AGREEMENT
EXHIBIT 10.17
THIS AGREEMENT (“Agreement”) made as of the 21st day of December, 2006, by and
between LEBANON MUTUAL INSURANCE COMPANY, a Pennsylvania corporation (the “Company”), Xxxx X.
Xxxxxxxx, an individual (the “Executive”).
WITNESSETH:
WHEREAS, the Executive is presently employed by the Company in a position of substantial
responsibility; and
WHEREAS, the Company desires to induce the Executive to remain in the employ of the Company on
an impartial and objective basis in the event of a transaction pursuant to which a Change in
Control (as defined in Section 2(c)) of the Company occurs.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Term of Agreement.
(a) In General. Except as otherwise provided herein, the term of this
Agreement will be for a period commencing on the date of this Agreement and ending on the
date that is 90 days following the delivery of written notice of termination of this
Agreement to the Executive by the Company. Notwithstanding the preceding sentence,
following a Change in Control, the term of this Agreement (if this Agreement is in effect
on the date of the Change in Control) shall continue for a period of one year following the
effective date of the Change in Control.
(b) Termination for Cause. Notwithstanding the provisions of Section 1(a),
this Agreement will terminate automatically upon termination of the Executive’s employment
for Cause. As used in this Agreement, the term “Cause” means, at any time, termination
following (A) the Executive’s conviction of, or plea of guilty or nolo contendere to, a
crime classified as a felony within the relevant jurisdiction, (B) the Executive’s willful
breach of his fiduciary duty involving personal profit, or engagement in an act of personal
dishonesty, in the performance of his duties, or (C) the Executive’s willful failure to
follow the lawful instructions, with respect to material matters, of the Company’s board of
directors (“Board”) or his supervisor after his receipt of written notice of such
instructions, other than a failure resulting from his incapacity because of physical or
mental illness. If the Executive’s employment is terminated for Cause, his rights under
this Agreement will cease as of the effective date of such termination.
(c) Voluntary Termination, Retirement, or Death. Notwithstanding the
provisions of Section 1(a), this Agreement will terminate automatically upon the
voluntary termination of the Executive’s employment (other than in accordance with
Section 2), his retirement at any age or his death. In any such event, the Executive’s
rights under this Agreement will cease as of the effective date of such termination;
provided, however, that if the Executive dies after a Notice of
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Termination (as defined in
Section 2(b)) is delivered by him in accordance with such section, the payments described
in Section 3 will nonetheless be made to the person or persons determined pursuant to
Section 9(b).
(d) Disability. Notwithstanding the provisions of Section 1(a), this
Agreement will terminate automatically upon the termination of the Executive’s employment
by reason of his Disability. In such event, the Executive’s rights under this Agreement
will cease as of the effective date of such termination; provided, however, that if the
Executive becomes disabled after a Notice of Termination is delivered by him in accordance
with Section 2(b), he will nonetheless be entitled to receive the payments described in
Section 3. As used in this Agreement, the term “Disability” has the meaning ascribed to
such term in Proposed Treasury Regulation Section 1.409A-3(g)(4)(i)(A), as the same may
hereafter be amended or made final.
2. Termination Following a Change in Control.
(a) Events Giving Right To Terminate For Good Reason. If a Change in Control
occurs and, concurrently therewith or thereafter during the term of this Agreement, an
event constituting Good Reason also occurs with respect to the Executive, he may terminate
his employment in accordance with the provisions of Section 2(b) and, thereupon, will
become entitled to the payments described in Section 3. As used in this Agreement, the term
“Good Reason” means any of the following events:
(i) the involuntary termination of the Executive, other than an involuntary
termination permitted in Section 1(b) or (d);
(ii) any reduction in the Executive’s title, responsibility (including reporting
responsibility) or authority as in effect immediately prior to the Change in Control;
provided, however, that the assignment of the Executive to a position with a
reasonably similar title, responsibility and authority will not constitute an event
of Good Reason if the Executive’s actual or targeted compensation in such new
position is not less than the Executive’s actual and targeted compensation
immediately prior to the Change in Control;
(iii) any assignment to the Executive of duties inconsistent with his position
immediately prior to the Change in Control, except for an assignment of duties
consistent with a position permitted in Clause (ii);
(iv) any reassignment of the Executive to a principal place of employment which
requires him to move his principal residence and is more
than 50 miles from the Company’s principal executive office on the date of the
Change in Control;
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(v) any reduction in the Executive’s annual base salary as in effect on the date
of the Change in Control;
(vi) any failure by the Company to provide the Executive with benefits at least
as favorable as those enjoyed by him under any of the pension, life insurance,
medical, health and accident, disability or other employee benefit plans of the
Company in which the Executive participated on the date of the Change in Control, or
the taking of action that would materially reduce any of such benefits, unless such
reduction is part of a reduction applicable in each case to all or substantially all
of the participating employees; or
(vii) any other material breach of this Agreement on the part of the Company.
(b) Notice of Termination. Upon the occurrence of a Change in Control and an
event of Good Reason, the Executive may, within 90 days of the occurrence of any such
event, resign from employment by a notice in writing (“Notice of Termination”) delivered to
the Company, whereupon he will become entitled to the payments described in Section 3. In
the case of a termination described in Clause (i) of Section 2(a), the Executive shall
confirm his involuntary termination, in writing, within 90 days of the date of such
termination, and such confirmation will be deemed a Notice of Termination.
(c) Change in Control Defined. As used in this Agreement, the term “Change in
Control” has the meaning ascribed to the terms “change in the ownership or effective
control of the corporation” or “change in the ownership of a substantial portion of the
assets of the corporation,” in regulations promulgated under, or otherwise within the
meaning of, Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended (the
“Code”); provided, however, that neither the conversion nor the demutualization of the
Company, without more, shall be deemed a Change in Control.
3. Rights in the Event of Certain Terminations Following Change in Control. In the
event the Executive validly and timely delivers a Notice of Termination to the Company, he will be
entitled to receive the following payments:
(a) Over a period of 12 months following the date of termination of employment, the
Executive shall be paid an amount equal to his Highest Annual Compensation.
(i) For purposes of this Agreement, the term “Highest Annual Compensation” means
a dollar amount equal to the highest of the
Executive’s annualized base salary amount payable to him by the Company during
the term of this Agreement.
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(ii) The amount required to be paid to the Executive under Section 3(a)(i) shall
be paid in equal monthly installments, beginning 30 days following the date of
termination of employment.
(b) The provisions of this Section shall be modified to the extent required by
Section 19.
4. Legal Expenses. If the Executive obtains a judgment or settlement which enforces a
right or benefit under this Agreement, the Company shall pay to the Executive all reasonable legal
fees and expenses incurred by him in seeking to obtain or enforce such right or benefit.
5. Notices. Any notice required or permitted to be given under this Agreement shall be
deemed properly given if in writing and when mailed by express, registered or certified mail,
postage prepaid with return receipt requested, to the residence of the Executive, in the case of
notices to the Executive, and to the principal office of the Company, in the case of notices to the
Company. Either party may change his or its address for such notification by giving written notice
to such effect to the other party.
6. Waiver. No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive
and an executive officer of the Company, such officer being specifically designated by the Board
for such purpose. No waiver by any party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
7. Assignment. This Agreement shall not be assignable by any party hereto, except by
the Company to any successor in interest to the business of the Company.
8. Entire Agreement. This Agreement contains the entire agreement of the parties
relating to the subject matter of this Agreement and supersedes any prior agreement of the parties
relating to the same.
9. Successors Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession had taken place; provided, however, that no such assumption shall be required in
the case of the conversion or demutualization of the Company. Failure by the Company to
obtain
such assumption and agreement prior to the effectiveness of any such succession shall
constitute a material breach of this Agreement. As used in this Agreement,
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the “Company”
shall mean the Company as hereinbefore defined and any successor to the business and/or
assets of the Company as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(b) Subject to the provisions of Section 17, this Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees.
10. Continuation of Certain Provisions. Any termination of the Executive’s employment
under this Agreement or of this Agreement will not affect the benefit provisions of Section 3 or 4,
which will, if relevant, survive any such termination and remain in full force and effect in
accordance with their respective terms.
11. Other Rights. Nothing herein will be construed as limiting, restricting or
eliminating any rights the Executive may have under any plan, contract or arrangement to which he
is a party or in which he is a vested participant; provided, however, that any termination payments
required hereunder will be in lieu of any severance benefits to which he may be entitled under a
severance plan or arrangement of the Company; and provided further, that if the benefits under any
such plan or arrangement may not legally be eliminated, then the payments hereunder will be
correspondingly reduced in such manner as the Board may determine and is consistent with the
requirements of Code Section 409A.
12. No Mitigation or Offset. The Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking employment or otherwise.
Further, there shall be no offset against any amount payable or provided hereunder following the
Executive’s termination of employment solely by reason of his employment with another employer.
13. Severability. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
14. Applicable Law. This Agreement shall be governed by and construed in accordance
with the law (but not the law of conflict of laws) of the Commonwealth of Pennsylvania.
15. Headings. The headings of the sections of this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
16. Number. Words used herein in the singular form shall be construed as being used
in the plural form, as the context requires, and vice versa.
17. Payments By Reason of Death. In the event any amounts becomes payable hereunder
following the death of the Executive, such payments shall be made to his surviving spouse, if any,
or if none, to his estate.
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18. Tax Withholding. All payments made hereunder shall be subject to such federal,
state and local tax withholding as may be required by law.
19. Code Section 409A. Notwithstanding anything herein to the contrary, the
provisions of this Agreement are subject to the provisions of Code Section 409A. Without limiting
the generality of the foregoing, in the event any payment is or becomes subject to Code
Section 409A(a)(2)(B)(i), such payment shall be deferred, without interest, until the expiration of
the relevant six-month period, accumulated with all other deferred payments, and paid on the day
following such six-month period. All other remaining payments shall be made as otherwise required.
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be executed, as
of the date first above written.
LEBANON MUTUAL INSURANCE COMPANY
| By | ||||||
| President/Secretary | ||||||
| Attest: | ||||||
[CORPORATE SEAL]
|
(“Company”) | |||||
Witness: |
| (SEAL) | ||||||
| (“Executive”) |
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AMENDMENT
TO CHANGE IN CONTROL AGREEMENT
AGREEMENT made this ___ day of 2008, by and between LEBANON MUTUAL INSURANCE
COMPANY, a Pennsylvania corporation (the “Company”), and XXXX X. XXXXXXXX, an individual (the
“Executive”).
WITNESSETH:
WHEREAS, the Company and the Executive entered into an agreement effective December 21, 2006,
relating, among other things, to the Executive’s rights and obligations in the event of a Change in
Control of the Company (the “Change in Control Agreement”); and
WHEREAS, the Company and the Executive desire to amend the Change in Control Agreement to
comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), by
executing this document (the “Amendment”).
NOW, THEREFORE, the parties, intending to be legally bound hereby, further agree as follows:
1. Section (3)(b) of the Change in Control Agreement is amended and restated in its entirety
to read as follows—
(b) Notwithstanding the foregoing, if the Executive is a “specified
employee” (as defined in Code Section 409A(a)(2)(B)(i) and the
underlying regulations), all distributions under this Section shall
be subject to a delay of six months following the Executive’s
termination of employment. The initial payment shall be made as soon
as administratively feasible after the first day of the seventh
month that follows the month in which the termination of employment
occurs. The initial payment shall include any payments that would
otherwise have been paid under this Section during the six month
delay.
2. A new Section 3(c) is added to the Change in Control Agreement reading as follows—
(c) Notwithstanding the foregoing, and anything herein to the
contrary, the receipt of any benefits under this Section 3 shall be
subject to satisfaction of the condition precedent that the
Executive undergo a “separation from service” within the meaning of
Treas. Reg. § 1.409A-1(h) or any successor thereto.
3. Section 19 of the Change in Control Agreement is deleted in its entirety.
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IN WITNESS WHEREOF, the parties have executed this Amendment, or caused it to
be executed, on , 2008.
| LEBANON MUTUAL INSURANCE COMPANY | ||||||
| By | ||||||
| Date: , 2008 | ||||||
| Attest | ||||||
| Date: , 2008 | ||||||
| |
||||||
| Xxxx X. Xxxxxxxx |
||||||
| Date: , 2008 | ||||||
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