Inc. on the terms and conditions herein provided.
In order to effect the foregoing, the parties hereto desire
to enter into an employment agreement on the terms and conditions
set forth below. Accordingly, in consideration of the premises
and the respective covenants and agreements of the parties
contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Definitions and Special Provisions. Each capitalized
word and term used herein shall have the meaning ascribed to it
in the glossary appended hereto, unless the context in which such
word or term is used otherwise clearly requires. Such glossary
is incorporated herein by reference and made a part hereof.
2. Employment. Old Guard hereby agrees to employ the
Executive, and the Executive hereby agrees to serve Old Guard, on
the terms and conditions set forth herein.
3. Term of Agreement. The Executive's employment under
this Agreement shall commence on the date hereof and, except as
otherwise provided herein, shall continue until December 31,
2001; provided, however, that commencing on January 1, 1999 and
each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year beyond the term
otherwise established unless, at least 90 days prior to such
January 1st date, Old Guard or the Executive shall have given a
Notice of Nonextension.
4. Position and Duties. The Executive shall serve as
Treasurer and Chief Financial Officer of OGIMC and the Company,
and he shall have such responsibilities, duties and authority as
may, from time to time, be generally associated with such
positions. In addition, the Executive shall serve in such
capacity, with respect to each Subsidiary or affiliated company,
as the Board of Directors of each such Subsidiary or affiliated
company shall designate from time to time. During the term of
this Agreement, he shall devote substantially all of his working
time and efforts to the business and affairs of Old Guard, the
Subsidiaries and affiliated companies; provided, however, that
nothing herein shall be construed as precluding him from devoting
a reasonable amount of time to civic, charitable, trade
association, and similar activities, at least to the extent he is
presently devoting time.
5. Compensation and Related Matters.
(a) Base Compensation. During the period of the
Executive's employment hereunder, Old Guard shall pay to him
annual base compensation at a rate not less than
$118,175. The Board(s) of Directors of Old Guard shall
periodically review the Executive's employment performance,
in accordance with policies generally in effect from time to
time, for possible merit or Cost-of-living increases in such
base compensation. Except for a reduction which is
proportionate to a company-wide reduction in executive pay,
the annual base compensation paid to the Executive in any
calendar year shall not be less than the annual base
compensation paid to him in any prior calendar year. The
frequency and manner of payment of such base compensation
shall be in accordance with Old Guard's executive payroll
practices from time to time in effect. Nothing herein shall
be construed as precluding the Executive from entering into
any salary reduction or deferral plan or arrangement during
the term of this Agreement; provided, however, that his base
compensation shall be determined without regard to any such
salary reduction or deferral for purposes of calculating the
amount of any compensation and benefits to which he or his
surviving spouse may be entitled under Paragraph 6, 7, 10,
or 11 following his termination of employment. During the
initial calendar year of this Agreement, the amount set
forth in the first sentence of this subparagraph shall be
pro rated to reflect the portion of such calendar year which
follows the execution date hereof.
(b) Incentive Compensation. During the period of the
Executive's employment hereunder, he shall be entitled to
participate in all incentive plans, stock option plans,
stock appreciation rights plans, and similar arrangements
maintained by Old Guard for executive officers on a basis
and at award levels consistent and commensurate with his
position and duties hereunder,
(c) Employee Benefit Plans and Other Plans or
Arrangements. The Executive shall be entitled to
participate in all Employee Benefit Plans of Old Guard on
the same basis as other executive officers of Old Guard. In
addition, he shall be entitled to participate in and enjoy
any other plans and arrangements which provide for sick
leave, vacation, sabbatical, or personal days, company-
provided automobile, club memberships and dues, education
payment or reimbursement, business-related seminars, and
similar fringe benefits provided to or for the executive
officers of Old Guard from time to time, but at least to the
extent he is presently entitled to participate in and enjoy
such plans and arrangements.
(d) Expenses. During the period of the Executive's
employment hereunder, he shall be entitled to receive prompt
reimbursement for all reasonable and customary expenses,
including transportation expenses, incurred by him in
performing services hereunder in accordance with the general
policies and procedures established by Old Guard.
6. Termination By Reason of Disability.
(a) In General. In the event the Executive becomes
unable to perform his duties on a full-time basis by reason
of the occurrence of his Disability and, within 30 days
after a Notice of Termination is given, he shall not have
returned to the full-time performance of such duties, his
employment may be terminated by Old Guard.
(b) Compensation and Benefits During Remaining Term of
Agreement. In the event of the termination of the
Executive's employment under Subparagraph (a), Old Guard
shall pay or provide the compensation and benefits set
forth below:
(1) The Executive shall be paid an amount per
annum equal to the greater of (i) his highest base
compensation received during one of the two calendar
years immediately preceding the calendar year in which
the Date of Termination occurs, or (ii) his base
compensation in effect immediately prior to the Date of
Termination (or prior to any reduction which entitled
him to terminate his employment for Good Reason) for
the remainder of the term of this Agreement, beginning
with such Date of Termination. The frequency and
manner of payment of such amounts shall be in
accordance with Old Guard's executive payroll practices
from time to time in effect.
(2) The Executive shall be paid an amount equal
to the higher of the aggregate bonus(es) paid to him
with respect to one of the two years immediately
preceding the year in which the Date of Termination
occurs. Such amount shall be paid to him in cash on
each of the first and second anniversary dates of the
Date of Termination, and a pro rated amount shall be
paid to him in cash on the last day of the remaining
term of this Agreement. such pro rated amount shall be
determined by reference to a fraction, the numerator of
which is the number of whole months elapsed during the
year in which termination occurs, and the denominator
of which is 12.
(3) The Executive shall be paid an amount equal
to the highest annual contribution made on his behalf
(other than his own salary reduction contributions) to
each tax-qualified and non-qualified Defined
Contribution Plan of Old Guard with respect to the year
in which the Date of Termination occurs or one of the
two years immediately preceding such year. The amount
separately determined for each such plan shall be
aggregated and shall be paid to him in cash on each of
the first and second anniversary dates of the Date of
Termination, and a pro rated amount shall be paid to
him on the last day of the remaining term of this
Agreement. Such pro rated amount shall be determined
by reference to a fraction, the numerator of which is
the number of whole months elapsed during the year in
which termination occurs, and the denominator of which
is 12.
(4) The Executive shall accrue benefits equal to
the excess of (i) the aggregate retirement benefits he
would have received under the terms of each tax-
qualified and non-qualified Defined Benefit Plan of Old
Guard as in effect immediately prior to the Date of
Termination had he (A) continued to be employed for the
remaining term of this Agreement, and (B) received (on
a pro rated basis, as appropriate) the greater of (1)
the highest compensation taken into account under each
such plan with respect to one of the two years
immediately preceding the year in which the Date of
Termination occurs, or (11) his annualized base
compensation in effect immediately prior to the Date of
Termination (or prior to any reduction which entitled
him to terminate his employment for Good Reason), over
(ii) the retirement benefits he actually receives under
such plans. The frequency, manner and extent of
payment of such benefits shall be consistent with the
terms of the plans to which they relate and any
elections made thereunder. (As of the date of the
execution of this Agreement, there is no such plan.)
(5) The Executive and his eligible dependent
shall be entitled to continue to participate at the
same aggregate benefit levels, for the remaining term
of this Agreement and at no out-of-pocket or tax cost
to him, in the Welfare Benefit Plans in which he was a
participant immediately prior to the Date of
Termination, to the extent permitted under the terms of
such plans and applicable law. To the extent Old Guard
is unable to provide for continued participation in a
Welfare Benefit Plan, it shall provide an equivalent
benefit directly at no out-of-pocket or tax cost to
him. For purposes of the preceding two sentences, Old
Guard shall be deemed to have provided a benefit at no
tax cost to him if it pays an additional amount to him
or on his behalf, with respect to those benefits which
would otherwise be nontaxable to him, calculated in a
manner consistent with the provisions of Paragraph 12.
(c) Adjustment to Certain Subparagraph (b)
Compensation and Benefits. Notwithstanding the provisions
of Subparagraph (b)(5), Old Guard's obligation to pay or
fund any disability insurance premiums on "behalf of the
Executive shall be suspended while his Disability continues,
provided the cessation of payment or funding does not result
in the termination of disability benefits. Any amounts
otherwise due under Subparagraph (b) shall be reduced (but
not below zero) by the dollar amount of disability benefits
received by him pursuant to plans or policies funded,
directly at its cost, by Old Guard.
(d) Earlier Cessation of Certain welfare Benefits.
Notwithstanding the provisions of Subparagraph (b)(5), Old
Guard shall not be required to provide, at its cost, the
welfare benefits covered therein after the later of (i) the
attainment by the Executive and his spouse (if any) of age
65, or (ii) the date specified in the relevant plan document
for benefit termination (assuming that he was employed until
age 65 or the normal retirement date, if any, specified in
such document).
(e) Death During Remaining Term of Agreement.
(1) In the event the Executive dies during the
remaining term of this Agreement following his
termination for Disability and he is survived by a
spouse, the compensation and benefits remaining to be
paid and provided under Subparagraph (b) shall be
unaffected by his death and shall be paid and provided
to her or on her behalf; provided, however, that the
extent of her rights to the accrued benefits described
in Subparagraph (b)(4) shall be determined by reference
to the relevant plan provisions and any elections made
under such plans; and provided further, that Old Guard
shall not be required to provide continued benefits
with respect to her deceased husband; and provided
further, that in no event shall Old Guard be requited
to provide, at its cost, the other welfare benefits
described in Subparagraph (b)(5) to such spouse and her
eligible dependents after the earlier of (i) her death,
or (ii) the later of (A) her attainment of age 65, or
(B) the date specified in the relevant plan document
for benefit termination (assuming that the Executive
was employed until age 65 or the normal retirement
date, if any, specified in such document).
(2) In the event the Executive dies during the
remaining term of this Agreement following his
termination for Disability and he is not survived by a
spouse, (i) Old Guard shall thereafter make the
remaining payments described in Subparagraphs (b)(1)
through (b)(3) directly to his estate, (ii) the extent
of the rights of any person to the accrued benefits
described in Subparagraph (b)(4) shall be
determined by reference to the relevant plan provisions
and any elections made under such plans, and (iii) Old
Guard's obligation to provide continued benefits under
Subparagraph (b) (5) shall terminate.
(f) Compensation and Benefits Upon Expiration of
Remaining Term of Agreement. Upon the expiration of the
remaining term of this Agreement following the Executive's
termination for Disability, and provided his Disability then
continues, he shall be entitled to receive the compensation
and benefits provided under the terms of Old Guard's long-
term disability plan in effect on the Date of Termination
or, if greater, at the expiration of such remaining term.
Such compensation and benefits shall continue until the
earlier of (i) his death, or (ii) the later of (A) his
attainment of age 65, or (B) the date specified in the plan
document for benefit termination. To the extent Old Guard
is unable to provide such compensation and benefits under
its long-term disability plan, it shall provide equivalent
compensation and benefits directly at no out-of-pocket or
tax cost to him. For purposes of the preceding sentence,
Old Guard shall be deemed to have provided compensation and
benefits at no tax cost to him if it pays an additional
amount to him or on his behalf, with respect to the
compensation and benefits which would otherwise be
nontaxable to him, calculated in a manner consistent with
the provisions of Paragraph 12.
7. Termination By Reason of Death.
(a) Compensation and Benefits to Surviving Spouse. In
the event the Executive dies while he is employed under this
Agreement and is survived by a Spouse, Old Guard shall pay
or provide the compensation and benefits set forth below:
(1) The surviving spouse shall be paid an amount
equal to the greater of (i) the Executive's highest
base compensation received during one of the two
calendar years immediately preceding the calendar year
in which the Date of Termination occurs, or (ii) his
base compensation in effect immediately prior to the
Date of Termination (or prior to any reduction which
entitled him to terminate his employment for Good
Reason) for a period of one year, beginning with such
Date of Termination. The frequency and manner of
payment of such amounts shall be in accordance with
Old Guard's executive payroll practices from time to
time in effect.
(2) The surviving spouse shall be paid an amount
equal to the highest payment made to Executive under
each incentive bonus plan of Old Guard with respect to
one of the two years immediately preceding the year in
which the Date of Termination occurs. Such
amount shall be paid in cash to her within 30 days
after the Date of Termination.
(3) The surviving spouse shall be paid an amount
equal to the sum of the highest annual contribution
made on the Executive's behalf (other than his own
salary reduction contributions) to each tax-qualified
and non-qualified Defined Contribution Plan of Old
Guard with respect to the year in which the Date of
Termination occurs or one of the two years immediately
preceding such year. Such amount shall be paid in cash
to her within 30 days after the Date of Termination or
within 30 days after such amount can first be
determined, whichever is later.
(4) Subject to the following sentence, the
surviving spouse shall be paid benefits determined by
reference to the excess of (i) the aggregate retirement
benefits the Executive would have accrued under the
terms of each tax-qualified and non-qualified Defined
Benefit Plan as in effect immediately prior to the Date
of Termination, had he (A) continued to be employed for
a period of one year following the Date of Termination,
and (B) received (on a pro rated basis, as appropriate
the greater of (1) the highest compensation taken into
account under each such plan with respect to one of the
two years immediately preceding the year in which the
Date of Termination occurs, or (ii) his annualized base
compensation in effect immediately prior to the Date of
Termination (or prior to any reduction which entitled
him to terminate his employment for Good Reason), over
(ii) the retirement benefits actually determined under
such plans. The frequency, manner, and extent of
payment of such benefits shall be consistent with the,
terms of the plans to which they relate and any
elections made thereunder. (As of the date of the
execution of this Agreement, there is no such plan.)
(5) The surviving spouse and her eligible
dependents shall be entitled to continue to participate
at the same aggregate benefit levels, for a period of
one year following the Date of Termination and at no
out-of-pocket or tax cost to her, in the Welfare
Benefit Plans in which the Executive was a participant
immediately prior to the Date of Termination, to the
extent permitted under the terms of such plans and
applicable law; provided, however, that old Guard shall
not be required to provide continued benefits with
respect to her deceased husband; and provided further,
that Old Guard shall not thereafter be required to
provide, at its cost, the other welfare benefits
covered by such plans to such spouse and her eligible
dependents after the earlier of (i) her death, or
(ii) the later of (A) her attainment of age
65, or (B) the date specified in the relevant plan
document for benefit termination (assuming the
Executive was employed until age 65 or the normal
retirement date, if any, specified in such document).
To the extent Old Guard is unable to provide for
continued participation in a Welfare Benefit Plan as
required, it shall provide an equivalent benefit
directly at no out-of-pocket or tax cost to her. For
purposes of the preceding two sentences, Old Guard
shall be deemed to have provided a benefit at no tax
cost to her if it pays an additional amount to her or
on her behalf, with respect to those benefits which
would otherwise be nontaxable to her, calculated in a
manner consistent with the provisions of Paragraph 12.
(b) Compensation and Benefits to Estate, Etc. In the
event the Executive dies while he is employed under this
Agreement and is not survived by a spouse, (i) Old Guard
shall make the payments described in Subparagraphs (a)(1)
through (a)(3) directly to his estate, (ii) the extent of
the rights of any person to the accrued benefits described
in Subparagraph (a)(4) shall be determined by reference to
the relevant plan provisions and any elections made under
such plans, and (iii) Old Guard's obligation to provide
benefits under Subparagraph (a)(5) shall terminate.
8. Termination By Old Guard for Cause.
(a) In General. In the event old Guard intends to
terminate the Executive's employment for Cause, it shall
deliver a Notice of Termination to him which specifies a
Date of Termination not less than 30 days following the date
of such notice, unless a shorter period of notice is
required by the principal regulator of the Company or any
affiliate of the Company.
(b) Compensation. Within 30 days after the
Executive's termination under Subparagraph (a), Old Guard
shall pay him, in one lump sum, his accrued but unpaid base
compensation and leave bank compensation earned through the
Date of Termination.
9. Termination By the Executive Without Good Reason.
(a) In General. In the event the Executive intends to
terminate his employment without Good Reason, he shall
deliver a Notice of Termination to Old Guard which specifies
a Date of Termination not less than (i) 90 days following
the date of such notice, if a Change in Control shall not
have occurred, or (ii) 30 days following the date of such
notice, if a Change in Control shall have occurred.
(b) Compensation. Within 30 days after the Executive's
termination under Subparagraph (a), old Guard shall pay him,
in one lump sum, his accrued but unpaid base compensation
and leave bank compensation earned through the Date of
Termination.
10. Termination By Old Guard Without Disability or Cause.
(a) In General. In the event Old Guard intends to
terminate the Executive's employment for any reason other
than Disability or Cause, it shall deliver a Notice of
Termination to him which specifies a Date of Termination not
less than 90 days following the date of such notice.
(b) Compensation and Benefits During Remaining Term of
Agreement. In the event of the termination of the
Executive's employment under Subparagraph (a), Old Guard
shall pay or provide the compensation and benefits described
in Paragraph 6(b).
(c) Adjustment to Certain Subparagraph (b)
Compensation and Benefits. In the event the Executive
,suffers a disability during the remaining term of this
Agreement following the Date of Termination, Old Guard's
obligation to pay or fund any disability insurance premiums
on his behalf shall be suspended while his Disability.
continues, provided the cessation of payment or funding does
not result in the termination of disability benefits. Any
amounts described in Paragraph 6(b) and otherwise payable
under Subparagraph (b) shall be reduced (but not below zero)
by the dollar amount of disability benefits received by him
pursuant to plans or policies funded, directly at its cost,
by old Guard.
(d) Earlier Cessation of Certain Welfare Benefits.
Notwithstanding the provisions of Subparagraph (b), Old
Guard shall not be required to provide, at its cost, the
welfare benefits covered by Paragraph 6(b )(5) after the
later of (i) the attainment by the Executive and his spouse
(if any) of age 65, or (ii) the date specified in the
relevant plan document for benefit termination (assuming
that he was employed until age 65 or the normal retirement
date, if any, specified in such document).
(e) Death During Remaining Term of Agreement.
(1) In the event the Executive dies during the
remaining term of this Agreement following his
termination without Disability or Cause by Old Guard
and he is survived by a spouse, the compensation and
benefits required to be paid and provided under
Subparagraph (b) shall be unaffected by his death and
shall be paid and provided to her or on her behalf;
provided, however, that the extent of her rights to the
accrued benefits described in Paragraph
6(b)(4) shall be determined by reference to the
relevant plan provisions and any elections made under
such plans; and provided further, that Old Guard shall
not be required to provide continued benefits with
respect to her deceased husband; and provided further,
that in no event shall Old Guard be required to
provide, at its cost, the other welfare benefits
described in Paragraph 6(b)(5) to such spouse and her
eligible dependents after the earlier of (i) her death,
or (ii) the later of (A) her attainment of age 65, or
(B) the date specified in the relevant plan document
for benefit termination (assuming that the Executive
was employed until age 65 or the normal retirement
date, if any, specified in such document).
(2) In the event the Executive dies during the
remaining term of this Agreement following his
termination without Disability or Cause and he is not
survived by a spouse, (i) Old Guard shall thereafter
make the remaining payments described in Paragraphs
6(b)(1) through 6(b)(3) directly to his estate, (ii)
the extent of the rights of any person to the accrued
benefits described in Paragraph 6(b)(4) shall be
determined by reference to the relevant plan provisions
and any elections made under such plans, and (iii) old
Guard's obligation to provide the continued benefits
described in Paragraph 6(b)(5) shall terminate.
11. Termination By the Executive for Good Reason.
(a) In General. In the event the Executive intends to
terminate his employment for Good Reason, he shall deliver a
Notice of Termination to Old Guard which specifies a Date of
Termination not less than 30 days following the date of such
notice.
(b) Compensation and Benefits During Remaining Term of
Agreement. In the event of the termination of the
Executive's employment under Subparagraph (a) Old Guard
shall pay or provide the compensation and benefits described
in Paragraph 6 (b)
(c) Adjustment to Certain Subparagraph (b)
Compensation and Benefits. In the event the Executive
suffers a Disability during the remaining term of this
Agreement following the Date of Termination, Old Guard's
obligation to pay or fund any disability insurance premium*
on his behalf shall be suspended while his Disability
continues, provided the cessation of payment or funding does
not result in the termination of disability benefits. Any
amounts described in Paragraph 6(b) and otherwise payable
under Subparagraph (b) shall be reduced (but not below zero)
by the dollar amount of disability benefits received by him
pursuant to plans or policies funded, directly at
its cost, by Old Guard.
(d) Earlier Cessation of Certain Welfare Benefits.
Notwithstanding the provision of Subparagraph (b), Old Guard
shall not be required to provide, at its cost, the welfare
benefits covered by Paragraph 6(b)(5) after the later of (i)
the attainment by the Executive and his spouse (if any) of
age 65, or (ii) the date specified in the relevant plan
document for benefit termination (assuming that he was
employed until age 65 or the normal retirement date, if any,
specified in such document).
(e) Death During Remaining Term of Agreement.
(1) In the event the Executive dies during the
remaining term of this Agreement following his
termination for Good Reason and he is survived by a
spouse, the compensation and benefits required to be
paid and provided under subparagraph (b) shall be
unaffected by his death and shall be paid and provided
to her or on her behalf; provided, however, that the
extent of her rights to the accrued benefits described,
in Paragraph 6(b)(4) shall be determined by reference
to the relevant plan provisions and any elections made
under such plans; and provided further, that old Guard
shall not be required to provide continued benefits
with respect to her deceased husband; and provided
further, that in no event shall old Guard be required
to provide, at its cost, the other welfare benefits
described in Paragraph 6(b)(5) to such spouse and her
eligible dependents after the earlier of (i) her death,
or (ii) the later of (A) her attainment of age 65, or
(B) the date specified in the relevant plan document
for benefit termination (assuming that the Executive
was employed until age 65 or the normal retirement
date, if any, specified in such document).
(2) In the event the Executive dies during the
remaining term of this Agreement following his
termination for Good Reason and he is not survived by a
spouse, (i) Old Guard shall thereafter make the
remaining payments described in Paragraphs 6(b)(1)
through 6(b)(3) directly to his estate, (ii) the extent
of the rights of any person to the accrued benefits
described in Paragraph 6(b)(4) shall be determined by
reference to the relevant plan provisions and any
elections made under such plans, and (iii) Old Guard's
obligation to provide the continued benefits described
in Paragraph 6(b)(5) shall terminate.
12. Provisions Relating to Excise Taxes.
(a) In General. In the event the Executive becomes
liable, for any taxable year, for the payment of an Excise
Tax (because of a change in control) with respect to the
compensation and benefits payable by Old Guard under this
Agreement or otherwise, Old Guard shall make one or more
Gross-Up Payments to the Executive or on his behalf. The
amount of any Gross-Up Payment shall be calculated by
certified public accountant or other tax professional
designated jointly by the Executive and Old Guard, The
provisions of this paragraph shall apply with respect to the
Executive's surviving spouse or estate, where relevant.
(b) Methodology for Calculation of Gross-Up Payment.
For purposes of determining the amount of any Gross-Up.
Payment, the Executive shall be deemed to pay income taxes
at the highest federal, state, and local marginal rates of
tax for the calendar yea r in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income
tax which could be obtained from the deduction of state and
local income taxes, In the event that the Excise Tax is
subsequently determined to be less than the amount taken
into account at the time the Gross-Up Payment was made, the
Executive shall repay to Old Guard, at the time that the
amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable
to the reduction (plus a portion of the Gross-Up Payment
attributable to the Excise Tax and the federal, state, and
local income taxes imposed on the portion of the Gross-Up
Payment being repaid by the Executive to the extent such
repayment results in a reduction in Excise Tax or federal,
state, or local income tax), plus interest on the amount of
such repayment. Such interest shall be calculated by using
the rate in effect under Section 1274(d)(1) of the IRC, on
the date the Gross-Up Payment was made, for debt instruments
with a term equal to the period of time which has elapsed
from the date the Gross-Up Payment was made to the date of
repayment. In the event that the Excise Tax is subsequently
determined to exceed the amount taken into account at the
time the Gross-Up Payment was made (including by reason of
any payment the existence or amount of which could not be
determined at the time of the Gross-Up Payment), Old Guard
shall make an additional Gross-Up Payment with respect to
the excess at the time the amount thereof is finally
determined, plus interest calculated in a manner similar to
that described in the preceding sentence.
(c) Time of Payment. Any Gross-Up Payment provided
for herein shall be paid not later than the 30th day
following the payment of any compensation or the provision
of any benefit which causes such payment to be made;
provided, however, that if the amount of such payment cannot
be finally determined on or before such day, Old Guard shall
pay on such day an estimate of the minimum amount
of such payment and shall pay the remainder of such payment
(together with interest calculated in a manner similar to
that described in Subparagraph (b)) as soon as the amount
thereof can be determined. In the event that the amount Of
an estimated payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a
loan by old Guard to the Executive, payable on the 30th day
after demand by Old Guard (together with interest calculated
in a manner similar to that described in Subparagraph (b)).
(d) Notwithstanding the provisions of this paragraph
to the contrary, the actual amounts payable hereunder as
Gross-Up Payments shall be coordinated with any similar
amounts paid to the Executive under any other contract,
plan, or arrangement.
13. Fees and Expenses of the Executive. Except as provided
in the following sentence, Old Guard shall pay, within 30 days
following demand by the Executive, all legal, accounting,
actuarial, and related fees and expenses incurred by him in
connection with the enforcement of this Agreement. An
arbitration panel or a court of competent jurisdiction shall be
empowered to deny payment to the Executive of such fees and
expenses only if it determines that he instituted a proceeding
hereunder, or otherwise acted, in bad faith.
14. Reduction for Compensation and Benefits Received Under
Old Guard Severance Policy, Etc. Notwithstanding anything herein
to the contrary, in the event the Executive, his surviving
spouse, or any other person becomes entitled to continued
compensation and benefits hereunder by reason of the Executive's
termination of employment and, in addition, compensation or
similar benefits are payable under a severance policy, program or
arrangement maintained by Old Guard (other than retirement
plans), then the compensation or benefits otherwise payable
hereunder shall be reduced by the compensation or benefits
provided under such severance policy, program or arrangement.
15. Mitigation. The Executive shall not be required to
mitigate the amount of any compensation or benefits which may
become payable hereunder by reason of his termination by seeking
other employment or otherwise, nor, except as otherwise provided
in the following sentence or elsewhere herein, shall the amount
of any such compensation or benefits be reduced by any
compensation or benefits received by the Executive as the result
of his employment by another employer. Notwithstanding anything
in this Agreement to the contrary, Old Guard's obligation to
provide any medical and dental benefits hereunder may be
suspended, with the written concurrence of the Executive or if,
applicable, his surviving spouse during any period of time that
such benefits are being provided by reason of his or her
employment.
16. Funding of Compensation and Benefits; Acceleration of
Certain Payments.
(a) Grantor Trust. In the event the Executive's
employment is terminated without Cause or he terminates his
employment for Good Reason and a Change in Control has
occurred as of the Date of Termination or occurs thereafter,
the Executive shall have the right to require Old Guard to
establish a grantor trust (taxable to Old Guard) and fund
such trust, on an actuarially sound basis, to provide the
compensation and benefits to which he is entitled hereunder,
other than those which may be paid pursuant to the
provisions of Subparagraph (c). The specific terms of such
trust shall be as agreed to by the parties in good faith;
provided, however, that the trustee shall be a financial
institution independent of old Guard; and provided further,
that in no event shall Old Guard be entitled to withdraw
funds from the trust for its benefit, or otherwise
voluntarily assign or alienate such funds, until such time
as all compensation and benefits required hereunder are paid
and provided. The determination of the extent of required
funding, including any supplemental funding in the event of
adverse investment performance of trust assets, shall be
made by an actuary or a certified public accountant retained
by each party. To the extent such professionals cannot
agree on the proper level of funding, they shall select a
third such professional whose determination shall be binding
upon the parties. Notwithstanding the foregoing, Old Guard
shall remain liable for all compensation and benefits
required to be paid or provided hereunder.
(b) Alternate Security. In lieu of the right given to
the Executive under Subparagraph (a), he shall have the
right under such circumstances to require that Old Guard
provide (i) an irrevocable standby letter of credit issued
by a financial institution other than the Company or any
Subsidiary of the Company with a senior debt credit rating
of "A" or better by Xxxxx'x investors Service or Standard
Poor's Corporation, or (ii) other security reasonably
acceptable to him, to secure the payment of such
compensation and benefits.
(c) Accelerated Payment of Present Value of Certain
Compensation. In the event the Executive's employment is
terminated without Cause or he-terminates his employment for
Good Reason and a Change in Control has occurred as of the
Date of Termination or occurs thereafter, the Executive
shall have the continuing right to demand that the present
value of the remaining payments described in Paragraphs
6(b)(1) through (3), and payable by reason of the provisions
of Paragraph 10 or 11 (as the case may be), be paid to him
in one lump sum within 30 days after the date written demand
is given. For purposes of calculating the present value of
such payments, a discount factor shall be applied to each
such payment which is equal to the relevant
applicable federal rate in effect on the date written demand
is given by him, determined by reference to the period of
time between the date of such notice and the scheduled time
such payment would otherwise be made. In the event any
payment described in Paragraphs 6(b)(1) through (3) is not
yet determinable on the date written demand is made, the
other payments shall nonetheless be made as provided above;
and the undetermined payment shall be made within 30 days
after it becomes determinable, calculated as provided in the
preceding sentence but by treating the date on which the
payment becomes determinable as the date of written notice.
Nothing in this subparagraph shall be construed as affecting
the Executive's right to one or more Gross-Up Payments in
accordance with the provisions of Paragraph 12; and a Gross-
Up Payment (it applicable) will be calculated and made with
any payment made under this subparagraph, as well as any
other Gross-Up Payments that may be required hereunder at a
subsequent date.
17. Withholding Taxes. All compensation and benefits
provided for herein shall, to the extent required by law, be
subject to federal, state, and local tax withholding.
18. Confidential Information. The Executive agrees that
subsequent to his employment with Old Guard, he will not, at any
time, communicate or disclose to any unauthorized person, without
the written consent of the Old Guard, any proprietary or other
confidential information concerning the Company or any Subsidiary
of the Company; provided, however, that the obligations under
this paragraph shall not apply to the extent that such matters
(i) are disclosed in circumstances where the Executive is legally
obligated to do so, or (ii) become generally known to and
available for use by the public otherwise than by his wrongful
act or omission; and provided further, that he may disclose any
knowledge of insurance, financial, legal and economic principles,
concepts and ideas which are not solely and exclusively derived
from the business plans and activities of old Guard.
19. Covenants Not to Compete or to Solicit.
(a) Noncompetition. If the Executive's employment
terminates under Paragraph 8 prior to a Change in Control or
he voluntarily terminates his employment prior to a Change
in Control, he agrees that for a period of 12 months after
the Date of Termination he will not, without the written
consent in writing of the Board of Directors of the Company,
become an officer, employee, agent, partner, director, or a
four and nine-tenths percent or greater shareholder or
equity owner of any entity engaged in the property and
casualty insurance business with its corporate headquarters
located within 50 miles of the City of Lancaster,
Pennsylvania. If at the time of the enforcement of this
paragraph a court holds that the duration, scope, or area
restrictions stated herein are unreasonable under
the circumstances then existing and, thus, unenforceable,
Old Guard and the Executive agree that the maximum duration,
scope, or area reasonable under such circumstances shall be
substituted for the stated duration, scope, or area.
(b) Nonsolicitation. During his employment and for a
period of 12 months following the Date of Termination, the
Executive shall not, whether on his own behalf or on behalf
of any other individual or business entity, solicit,
endeavor to entice away from the Company, a Subsidiary or
any affiliated company, or otherwise interfere with the
relationship of the Company, a Subsidiary,or any affiliated
company with any person who is, or was within the then most
recent 12 month period, an employee or associate thereof;
provided, however, that this subparagraph shall not apply
following the occurrence of a Change in Control.
20. Arbitration. To the extent permitted by applicable law,
any controversy or dispute arising out of or relating to this
Agreement, or any alleged breach hereof, shall be settled by
arbitration in the City of Lancaster, Pennsylvania, in accordance
with the commercial rules of the American Arbitration Association
then in existence (to the extent such rules are not inconsistent
with the provisions of this Agreement), it being understood and
agreed that the arbitration panel shall consist of three
individuals acceptable to the parties hereto. In the event that
the parties cannot agree on three arbitrators within 20 days
following receipt by one party of a demand for arbitration from
another party, then the Executive and Old Guard shall each
designate one arbitrator and the two arbitrators selected shall
select the third arbitrator. The arbitration panel so selected
shall convene a hearing no later than 90 days following the
selection of the panel. The arbitration award shall be final and
binding upon the parties, and judgment may be entered thereon in
the Pennsylvania Court of Common Pleas or in any other court of
competent jurisdiction.
21. Additional Equitable Remedy. The Executive acknowledges
and agrees that Old Guard's remedy at law for a breach or a
threatened breach of the provisions of Paragraphs IS and 19 would
be inadequate; and, in recognition of this fact and
notwithstanding the provisions of Paragraph 20, in the event of
such a breach or threatened breach by him, it is agreed that Old
Guard shall be entitled to request equitable relief in the form
of specific performance, temporary restraining order, temporary
or permanent injunction, or any other equitable remedy which may
then be available. Nothing in this paragraph shall be construed
as prohibiting Old Guard from pursuing any other remedy available
under this Agreement for such a breach or threatened breach.
22. Related Agreements. Except as may otherwise be
provided herein, to the extent that any provision of any other
agreement between Old Guard and the Executive shall limit,
qualify, duplicate, or be inconsistent with any
provision of this Agreement, the provision in this Agreement
shall control and such provision of such other agreement shall be
deemed to have been superseded, and to be of no force or effect,
as if :such other agreement had been formally amended to the
extent necessary to accomplish such purpose.
23. No Effect on Other Rights. Except as otherwise
specifically provided herein, nothing contained in this Agreement
shall be construed as adversely affecting any rights the
Executive may have under any agreement, plan, policy or
arrangement to the extent any such right is not inconsistent with
the provisions hereof.
24. Exclusive Rights and Remedy. Except for any explicit
rights and remedies the Executive may have under any other
contract, plan or arrangement with Old Guard, the compensation
and benefits payable hereunder and the remedy for enforcement
thereof shall constitute his exclusive rights and remedy in the
event of his termination of employment.
25. Director and Officer Liability insurance;
Indemnification. Old Guard shall provide the Executive
(including his heirs, executors, and administrators) with
coverage under a standard directors and officers' liability
insurance policy, at Old Guard's expense, in amounts consistent
with amounts provided by peer corporations to their directors and
officers, and shall indemnify him as both a director and as an
officer (and his heirs, executors, and administrators) to the
fullest extent permitted under Pennsylvania law against all
expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit, or proceeding in which
he may be involved by reason of his having been an officer or
director of Old Guard or any Subsidiary or affiliated company
(whether or not he continues to be such an officer or director at
the time of incurring such expenses or liabilities). Such
expenses and liabilities shall include, but not be limited to,
judgments, court costs, and attorneys' fees, and the costs of
reasonable settlements.
26. Notices. Any notice required or permitted under
this Agreement shall be sufficient if it is in writing and shall
be deemed given (i) at the time of personal delivery to the
addressee, or (ii) at the time sent certified mail, with return
receipt requested, addressed as follows:
If to the Executive--
Xx. Xxxxx X. Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
If to Old Guard, OGIMC, or the Company--
0000 Xxxxxx Xxxx
X.X. Xxx,0000
Xxxxxxxxx, XX 00000
Attention: President
The name or address of any addressee may be changed at any time
and from time to time by notice similarly given.
27. No Waiver. The failure by any party to this Agreement
at any time or times hereafter to require strict performance by
any other party of any of the provisions, terms, or conditions
contained in this Agreement shall not waive, affect, or diminish
any right of the first party at any time or times thereafter to
demand strict performance therewith and with any other provision,
term, or condition contained in this Agreement, Any actual waiver
of a provision, term, or condition contained in this Agreement
shall not constitute a waiver of any other provision, term, or
condition herein, whether prior or subsequent to such actual
waiver and whether of the same or a different type. The failure
of Old Guard to promptly terminate the Executive's employment for
Cause or the Executive to promptly terminate his employment for
Good Reason shall not be construed as a waiver of the right of
termination, and such right may be exercised at any time
following the occurrence of the event giving rise to such right.
28. Joint and Several Obligations of OGIMC and the Company.
OGIMC and the Company shall be jointly and severally liable for
all compensation and benefits that may become payable hereunder
to or on behalf of the Executive or, if applicable, his surviving
spouse, estate or beneficiaries.
29. Survival. Notwithstanding the nominal termination of
this Agreement and the Executives Employment hereunder the
provisions hereof which specify continuing obligations,
compensation and benefits, and rights (including the otherwise
applicable term hereof) shall remain in effect until such time as
all such obligations are discharged, all such compensation and
benefits are received, and no party or beneficiary has any
remaining actual or contingent rights hereunder.
30. Severability. In the event any provision in this
Agreement shall be held illegal or invalid for any reason, such
illegal or invalid provision shall not affect the remaining
provisions hereof, and this Agreement shall be construed,
administered and enforced as though such illegal or invalid
provision were not contained herein.
31. Binding Effect and Benefit. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the successors and assigns of Old Guard and the executors,
personal representatives, surviving spouse, heirs,
devisees, and legatees of the Executive.
32. Entire Agreement. This Agreement embodies the entire
agreement among the parties with respect to the subject matter
hereof, and it supersedes all prior discussions and oral
understandings of the parties with respect thereto.
33. No Assignment. This Agreement, and the benefits and
obligations hereunder, shall not be assignable by any party
hereto except by operation of law.
34. No Attachment. Except as otherwise provided by law, no
right to receive compensation or benefits under this Agreement
shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to
set off, execution, attachment, levy, or similar process, and any
attempt, voluntary or involuntary, to effect any such action
shall be null and void.
35. Captions. The captions of the several paragraphs and
subparagraphs of this Agreement have been inserted for
convenience of reference only. They constitute no part of this
Agreement and are not to be considered in the construction
hereof.
36. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed one and the
same instrument which may be sufficiently evidenced by any one
counterpart.
37. Number. Wherever any words are used herein in the
singular form, they shall be construed as though they were used
in the plural form, as the context requires, and vice versa.
38. Applicable Law. Except to the extent preempted by
federal law, the provision$ of this Agreement shall be construed,
administered, and enforced in accordance with the domestic
internal law of the Commonwealth of Pennsylvania.
replaces all prior Employment Agreements between Executive and
the Company or any Subsidiary of the Company.
IN WITNESS WHEREOF, the parties have executed this
Agreement, or caused it to be executed, as of the date first
above written.
/s/ Xxxxx X. Xxxxxx (SEAL)
OLD GUARD INSURANCE MANAGEMENT CO.
By/s/ Xxxxx X. Xxxxxx
Attest:/s/Xxxxxx X. Xxxx
OLD GUARD GROUP, INC.
By/s/ Xxxxx X. Xxxxxx
Attest:/s/Xxxxxx X. Xxxx
PAGE 20
GLOSSARY
"Board of Directors" means the board of directors of the
relevant corporation.
"Cause" means (i) a documented repeated and willful failure
by the Executive to perform his duties and achieve reasonably
established goals, but only after written demand and only if
termination is effected by action taken by a vote of (A) prior to
a Change in Control, at least a majority of the directors of the
Company then in office, or (E) after a Change in Control, at
least 80% of the nonofficer directors of the Company then in
office, (ii) his final conviction of a felony, (iii) conduct by
him which constitutes moral turpitude which is directly and
materially injurious to the Company or any Subsidiary or
affiliated company, (iv) willful material violation of corporate
policy, or (v) the issuance by the regulator of the Company or
any Subsidiary or affiliated company of an unappealable order to
the effect that he be permanently discharged,
For purposes of this definition, no act or failure to act on
the part of the Executive shall be considered "willful" unless
done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the
Company or any of its Subsidiaries or affiliated companies,
"Change in Control" means the occurrence of any of the
following events:
(a) any Person (except (i) the company or any
Subsidiary or prior affiliate of the Company, or (ii) any
Employee Benefit Plan (or any trust forming a part thereof)
maintained by the Company or any Subsidiary or prior
affiliate of the Company) is or becomes the beneficial
owner, directly or indirectly, of the Company's securities
representing 19% or more of the combined voting power of the
company's then outstanding securities, or 50.1% or more of
the combined voting power of a Material subsidiary's then
outstanding securities, other than pursuant to a transaction
described in Clause (c);
(b) there occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of the
Company or a Material Subsidiary to another entity, except
to an entity controlled directly or indirectly by the
Company; or
(c) there occurs a merger, consolidation, share
exchange, division or other reorganization of or relating to
(i) the shareholders of the Company immediately
before such merger, consolidation, share exchange,
division or reorganization own, directly or indirectly,
immediately thereafter at least two-thirds of
the combined voting power of the outstanding voting
securities of the Surviving Company in substantially
the same proportion as their ownership of the voting
securities immediately before such merger,
consolidation, share exchange, division or
reorganization; and
(ii) the individuals who, immediately before such
merger, consolidation, share exchange, division or
reorganization, are members of the Incumbent Board
continue to constitute at least two-thirds of the board
of directors of the Surviving Company; provided,
however, that if the election, or nomination for
election by the Company's shareholders, of any new
director was approved by a vote of at least two-thirds
of the Incumbent Board, such director shall, for the
purposes hereof, be considered a member of the
Incumbent Board; and provided further, however, that no
individual shall be considered a member of the
Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened
Election Contest or Proxy Contest, including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; and
(iii) no Person (except (A) the Company or any
Subsidiary or prior affiliate of the Company, (B) any
Employee Benefit Plan (or any trust forming a part
thereof) maintained by the Company or any Subsidiary or
prior affiliate of the Company, or (C) the Surviving
Company or any Subsidiary or prior affiliate of the
Surviving Company) has beneficial ownership of 19.9% or
more of the combined voting power of the surviving
Company's outstanding voting securities immediately
following such merger, consolidation, share exchanger
division or reorganization;
(d) a plan of liquidation or dissolution of the
Company, other than pursuant to bankruptcy or insolvency
laws, is adopted; or
individuals who, at the beginning of such period,
constituted the Board of Directors of the Company cease for
any reason to constitute at least a majority of such Board
of Directors, unless the election, or the nomination for
election by the Company's shareholders, of each new director
was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period; provided, however, that no
individual shall be considered a member of the Board of
Directors of the Company at the beginning of such period if
such individual initially assumed office as a result of
either an actual or threatened Election Contest or
Proxy Contest, including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest,
Notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of securities representing 19.9% or more
of the combined voting power of the Company's then outstanding
securities solely as a result of an acquisition by the Company of
its voting securities which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person; provided, however, that if a
Person becomes a beneficial owner of 19.9% or more of the
combined voting power of the Company's then outstanding
securities by reason of share repurchases by the Company and
thereafter becomes the beneficial owner, directly or indirectly,
of any additional voting securities of the Company, then a Change
in Control shall be deemed to have occurred with respect to such
Person under Clause (a).
Notwithstanding anything contained herein to the contrary, if the
Executive's employment is terminated and he reasonably
demonstrates that such termination (i) was at the request of a
third party who has indicated an intention of taking steps
reasonably calculated to effect a Change in Control and who
effects a Change in Control, or (ii) otherwise occurred in
connection with, or in anticipation of, a Change in Control which
actually occurs, then for all purposes hereof, a Change in
Control shall be deemed to have occurred on the day immediately
prior to the date of such termination of his employment.
Notwithstanding anything contained herein, the demutualization of
one or more of the Guarantors and the initial public offering of
the Company shall not constitute a Change in Control.
"Company" means Old Guard Group, Inc., a Pennsylvania
(stock) corporation, and any successor thereto.
"Date of Termination" means:
(a) if the Executive's employment is terminated for
disability, 30 days after the Notice of Termination is given
(provided that he shall not have returned to the performance
of his duties on a full-time basis during such 30-day
period);
(b) if the Executive's employment terminates by reason
of his death, the date of his death;
(c) if the Executive's employment is terminated by Old
Guard for Cause, the date specified in the Notice of
Termination;
(d) if the Executive's employment is terminated by him
without Good Reason, the date specified in the Notice of
Termination;
(e) if the Executive's employment is terminated by Old
Guard for any reason other than for Disability or Cause, the
date specified in the Notice of Termination; or
(f) if the Executive's employment is terminated by
him for Good Reason, the date specified in the Notice of
Termination;
provided, however that the Date of Termination shall mean the
actual date of termination in the event the parties mutually
agree to a date other than that described above.
"Defined Benefit Plan" has the meaning ascribed to such term
in Section 3(35) of ERISA.
"Defined Contribution Plan" has the meaning ascribed to such
term in Section 3(34) of ERISA.
"Disability" has the meaning ascribed to the terra
"permanent and total disability" in Section 22(e)(3) of the IRC.
"Election Contest" means a solicitation with respect to the
election or removal of directors that is subject to the
provisions of Rule 14a-11 of the 1934 Act.
"Employee Benefit Plan" has the meaning ascribed to such
term in Section 3(3) of ERISA,
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and as the same may be amended from time to
time.
"Excise Tax" means the tax imposed by Section 4999 of the
IRC (or any similar tax that may hereafter be imposed by federal,
state or local law).
"Executive" means Xxxxx X. Xxxxxx, an individual residing in
Lancaster County, Pennsylvania.
"Good Reason" means, after a Change in Control:
(a) a change in the Executive's status or position,
or any material diminution in his duties or
responsibilities;
(b) any increase in the Executive's duties
inconsistent with his position;
(c) any reduction in the Executive's base
compensation;
(d) a failure to increase the Executive's base
compensation, consistent with his performance review, within
12 months of the last increase; or a failure to consider
Executive for an increase within 12 months of his last
performance review;
(e) a failure to continue in effect any Employee
Benefit Plan in which the Executive participates, including
(whether or not they constitute Employee Benefit Plans)
incentive bonus, stock option, or other qualified or
nonqualified plans of deferred compensation (A) other than -
as a result of the normal expiration of such a plan, or (B)
unless such plan is merged or consolidated into, or replaced
with, a plan with benefits which are of equal or greater
value;
(f) requiring the Executive to be based anywhere other
than the county where his principal office was located
immediately prior to the Change in Control;
(g) refusal to allow the Executive to attend to
matters or engage in activities in which he was permitted
to engage prior to the Change in Control;
(h) delivery to the Executive of a Notice of
Nonextension;
(i) failure to secure the affirmation by a Successor,
within three business days prior to a Change in Control, of
this Agreement and its or Old Guard's continuing obligations
hereunder (or where there is not at least three business
days advance notice that a Person may become a Successor,
within one business day after having notice that such Person
may become or has become a Successor); or
(j) any purported termination of the Executive's
employment which is not in accordance with the terms of this
Agreement.
Notwithstanding anything herein to the contrary, at the election
of the Executive, beginning with the 181st day following a Change
in Control and continuing through the first anniversary of such
Change in Control, he may terminate his employment for any reason
or no reason and such termination will be treated as having
occurred for Good Reason.
"Gross-Up Payment" means an additional payment to be made to
or on behalf of the Executive in an amount such that the net
amount retained by him, after deduction of any Excise Tax on the
Total Payments and any federal, state, and local income tax and
Excise Tax on such additional payment, equals the Total Payments.
"Incumbent Board" means the Board of Directors of the
Company as constituted at any relevant time.
"IRC" means the Internal Revenue Code of 1986, as amended
and as the same may be amended from time to time.
"Material subsidiary" means a Subsidiary whose net worth,
determined under generally accepted accounting principles, at the
fiscal year end immediately prior to any relevant time is at
least 25% of the aggregate net worth of the controlled group of
corporations of which the Company is the common parent.
"1934 Act" means the Securities Exchange Act of 1934, as
amended and as the same may be amended from time to time.
"Notice of Nonextension" means a written notice delivered to
or by the Executive which advises that the Agreement will not be
extended as otherwise provided in Paragraph 3.
"Notice of Termination" means a written notice that (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive;s employment under the provision so indicated, and
(iii) gives the required advance notice of termination.
"OGIMC" means Old Guard Insurance Management Co., a
Pennsylvania corporation.
"Old Guard" means the Company and OGIMC, collectively, or, as
the context requires, either the Company or OGIMC, and any
successor to either or both of them,
"Person" has the same meaning as such term has for purposes
of Sections 13(d) and 14(d) of the 1934 Act.
"Proxy contest" means the solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors of the Company.
"Subsidiary" means any business entity of which a majority
of its voting power or its equity securities or equity interests
is owned, directly or indirectly by the Company.
"Successor" means any Person that succeeds to, or has the
practical ability to control (either immediately or with the
passage of time), Old Guard's business directly, by merger or
consolidation, or indirectly, by purchase of Old Guard's voting
securities or all or substantially all of its assets.
"Surviving Company" means the business entity that is a
resulting company following a merger, consolidation, share
exchange, division or other reorganization of or relating to the
Company.
"Total Payments" means the compensation and benefits that
become payable under the Agreement or otherwise (and which may be
subject to an Excise Tax) by reason of the Executive's
termination of employment, determined without regard to any
Gross-Up Payments that may also be made.
"Welfare Benefit ]Plan" has the meaning ascribed to the term
"employee welfare benefit plan" in Section 3(l) of ERISA. For
purposes of determining the Executive's or his dependents' right
to continued welfare benefits hereunder following his termination
of employment, the meaning of such term shall include any retiree
health plan maintained by Old Guard at any time after the
relevant Date of Termination, notwithstanding the fact that the
Executive is not a participant therein prior to such date.
