EXHIBIT 10.11 - EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") made effective as of the 9th day of May,
2002 (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. XXXXXX (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 May 8, 2006, 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 May 8, 2006.
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
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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.
(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
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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.
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.
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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;
(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
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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;
(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
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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.
(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
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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;
(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
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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).
(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
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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.
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;
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(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 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
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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).
(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
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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.
(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
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other remedies available to it for such breach, including the recovery of
damages from the Executive.
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
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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.
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.
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(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.
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.
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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
--------------------------- -------------------------------
J.R. Van Gorder F. Xxxxxxx Xxxx
Secretary Chairman of the Board
WITNESS:
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
--------------------------- -------------------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
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