Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") made effective as of the 16th
day of December, 1997 (the "Effective Date") by and between ERIE INDEMNITY
COMPANY, a Pennsylvania corporation with its principal place of business at
Erie, Pennsylvania (the "Company"), and XXXXXXX X. XXXXX (the "Executive");
WITNESSETH:
WHEREAS, the Company has determined that it is in the best
interests of the Company and its shareholders to secure the continued employment
of the Executive on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Executive desires and is willing to accept
employment with the Company on the terms and subject to the conditions set forth
herein;
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Term. The Company hereby agrees to continue the employment
of the Executive and the Executive hereby agrees to continue to serve the
Company pursuant to the terms and conditions of this Agreement as President and
CEO of the Company, or in such other position with the Company of at least
commensurate responsibility and authority in all material respects, for a term
of four years commencing on the Effective Date hereof and expiring on December
15, 2001, unless earlier terminated pursuant to Section 5 hereof.
Notwithstanding the foregoing, the Executive shall serve in said office(s) at
the pleasure of the Company's Board of Directors (the "Board of Directors") and
the Executive may be removed from said office(s) at any time with or without
Cause, as hereinafter defined, pursuant to Sections 5(b) or 5(d) hereof;
provided that any such removal shall be without prejudice to any contract rights
the Executive may have hereunder. Subject to Section 8(a)(6) and Section 8(b)
hereof, this Agreement shall expire by its terms on December 15, 2001.
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2. Duties and Responsibilities. The Executive's duties
hereunder shall be those which shall be prescribed by the Company's Bylaws, as
amended from time to time, and by the Board of Directors or any committee
thereof from time to time and shall include such executive authority, duties,
powers and responsibilities as customarily attend the office as President and
CEO of a company comparable to the Company. The Executive shall discharge such
duties consistent with sound business practices and in accordance with law and
the Company's general employment policies, in each case, as in effect from time
to time, in all material respects and the Executive shall use best efforts to
promote the best interests of the Company. During the term of this Agreement,
the Executive's position (including the Executive's status and reporting
requirements), authority, duties, powers and responsibilities shall at all times
be at least commensurate in all material respects with the most significant of
those held, exercised or assigned to the Executive as of the Effective Date. The
Executive shall devote the Executive's knowledge, skill and all of the
Executive's professional time, attention and energies (reasonable absences for
vacations and illness excepted), to the business of the Company in order to
perform such assigned duties faithfully, competently and diligently. It is
understood and agreed between the parties that the Executive may (i) engage in
charitable and community activities, including serving on boards of directors or
trustees of and holding other leadership positions in non-profit organizations
unless the objectives and requirements of such positions are determined by the
Board of Directors to be inconsistent with the performance of the Executive's
duties hereunder, and, (ii) manage personal investments, so long as such
activities do not interfere or conflict with the Executive's performance of
responsibilities and obligations hereunder. It is expressly agreed that any such
activities engaged in by the Executive as of the Effective Date shall not
thereafter be deemed to interfere with the Executive's obligations and
responsibilities hereunder. The Executive agrees that the approval of the Board
of Directors or a committee thereof shall be required before the Executive first
accepts a position as director of any for-profit corporation after the date
hereof.
3. Compensation. During the term of this Agreement,
the Executive shall receive, for all services rendered to the Company
hereunder, the following (hereinafter referred to collectively as
"Compensation"):
(a) Salary. The Executive shall be paid an annual
base salary at an annual rate at least equal to the annual
rate being paid or payable to the Executive by the Company in
the month in which the Effective Date occurs, with such
increases thereafter as shall be determined from time to time
to be fair and reasonable by the Board of Directors or by the
Executive Compensation Committee of the Board of Directors
(the "Committee") in its discretion after taking into account,
among other things, the authority, duties, powers and
responsibilities of the Executive's position, the Executive's
performance, the Company's performance, the compensation of
persons in comparable positions at the Company and at other
comparable companies, and the effect of inflation. The
Executive's annual base salary shall not be reduced after any
such increase. The Executive's annual base salary shall be
payable in equal installments in accordance with the Company's
general salary payment policies, but no less frequently than
bi-weekly.
(b) Incentive Compensation. The Executive shall be
eligible for awards under the Company's incentive compensation
plans, if any, applicable to senior executive officers of the
Company or to key employees of the Company or its
subsidiaries, including, but not limited to, management
incentive plans and stock option plans, in accordance with and
subject to the terms thereof (including any provisions
providing for changes in the level of or termination of
benefits thereunder), on a basis commensurate with the
Executive's position and authorities, duties, powers and
responsibilities.
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(c) Employee Benefit Plans. The Executive and the
Executive's "dependents," as that term may be defined under
the applicable employee benefit plan(s) of the Company, shall
be included, to the extent eligible thereunder and subject to
the terms of the plans (including any provisions for changing
the level of or termination of benefits thereunder), in all
plans, programs and policies which provide benefits for
Company employees and their dependents on a basis commensurate
with the Executive's position and authorities, duties, powers
and responsibilities including, without limitation, health
care insurance, health and welfare plans, pension and
retirement plans, group life insurance plans, split dollar
life insurance plans, short and long-term disability plans,
survivors' benefits, executive supplemental benefits, holidays
and other similar or comparable benefits made available to the
Company's employees and senior executive officers
(hereinafter, such plans, programs and policies shall be
collectively referred to as the "Erie Benefit Plans"). Such
plans, programs and policies shall include, but are not
limited to, the Erie Insurance Group Retirement Plan for
Employees, the Erie Insurance Group Employee Savings Plan, the
Erie Insurance Group Deferred Compensation Plan, the Erie
Insurance Group Split Dollar Life Insurance Plan, the Erie
Insurance Group Supplemental Executive Retirement Plan, and
the Erie Insurance Group Health Protection, Prescription Drug,
Dental Assistance and Vision Care Plans.
(d) Perquisites. The Executive shall be entitled to
all perquisites which the Company from time to time makes
available to senior executive officers of the Company. Such
perquisites shall include, but are not limited to, parking,
club dues, tax preparation assistance, and an annual physical
examination.
(e) Expenses and Working Facilities. The Executive is
hereby authorized to incur, and shall be reimbursed by the
Company for, any and all reasonable and necessary business
related expenses, including, but not limited to, expenses for
business travel, entertainment, gifts and similar matters,
which expenses are incurred by the Executive on behalf of the
Company or any of its subsidiaries, upon presentation of
itemized accounts of such expenses in accordance with Company
policies. The Executive shall be furnished during the term of
this Agreement with offices and other working facilities in
the Company's principal executive offices located in Erie,
Pennsylvania (or other location of the principal executive
offices within the Erie metropolitan area) and secretarial and
other assistance suitable to the Executive's position and
adequate for the performance of duties hereunder.
(f) Performance Appraisal. The Executive's
performance may be evaluated by the Board of Directors or the
Committee from time to time. The Executive shall be entitled
to such additional remuneration, including but not limited to
annual bonuses based on performance, as the Board of Directors
or the Committee may, in its discretion, determine from time
to time.
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4. Absences. The Executive shall be entitled to vacations in
accordance with the Company's vacation policy in effect from time to time (but
in no event shall the Executive be entitled to fewer vacation days than under
the Company's vacation policy as in effect on the Effective Date) and to
absences because of illness or other incapacity, and shall also be entitled to
such other absences, whether for holiday, personal time, conventions, or for any
other purpose, as are granted to the Company's other senior executive officers
or as are approved by the Board of Directors or the Committee, which approval
shall not be unreasonably withheld.
5. Termination. The Executive's employment hereunder may be
terminated only as follows:
(a) Expiration of Term of Office. Upon the expiration
of the term of the office(s) to which the Executive has been
elected or appointed as set forth in Section 1 hereof, the
Board of Directors may (i) determine that the Executive should
not continue in such office(s) or (ii) that the Executive
should not be elected or appointed to an office with duties,
authorities, powers and responsibilities that are at least
commensurate with those of said office(s), in either case, for
reasons other than for Cause (if the reasons for such
noncontinuance, nonreelection or nonreappointment constitute
Cause, then Section 5(d) hereof will apply).
(b) By the Company Without Cause. The Company may at
any time terminate the Executive's employment hereunder
without Cause only by the affirmative vote of a majority of
the entire Board of Directors, and upon no less than thirty
(30) days' prior written notice to the Executive.
(c) By the Executive Without Good Reason. The
Executive may at any time terminate employment hereunder for
any reason upon no less than thirty (30) days' written notice
to the Company. Section 5(e) shall apply to any termination of
employment by the Executive for Good Reason.
(d) By the Company For Cause. The Company may
terminate the Executive's employment hereunder for Cause. In
such event, the Company shall give to the Executive prompt
written notice (in addition to any notice which may be
required by Section 5(d)(1) hereof) specifying in reasonable
detail the basis for such termination. For purposes of this
Agreement, "Cause" shall mean any of the following conduct by
the Executive:
(1) The deliberate and intentional
breach of any material provision of
this Agreement, which breach
Executive shall have failed to cure
within thirty (30) days after
Executive's receipt of written
notice from the Company specifying
the specific nature of the
Executive's breach;
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(2) The deliberate and intentional
engaging by Executive in gross
misconduct that is materially and
demonstrably inimical to the best
interests, monetary or otherwise, of
the Company; or
(3) Conviction of a felony or conviction
of any crime involving moral
turpitude, fraud or deceit.
For purposes of this definition, no act, or failure to act, on the Executive's
part shall be considered "deliberate and intentional" unless done, or omitted to
be done, by the Executive not in good faith and without reasonable belief that
such action or omission was in the best interest of the Company.
(e) By the Executive for Good Reason. The Executive
may terminate employment hereunder for Good Reason upon
providing thirty (30) days written notice to the Company after
the Executive reasonably becomes aware of the circumstances
giving rise to such Good Reason. For purposes of this
Agreement, "Good Reason" means the following conduct of the
Company, unless the Executive shall have consented thereto in
writing:
(1) Material breach of any material
provision of this Agreement by the
Company, which breach shall not have
been cured by the Company within
thirty (30) days after Company's
receipt from the Executive or the
Executive's agent of written notice
specifying in reasonable detail the
nature of the Company's breach;
(2) The assignment to the Executive of
any duties inconsistent in any
material respect with the
Executive's position (including any
reduction of the Executive's status
and reporting requirements),
authority, duties, powers or
responsibilities with the Company as
contemplated by Section 2 of this
Agreement, or any other action by
the Company, including the removal
of the Executive from or any failure
to reelect or reappoint the
Executive to the office(s) specified
in Section 2 or a commensurate
office(s) (other than for Cause),
which results in a diminution of the
Executive's authority, duties,
position, responsibilities or
status, excluding for this purpose
any isolated, insubstantial and
inadvertent action respecting the
Executive not taken in bad faith and
which is remedied by the Company
within thirty (30) days after
receipt of written notice from the
Executive to the Company;
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(3) The Company's relocation of the
Executive out of the Company's
principal executive offices or the
relocation of the Company's
principal executive offices to a
location outside the Erie,
Pennsylvania metropolitan area,
except for required short-term
travel on the Company's behalf to
the extent necessary for the
Executive to carry out his normal
duties in the ordinary course of
business;
(4) The failure of the Company to obtain
the assumption in writing of its
obligations to perform this
Agreement by any successor as
provided in Section 14 hereof not
less than five days prior to a
merger, consolidation or sale as
contemplated in Section 14; or
(5) A reduction in the overall level of
compensation of the Executive. For
purposes of this subsection 5, the
following shall not constitute a
reduction in the overall level of
compensation of the Executive: (i)
changes in the cash/stock mix of
compensation payable to the
Executive; (ii) a reduction in the
overall level of compensation of the
Executive resulting from the failure
to achieve corporate, business unit
and/or individual performance goals
established for purposes of
incentive compensation for any year
or other period; provided that the
aggregate short-term incentive
opportunity, when combined with the
Executive's base salary, provides,
in the aggregate, an opportunity for
the Executive to realize at least
the same overall level of
compensation as was paid in the
immediately prior year or period at
target performance levels; and
provided, further, that such target
performance levels are reasonable at
all times during the measurement
period, taking into account the fact
that one of the purposes of such
compensation is to incent the
Executive; (iii) reductions in
compensation resulting from changes
to any Erie Benefit Plan (provided
that such changes are generally
applicable to all participants in
such Erie Benefit Plan); and (iv)
any combination of the foregoing.
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(f) Disability. In the event that the Executive shall
be unable to perform the Executive's duties hereunder on a
full time basis for a period of one hundred-eighty (180)
consecutive calendar days by reason of incapacity due to
illness, accident or other physical or mental disability, then
the Company may, at its discretion, terminate the Executive's
employment hereunder if the Executive, within ten (10) days
after receipt of written notice of termination (which notice
may be given before or after the end of the entire 180 day
period), shall not have returned to the performance of all of
his duties hereunder on a full-time basis.
(g) Death. The Executive's employment under this
Agreement shall terminate upon the Executive's death.
(h) Mutual Written Agreement. This Agreement
and the Executive's employment hereunder may be terminated
at any time by the mutual written agreement of the Executive
and the Company.
6. Compensation in the Event of Termination. In the event that the
Executive's employment hereunder terminates prior to the expiration of this
Agreement for any reason provided in Section 5 hereof, the Company shall pay the
Executive, compensation and provide the Executive and the Executive's eligible
dependents with benefits as follows:
(a) Executive's Nonreelection to Office; Termination
By Company Without Cause; Termination By Executive for Good
Reason. In the event that the Executive's employment hereunder
is terminated: (i) because the Executive does not continue in
office pursuant to Section 5(a) hereof; or (ii) by the Company
without Cause pursuant to Section 5(b) hereof; or (iii) by the
Executive for Good Reason pursuant to Section 5(e) hereof,
then in any such event the Company shall pay or provide, as
applicable, the following compensation and benefits to the
Executive:
(1) Three (3) times the following: (A)
the highest annual base salary paid
or payable to the Executive in the
then current year or any one (1) of
the three (3) calendar years
preceding Executive's termination of
employment hereunder; plus (B) an
amount equal to the sum of the
Executive's highest award(s) under
the Company's Annual Incentive Plans
for any one (1) of the three (3)
calendar years preceding the date of
the termination of Executive's
employment hereunder (such total is
referred to herein as "Covered
Compensation"). Such payment to the
Executive by the Company shall be
paid in a lump sum unless the
Executive elects, and so notifies
the Company in writing prior to the
termination of the Executive's
employment hereunder, to receive
such payment in three (3) equal
annual installments. The lump sum or
first payment, as the case may be,
shall be paid within sixty (60) days
after the date of the termination of
the Executive's employment
hereunder;
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(2) Any awards or other compensation to
which the Executive is entitled
under any of the Company's
compensation plans or Erie Benefit
Plans to the extent not covered in
subsection (1) hereof;
(3) Any award to which the Executive
would be entitled under the
Company's Long-Term Incentive Plan
as in effect on December 16, 1997,
calculated under the provision of
that Plan as if the Executive ceases
to be an Employee of the Company by
reason of death, disability or
normal retirement;
(4) Continuing coverage for all purposes
(including eligibility, coverage,
vesting and benefit accruals, as
applicable), for a period of three
(3) years after the date of the
termination of Executive's
employment hereunder, to the extent
not prohibited by law, for the
Executive and the Executive's
eligible dependents under all of the
Erie Benefit Plans in effect and
applicable to Executive and the
Executive's eligible dependents as
of the date of termination. In the
event that the Executive and/or the
Executive's eligible dependents,
because of the Executive's
terminated status, cannot be covered
or fully covered under any or all of
the Erie Benefit Plans, the Company
shall continue to provide the
Executive and/or the Executive's
eligible dependents with the same
level of such coverage in effect
prior to termination, payable from
the general assets of the Company if
necessary. Notwithstanding the
foregoing, the Executive may elect
(by giving written notice to the
Company prior to the termination of
employment hereunder), on a benefit
by benefit basis, to receive in lieu
of continuing coverage, cash in an
amount equal to the present value
(using a 6.5% discount rate over
three years) of the projected cost
to the Company of providing such
benefit for such three year period.
The aggregate amount of cash to
which the Executive is entitled
pursuant to the preceding sentence
shall be payable by the Company to
the Executive within sixty (60) days
after the date of the termination of
Executive's employment hereunder;
and
(5) For a period of three (3) years
after the date of the termination of
Executive's employment hereunder,
such perquisites as are made
available to the Executive as of the
date of the termination of
Executive's employment hereunder.
The Executive's subsequent death, disability or attainment of age 65 or any
other age shall in no way affect or limit the Company's obligations under this
Section 6(a).
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(b) Termination By the Company for Cause. In the
event that the Company shall terminate the Executive's
employment hereunder for Cause pursuant to Section 5(d), this
Agreement shall forthwith terminate and the obligations of the
parties hereto shall be as set forth in Section 8 hereof.
(c) Termination by the Executive Without Good Reason.
In the event that the Executive shall terminate employment
hereunder other than for Good Reason pursuant to Section 5(c),
this Agreement shall forthwith terminate and the obligations
of the parties hereto shall be as set forth in Section 8
hereof.
(d) Disability. In the event that the Company elects
to terminate the Executive's employment hereunder pursuant to
Section 5(f), the Executive shall continue to receive from the
date of such termination through the expiration date of this
Agreement, sixty percent (60%) of the then current annual base
salary to which the Executive was entitled pursuant to Section
3(a) hereof immediately preceding such termination, in
accordance with the payroll practices of the Company for
senior executive officers, reduced, however, by the amount of
any proceeds from Social Security and disability insurance
policies provided by and at the expense of the Company.
(e) Death. In the event of the death of the Executive
during the term of this Agreement, the then current annual
base salary to which the Executive was entitled pursuant to
Section 3(a) hereof immediately preceding the Executive's
death shall be paid, in twelve (12) equal monthly installments
following the date of death, to the last beneficiary
designated by the Executive under the Company's group life
insurance policy maintained by the Company or such other
written designation expressly provided to the Company for the
purposes hereof or, failing either such designation, to the
Executive's estate.
(f) Mutual Written Consent. In the event that the
Executive and the Company shall terminate the Executive's
employment by mutual written agreement, the Company shall pay
such compensation and provide such benefits, if any, as the
parties may mutually agree upon in writing.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking employment or otherwise, nor shall any
amounts received from employment or otherwise by the Executive offset in any
manner the obligations of the Company hereunder except as specifically provided
in Section 6(d) hereof.
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7. Certain Additional Payments by the Company. Notwithstanding
anything in this Agreement to the contrary, in the event it is determined that
any payment or distribution by the Company to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (a "Payment"), is subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor provision, on excess parachute payments, as that
term is used and defined in Sections 4999 and 280G of the Code, then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount equal to the then current rate of tax under said Section
4999 multiplied by the total of the amounts so paid or payable, including the
Gross-Up Payment, which are deemed to be a part of an excess parachute payment.
8. Effect of Expiration of Agreement or Termination of
Executive's Employment. Upon the expiration of this Agreement by its terms or
the termination of the Executive's employment hereunder, neither the Company nor
the Executive shall have any remaining duties or obligations hereunder except
that:
(a) The Company shall:
(1) Pay the Executive's accrued salary
and any other accrued benefits under
Sections 3(a), (b), and (c) hereof;
(2) Reimburse the Executive for expenses
already incurred in accordance with
Section 3(e) hereof;
(3) Pay or otherwise provide for any
benefits, payments or continuation
or conversion rights in accordance
with the provisions of any Erie
Benefit Plan of which the Executive
or any of the Executive's dependents
is or was a participant or as
otherwise required by law;
(4) Pay the Executive and the
Executive's beneficiaries any
compensation and/or provide the
Executive or the Executive's
eligible dependents any benefits, as
the case may be, due pursuant to
Section 6 or Section 7 hereof; and
(5) Unless the employment of the
Executive is terminated by the
Company for Cause, pay the Executive
or the Executive's beneficiaries the
full amount or amounts accrued under
the Supplemental Executive
Retirement Plan of the Company (the
"SERP") as in effect on the
Effective Date (or as such benefits
may be enhanced by subsequent
amendments or supplements to such
SERP), as though, solely for
purposes of determining any
otherwise applicable actuarial
reduction
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factors, the event of the
termination of Executive's
employment hereunder or expiration
of this Agreement occurred on the
Executive's Normal Retirement Date
as defined in such SERP. Accrued
benefits under the SERP shall be
fully vested and nonforfeitable upon
such termination (including
termination on account of the
Executive's death) or expiration.
Any reductions in SERP benefits that
would otherwise apply pursuant to
Section 10.1 of the Company's
Retirement Plan for Employees (or
pursuant to any successor provision
of such plan or any successor plan)
relating to Section 415(b) of the
Code shall not be applicable for
purposes hereof. No further approval
by the Board of Directors or the
Committee with respect to payments
under the SERP in accordance with
the preceding sentences shall be
required. Unreduced payments may
begin at age 55, but in no event
would payments be made under this
Section 8(a)(5) before the Executive
reaches age fifty-five (55). The
Company shall purchase for the
Executive, naming the Executive
and/or the Executive's designee the
owner, a paid up annuity, from an
insurer reasonably acceptable to the
Executive but in any event having an
A.M. Best rating of A+ or better (or
other comparable rating), that will
pay to the Executive an amount equal
to the benefit to which the
Executive would otherwise be
entitled under the SERP and payable
at the times such SERP benefit would
be payable in accordance with the
provisions hereof. Upon the purchase
and delivery to the Executive of
such an annuity, the Executive shall
release the Company from any further
obligation under the SERP. The
Company further agrees to pay the
Executive immediately upon
termination, a cash payment (the
"Tax Gross-up") equal to the sum of
the following: (i) all taxes
(federal, state, local, and payroll
taxes) incurred and due and owing by
the Executive, arising from the cost
of the annuity purchased by the
Company to meet the requirements of
this Section 8(a)(5), and (ii) any
such taxes incurred and due and
owing with respect to the amount
paid in (i).
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(6) Continue to remain bound by the
terms of Section 12 hereof.
(b) The Executive shall remain bound by the terms of
Sections 9 and 13 hereof for a period of thirty six (36)
months after the expiration of the Agreement by its terms;
provided, that the Executive shall not be bound by the terms
of Section 9(b) after the termination of employment (other
than a termination of the Executive by the Company for Cause)
if such termination occurs after the expiration of this
Agreement by its terms.
9. Covenants as to Confidential Information and Competitive
Conduct. The Executive hereby acknowledges and agrees as follows: (i) this
Section 9 is necessary for the protection of the legitimate business interests
of the Company, (ii) the restrictions contained in this Section 9 with regard to
geographical scope, length of term and types of restricted activities are
reasonable; (iii) the Executive has received adequate and valuable new
consideration for entering into this Agreement, and (iv) the Executive's
expertise and capabilities are such that this obligation hereunder and the
enforcement hereof by injunction or otherwise will not adversely affect the
Executive's ability to earn a livelihood.
(a) Confidentiality of Information and Nondisclosure.
The Executive acknowledges and agrees that the Executive's
employment by the Company under this Agreement necessarily
involves knowledge of and access to confidential and
proprietary information pertaining to the business of the
Company and its subsidiaries. Accordingly, the Executive
agrees that at all times during the term of this Agreement and
at any time thereafter, the Executive will not, directly or
indirectly, without the express written approval of the
Company, unless directed by applicable legal authority
(including any court of competent jurisdiction, governmental
agency having supervisory authority over the business of the
Company or the subsidiaries, or any legislative or
administrative body having supervisory authority over the
business of the Company or its subsidiaries) having
jurisdiction over the Executive, disclose to or use, or
knowingly permit to be so disclosed or used, for the benefit
of himself, any person, corporation or other entity other than
the Company, (i) any information concerning any financial
matters, customer relationships, competitive status, supplier
matters, internal organizational matters, current or future
plans, or other business affairs of or relating to the Company
or its subsidiaries, (ii) any management, operational, trade,
technical or other secrets or any other proprietary
information or other data of the Company or its subsidiaries,
or (iii) any other information related to the Company or its
subsidiaries or which the Executive should reasonably believe
will be damaging to the Company or its subsidiaries which has
not been published and is not generally known outside of the
Company. The Executive acknowledges that all of the foregoing
constitutes confidential and proprietary information, which is
the exclusive property of the Company.
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(b) Restrictive Covenant. During the term of, and for
a period of one (1) year (the "Restrictive Period") after the
termination of the Executive's employment hereunder for any
reason (other than a termination of the Executive hereunder
pursuant to Section 5(a), 5(b) or 5(e), hereof), the Executive
shall not render, directly, or indirectly, services to any
person, firm, corporation, association or other entity which
conducts the same or similar business as the Company or its
subsidiaries at the date of the Executive's termination of
employment hereunder within the states in which the Company or
any of its subsidiaries is then licensed and doing business at
the date of the Executive's termination of employment
hereunder without the prior written consent of the Board of
Directors, which may be withheld in its discretion. In the
event the Executive violates any of the provisions contained
in this Section 9(b) hereof, the Restrictive Period shall be
increased by the period of time from the commencement by the
Executive of any violation until such violation has been cured
to the satisfaction of the Company. The Executive further
agrees that at no time during the Restrictive Period will the
Executive attempt to directly or indirectly solicit or hire
employees of Company or its subsidiaries or induce any of them
to terminate their employment with the Company or any of the
subsidiaries. Notwithstanding the foregoing, the performance
by the Executive of rights and duties under an agency
agreement with the Company shall not constitute a breach of
this Section 9(b).
(c) Company Remedies. The Executive acknowledges and
agrees that any breach of this Section 9 will result in
immediate and irreparable harm to the Company, and that the
Company cannot be reasonably or adequately compensated by
damages in an action at law. In the event of a breach by the
Executive of the provisions of this Section 9, the Company
shall be entitled, to the extent permitted by law, immediately
to cease to pay or provide the Executive or the Executive's
dependents any compensation or benefit being, or to be, paid
or provided to the Executive pursuant to Section 3, Section 6
or Section 8 of this Agreement, and also to obtain immediate
injunctive relief restraining the Executive from conduct in
breach of the covenants contained in this Section 9. Nothing
herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach,
including the recovery of damages from the Executive.
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10. Resolution of Differences Over Breaches of Agreement.
Except as otherwise provided herein, in the event of any controversy, dispute or
claim arising out of, or relating to, this Agreement, or the breach thereof, or
arising out of any other matter relating to the Executive's employment with the
Company, the parties may seek recourse only for temporary or preliminary
injunctive relief to the courts having jurisdiction thereof and if any relief
other than injunctive relief is sought, the Company and the Executive agree that
such underlying controversy, dispute or claim shall be settled by arbitration
conducted in Erie, Pennsylvania in accordance with this Section 10 and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA").
The matter shall be heard and decided, and awards rendered by a panel of three
(3) arbitrators (the "Arbitration Panel"). The Company and the Executive shall
each select one arbitrator from the AAA National Panel of Commercial Arbitrators
(the "Commercial Panel") and AAA shall select a third arbitrator from the
Commercial Panel. The award rendered by the Arbitration Panel shall be final and
binding as between the parties hereto and their heirs, executors,
administrators, successors and assigns, and judgment on the award may be entered
by any court having jurisdiction thereof. Except as provided in Section 11
hereof, each party shall bear sole responsibility for all expenses and costs
incurred by such party in connection with the resolution of any controversy,
dispute or claim in accordance with this Section 10.
11. Payment of Executive's Legal Fees. If the Executive is
required to bring any action to enforce rights or to collect moneys due under
this Agreement, the Company shall pay to the Executive the fees and expenses
incurred by the Executive in bringing and pursuing such action if the Executive
is successful, in whole or in part, on the merits or otherwise (including by way
of a settlement involving a payment of money by the Company to the Executive),
in such action. The Company shall pay such fees and expenses in advance of the
final disposition of such action upon receipt of an undertaking from the
Executive to repay to the Company such advances if the Executive is not
ultimately successful, in whole or in part, on the merits or otherwise, in such
action.
12. Severance Pay upon Termination of Employment after
Expiration of the Agreement. Notwithstanding the expiration of this Agreement by
its terms and notwithstanding the terms of any corporate severance policy then
in effect and applicable to the Executive, if the employment of the Executive is
terminated without Cause by the Company, by the Executive for Good Reason or
upon the expiration of the term of the office(s) to which the Executive has been
elected or appointed as set forth in Section 1 hereof (for reasons other than
for Cause), in any case, within thirty-six (36) months after the expiration of
this Agreement by its terms, then (i) the Company shall pay to the Executive
severance compensation in an amount equal to two (2) times the Executive's
Covered Compensation as determined on the date of such termination, and (ii) the
Executive and the Executive's eligible dependents shall be entitled to
continuing coverage under the Company's then-existing group health plans
(including medical, dental, prescription drug and vision plans, if any) for a
period of two (2) years after the date of the termination of the Executive's
employment, to the extent not prohibited by law and subject to the terms of such
plans including provisions as to deductibles and copayments and changes in
levels of coverage that are generally applicable to employees. The payment to
the Executive by the Company pursuant to subsection (i) of the preceding
sentence shall be paid in a lump sum unless the Executive elects, and so
notifies the Company in writing prior to the Executive's termination of
employment, to receive such payment in two (2) equal annual installments. The
lump sum or first payment, as the case may be, shall be paid within thirty (30)
days after the date of termination of the Executive's employment.
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13. Release. The Executive hereby acknowledges and agrees that
neither the Company nor any of its representatives or agents will be obligated
to pay any compensation or benefit which the Executive has a right to be paid or
provided to the Executive or the Executive's dependents pursuant to Section 6,
Section 8 or Section 12 of this Agreement, unless the Executive, if requested by
the Company in its sole discretion, executes a release in a form reasonably
acceptable to the Company, which releases any and all claims the Executive has
or may have against the Company or its subsidiaries, agents, officers,
directors, successors or assigns.
14. Waiver. The waiver by a party hereto of any breach by the
other party hereto of any provision of this Agreement shall not operate or be
construed as a waiver of any other or subsequent breach by a party hereto.
15. Assignment. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and the Company
shall be obligated to require any successor to expressly acknowledge and assume
its obligations hereunder. This Agreement shall inure to the extent provided
hereunder to the benefit of and be enforceable by the Executive or the
Executive's legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. The Executive may not delegate any of the
Executive's duties, responsibilities, obligations or positions hereunder to any
person and any such purported delegation shall be void and of no force and
effect.
16. Notices. Any notices required or permitted to be given
under this Agreement shall be sufficient if in writing, and if personally
delivered or when sent by first class certified or registered mail, postage
prepaid, return receipt requested--in the case of the Executive, to his
residence address as set forth below, and in the case of the Company, to the
address of its principal place of business as set forth below, to the attention
of the Chairman of the Board, or in case the Executive is the Chairman of the
Board, to the Chairman of the Compensation Committee of the Board -- or to such
other person or at such other address with respect to each party as such party
shall notify the other in writing.
17. Construction of Agreement.
(a) Governing Law. This Agreement shall be
governed by and construed under the laws of the Commonwealth
of Pennsylvania.
(b) Severability. In the event that any one or more
of the provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
(c) Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience of
reference only and shall not constitute a part of this
Agreement.
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18. Entire Agreement. This Agreement contains the entire
agreement of the parties concerning the Executive's employment and all promises,
representations, understandings, arrangements and prior agreements on such
subject are merged herein and superseded hereby, including the Employment
Agreement effective November 20, 1995 which is expressly superseded hereby. The
provisions of this Agreement may not be amended, modified, repealed, waived,
extended or discharged except by an agreement in writing signed by the party
against whom enforcement of any amendment, modification, repeal, waiver,
extension or discharge is sought. No person acting other than pursuant to a
resolution of the Board of Directors or the Committee shall have authority on
behalf of the Company to agree to amend, modify, repeal, waive, extend or
discharge any provision of this Agreement or anything in reference thereto or to
exercise any of the Company's rights to terminate or to fail to extend this
Agreement.
60
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
officers thereunto duly authorized, and the Executive has hereunto set his hand
all as of the day and year first above written.
ATTEST: ERIE INDEMNITY COMPANY
/s/ J. R. Xxx Xxxxxx /s/ F. Xxxxxxx Xxxx
____________________________ By:__________________________________
J. R. Van Gorder F. Xxxxxxx Xxxx
Secretary Chairman of the Board
WITNESS:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxx
____________________________ _____________________________________(SEAL)
Xxxxxxx X. Xxxxx
000 Xxxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
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