EXHIBIT 10.1
FORM OF CHANGE IN CONTROL AGREEMENT
The agreement contained below has the same form as separate agreements between
the Company and certain of its officers except the following differences apply
to the contract between the Company and (A) the Chief Executive Officer, in
which: (1) the factor in Section 4(c)(ii)(b) is 2.999 instead of 2.000; and (2)
the period in (i) the last proviso to Section 1, (ii) the lead-in paragraph to
Section 3, (iii) the lead-in paragraph to Section 3(c), and (iv) Section 4 (c)
(vii), is thirty-six (36) months instead of twenty-four months, (3) the Initial
Expiration Date is December 31, 2009, instead of December 31, 2007, and (4) in
Section 1, the date January 1, 2008 is January 1, 2010.; and (B) its Senior Vice
Presidents for Field Operations and for Personal Lines, in which: (1) the
factor in Section 4(c)(ii)(b) is 1.000 instead of 2.000; and (2) the period in
(i) the last proviso to Section 1, (ii) the lead-in paragraph to Section 3,
(iii) the lead-in paragraph to Section 3(c), and (iv) Section 4 (c) (vii), is
twelve (12) months instead of twenty-four months, The contract with the
Company's Senior Vice President-Personal Lines also provides for a continuation
in salary and benefits for twelve months following any termination of his
employment by the Company, other than for cause, occurring prior to December 31,
2006, unless a change in control has previously occurred.
Harleysville Insurance
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
xxx.xxxxxxxxxxxxxxxxx.xxx
[Name of Executive]
[Title]
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
RE: CHANGE IN CONTROL AGREEMENT
Dear _______:
Harleysville Group Inc. ("Employer") considers the establishment and
maintenance of a sound and vital management team essential to protecting and
enhancing the best interests of it and its stockholders and those of its parent
company, Harleysville Mutual Insurance Company ("Parent") and the Parent's
policyholders. In this connection, the Employer recognizes that, as is the case
with many publicly held corporations, the possibility of a change in control of
the Employer exists and that such possibility and the uncertainty and questions
which it may raise among management personnel as to the effect of such change in
control on the Employer, may result in the departure or distraction of such
personnel to the detriment of the Employer, the Parent, the Employer's
stockholders and the Parent's policyholders. Accordingly, the Board of
Directors of the Employer ("Board") has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of the key members of the Employer's management, including yourself,
to their assigned duties without the distraction arising from the possibility
of a change in control.
In order to induce you to remain in the Employer's employ, this letter
agreement ("Agreement") sets forth the severance benefits which the Employer
agrees will be provided to you in the event your employment is terminated
subsequent to a "Change in Control" (as defined in Section 2) and under the
circumstances described below.
1. Term. This Agreement shall commence on January 1, 2005 and shall
continue in effect through December 31, 2007 (the "Initial Expiration Date");
provided, however, that commencing on January 1, 2008, and each January 1
thereafter, the term of this Agreement shall automatically be extended for one
additional year (each, an "Extended Expiration Date") unless, not later than
twelve (12) months prior to the Initial Expiration Date or any Extended
Expiration Date, as the case may be, the Employer shall have given notice that
it does not wish to extend this Agreement; provided, further, if a Change in
Control of the Employer shall have occurred during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control
occurred.
2. Change in Control.
For purposes of this Agreement, "Change in Control" of the Employer shall be
deemed to have occurred:
(a) if the "beneficial ownership" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of securities representing more than twenty
percent (20%) of the combined voting power of the Employer Voting Securities (as
herein defined) is acquired by any individual, entity or group (a "Person"),
other than the Parent, the Employer, any trustee or other fiduciary holding
securities under any employee benefit plan of the Employer or an affiliate
thereof, or any corporation owned, directly or indirectly, by the stockholders
of the Employer in substantially the same proportions as their ownership of
stock of the Employer (for purposes of this Agreement, "Employer Voting
Securities" shall mean the then outstanding voting securities of the Employer
entitled to vote generally in the election of directors); provided, however,
that the following shall not constitute a
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Change in Control under this paragraph (a) : (i) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of paragraph (c) of
this Section 2; (ii) any acquisition of the Employer Voting Securities from the
Parent pursuant to a Business Combination (as herein defined) or otherwise, if
(x) the acquiring or resulting entity is organized in the mutual form, and (y)
persons who were members of the Incumbent Board (as herein defined) of the
Parent immediately prior to such acquisition constitute at least two-thirds of
the members of the Board of Directors of the acquiring entity immediately
following such acquisition and (iii) any acquisition of voting securities from
the Employer or the Parent by a person engaged in business as an underwriter of
securities who acquires the shares through his participation in good faith in a
firm commitment underwriting registered under the Securities Act of 1933; and
(iv) any acquisition otherwise within the terms of this paragraph (a) during any
period in which Parent owns at least a majority of the combined voting power of
Employer Voting Securities (the "Parent Control Period"), but if such an
acquisition is made during a Parent Control Period by any Person and such Person
continues to hold more than 20% of the combined voting power of all Employer
Voting Securities on the first day following the termination of a Parent Control
Period, such acquisition will be deemed to have been first made on such date; or
(b) if, during any period of twenty-four (24) consecutive
months, individuals who, as of the beginning of such period, constitute the
Board of Directors of the Employer or the Parent, as the case may be (the
"Applicable Incumbent Board"), cease for any reason to constitute at least a
majority of the Board of Directors of the Employer or the Parent, as the case
may be; provided, however, that (x) any individual becoming a director of the
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Employer or the Parent, as the case may be, during such period whose election,
or nomination for election, was approved by a vote of at least a two-thirds of
the directors then comprising the Applicable Incumbent Board (other than in
connection with the settlement of a threatened proxy contest) shall be
considered as though such individual were a member of the Incumbent Board of
Directors of the Employer or the Parent, as the case may be, and (y) the
provisions of this paragraph (b) shall not be applicable to the composition of
the Board of Directors of Parent if Parent shall cease to own at least 20% of
the combined voting power of all Employer Voting Securities; or
(c) upon consummation by the Employer of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Employer or the acquisition of assets or stock of another
entity (a "Business Combination"), unless, in any such case, immediately
following such Business Combination the following three conditions are met: (i)
more than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of (x) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, a corporation which as a result of such
transaction owns the Employer or all or substantially all of the Employer's
assets either directly or through one or more subsidiaries (the "New Parent
Corporation"), is represented, in either such case, directly or indirectly, by
Employer Voting Securities outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such
Employer Voting Securities were converted pursuant to such Business
Combination), and such voting power is distributed among the holders thereof
in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Employer Voting Securities, and (ii) no Person
(excluding any employee benefit plan (or related trust) of the Employer or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 50% or more of the combined voting power of the then
outstanding voting securities eligible to elect directors of the New Parent
Corporation (or, if there is no New Parent Corporation, the Surviving
Corporation) except to the extent that such ownership of the Employer existed
prior to the Business Combination, and (iii) at least a majority of the members
of the board of directors of the New Parent Corporation (or, if there is no New
Parent Corporation, the Surviving Corporation) were members of the Board of
Directors of the Employer at the time of the execution of the initial
agreement, or the action of the Board, providing for such Business Combination;
or
(d) Parent affiliates with, or acquires by merger, a third
party and, as a consequence thereof, persons who were members of the Incumbent
Board of Parent immediately prior to such transaction cease to constitute at
least two-thirds of the directors of Parent following such transaction provided,
however, that this paragraph (d) shall not apply if immediately prior
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to such affiliation or merger, Parent does not own more than 20% of the
combined voting power of Employer Voting Securities; or
(e) upon approval by the stockholders of the Employer and all
necessary regulatory authorities of a complete liquidation or dissolution of the
Employer; or
(f) any other event shall occur that would be required to be
reported by the Employer in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act (or any provision successor thereto); or
(g) the Employer or Parent has entered into a management
agreement or similar arrangement pursuant to which an entity other than the
Employer or the Parent or the Boards of Directors or the executive officers and
management of the Employer or the Parent has the power to direct or cause the
direction of the management and policies of the Employer or the Parent;
provided, however, that this paragraph (g) shall not apply to Parent if,
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immediately prior to entering into any such management agreement or similar
arrangement, Parent does not own more than 20% of Employer Voting Securities.
3. Termination Following Change in Control. If any of the events described
in Section 2 hereof constituting a Change in Control shall occur during the term
hereof, you shall be entitled to the benefits provided in Section 4 hereof
upon the subsequent termination of your employment within twenty-four months
following such Change in Control unless such termination is (a) because of your
death or Retirement, (b) by the Employer for Cause , or (c) by you other than
for Good Reason, in accordance with the following:
(a) Disability; Retirement.
(i) If, as a result of your incapacity due to physical or mental illness,
you shall have been absent from your duties with the Employer on a full time
basis for six (6) consecutive months and within 30 days after written notice of
termination is given you shall not have returned to the full time performance of
your duties, the Employer may terminate this Agreement for "Disability."
(ii) Termination of your employment based on "Retirement" shall mean
termination in accordance with the Employer's retirement policy, including early
retirement, generally applicable to its salaried employees or in accordance with
any retirement arrangement established with your consent with respect to you.
(b) Cause. The Employer may terminate your employment for Cause.
Termination by the Employer of your employment for "Cause" shall mean
termination upon (A) the willful and continued failure by you to substantially
perform your duties with the Employer (other than any such failure resulting
from your incapacity due to physical or mental illness), or any such actual or
anticipated failure after the issuance of a Notice of Termination by you for
Good Reason, as such terms are defined in Subsections 3(d) and 3(c),
respectively, after a written demand specifically identifies the manner in which
the Board believes that you have not substantially performed your duties, or (B)
the willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
paragraph, no act or failure to act on your part shall be considered "willful"
unless done or omitted to
be done by you not in good faith and without reasonable belief that your action
or omission was in the best interest of the Employer. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board of a meeting of the Board called and held for the
purpose (after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, you were guilty of conduct set forth above and specifying
the particulars thereof in detail.
(c) Good Reason. You may terminate your employment for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean, within twenty four (24)
months following any Change in Control and without your express written consent:
(i) the assignment to you of any duties inconsistent with your positions,
duties, responsibilities and status with the Employer immediately prior to a
Change in Control or a change in your reporting responsibilities, titles or
offices as in effect immediately prior to a Change in Control, or any removal of
you from or any failure to re-elect you to any of such positions, except in
connection with the termination of your employment for Cause, Disability,
Retirement or by you other than for Good Reason or as a result of your death;
(ii) a reduction in your base salary under the Employer's Wage and Salary
Program in effect immediately prior to a Change in Control or as the same may be
increased from time to time thereafter;
(iii) a failure by the Employer (A) to continue its executive incentive
plans, as the same may be amended or modified from time to time but
substantially in the form in effect immediately prior to a Change in Control
("Program"), or failure by the Employer to continue you as a participant in the
Program on at least the basis in effect immediately preceding a Change in
Control, provided that the failure to continue any one or more plans
constituting the Program, or to continue you in any one or more plans shall not
constitute Good Reason as long as, after giving effect to any such changes, the
aggregate of the compensation which may be earned by you and the circumstances
under which such amounts may be earned are substantially comparable, taken as a
whole, as the Program, or (B) to pay you any installment of a previous award or
of deferred compensation, if any, under the Program or any deferred compensation
program in which you participated immediately prior to a Change in Control;
(iv) the Employer requiring you to be based anywhere other than within fifty
(50) miles of the office in Harleysville, Pennsylvania, except for required
travel on business to an extent substantially consistent with the business
travel obligations you experienced immediately preceding a Change in Control;
(v) the failure by the Employer to continue in effect any benefit or
compensation plan or arrangement, in which you are participating immediately
preceding Change in Control, the taking of any action by the Employer not
required by law which would adversely affect your participation in or materially
reduce your benefits under any of such plans or deprive you of any material
fringe benefit enjoyed by you at the time of the Change in Control or the
failure by the Employer to provide you with the number of paid vacation days,
holidays and personal days to which you are then entitled in accordance with the
Employer's normal leave policy in effect immediately preceding a Change in
Control; provided, however, that the failure to
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continue any plan or benefit or the taking of any action which adversely affects
your participation in, or materially reduces your benefits under any plan or
deprives you of any material fringe benefit shall not be Good Reason under this
Section 3(c)(v) if the failure to continue or other action applies equally to
all employees or executives covered by the plan or benefit.
(vi) the failure of the Employer to obtain the assumption of the agreement
to perform this Agreement by any successor as contemplated in Section 5 hereof;
or
(vii) any purported termination of your employment by the Employer which is
not effected pursuant to a Notice of Termination satisfying the requirements of
subparagraph (d) below (and, if applicable, subparagraph (b) above). Your
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination by the Employer pursuant to
subparagraphs (a) or (b), above, or by you pursuant to subparagraph (c), above,
shall be communicated by a written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth, in reasonable detail, the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall mean (A) if this
Agreement is terminated for Disability, 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30-day
period), (B) if your employment is terminated pursuant to subparagraph (c),
above, the date specified in the Notice of Termination and (C) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided that, if within 30 days after any Notice of
Termination is given, the party receiving such Notice of Termination gives
notice to the other party, other than in Bad Faith, that a dispute exists
concerning the termination and the party giving such Notice shall pursue his
claim diligently and in other than Bad Faith, the Date of Termination shall be
the date on which the dispute is finally resolved, either by mutual written
agreement of the parties, by a binding and final arbitration award or by a final
judgement, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected). As used
in this Agreement, "Bad Faith" shall mean that a dispute was asserted or
maintained by you (i) for an improper purpose, such as to harass or cause
unnecessary delay or needlessly increase the cost of resolution, or (ii) on a
basis not warranted by existing law or a non-frivolous argument for the
extension, modification, or reversal of existing law or the establishment of new
law, or (iii) in the absence of evidentiary support (unless evidentiary support
was reasonably likely to exist after investigation or discovery). Bad Faith
shall only be determined to exist for purposes of this Agreement if the
arbitrator selected pursuant to Section 10 hereof makes a specific finding
thereof in his award.
4. Compensation Upon Termination Or During Disability Following A Change In
Control.
(a) During any period following a Change in Control that you fail to perform
your duties hereunder as a result of incapacity due to physical or mental
illness, you shall continue to receive your full base salary at the rate then in
effect and any installments of deferred portions of awards under the Program
paid during such period until your employment is terminated pursuant to
paragraph 3(a) hereof. Thereafter, your benefits shall be determined in
accordance with the Employer's Long-Term Disability Plan, or any substitute plan
then in effect.
(b) If, following a Change in Control, you terminate your employment other
than for Good Reason or your employment shall be terminated for Cause, the
Employer shall pay you your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given plus all other
amounts to which you are entitled under any compensation plan, the annual
incentive plan, long-term incentive plan, or stock option plan of the Employer
at the time such payments are due and the Employer shall have no further
obligation to you.
(c) If, following a Change in Control, the Employer shall terminate your
employment other than pursuant to paragraph (a) or (b) hereof or if you
shall terminate your employment for Good Reason, then the Employer shall
pay to you as severance pay in a lump sum on the thirtieth day following the
Date of Termination, the following amounts:
(i) your full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given and an amount equal to the
amount, if any, of the deferred portion of any awards which have been awarded to
you pursuant to the Program but which have not yet been paid to you and the
amount of Deferred Compensation, if any, under the Program which has accrued to
your account; and
(ii) in lieu of any further salary payments to you for periods subsequent to
the Date of Termination, an amount equal to the product of (a) the higher of
your annual base salary in effect as of (i) the date of the Change in Control,
and (ii) the Date of Termination, plus the average target awards under any
annual incentive plan for the last three years, multiplied by (b) the number
2.000; and
(iii) in lieu of payments of any type under any long-term incentive plan,
and to the extent not covered by any other subsection of this Section 4(c), a
cash amount equal to the sum of the target bonuses, pro-rated on a
month-completed basis, for all long-term incentive plan periods in which you are
currently participating plus any incentive compensation which has been allocated
or awarded to you for a fiscal year or other measuring period preceding the Date
of Termination but has not yet been paid. If all or part of a target award is
comprised of shares of Employer's stock, the amount paid in cash shall be equal
to the fair market value of the stock at the beginning of the plan period; and
(iv) to the extent you may not legally exercise any stock options at the
time of Change of Control, then in lieu of shares of stock of the Company
otherwise issuable upon exercise of stock options ("Options"), if any, granted
to you under the Employer's Equity Incentive Plan or other plan then in effect
(which Options shall be cancelled upon the making of the payment referred to
below), you shall receive an amount in cash equal to the aggregate spread
between the exercise prices of all Options held by you and the higher of (a) the
highest closing price of the stock subject to the Options during the twelve
months immediately preceding the Date of Termination, or (b) the highest price
per share actually paid in connection with any Change in Control including,
without limitation, prices paid in any subsequent merger or combination with any
entity that acquires control (the higher price being hereinafter referred to as
the Termination Price"); and
(v) in the event that any payments made to you under this Agreement or
otherwise (the "Payments") are subject to the excise tax imposed by Section 4999
of the Internal Revenue Code (the "Excise Tax"), then the Employer shall pay you
an additional amount ("Gross Up") such that the net amount retained by you after
deduction of any Excise Tax on the Payments and any Federal, State and local
income taxes and Excise Tax upon the payments provided for by this Section
4(c)(v) shall be equal to the total value of the Payments at the time such
payments are to be made. For the avoidance of doubt, this Section 4(c) (v)
shall not provide you any additional amounts in respect of Federal, State, and
local income taxes payable by you on amounts payable to you under any other
section of this Agreement. For purposes of determining the amount of the Gross
Up, you shall be deemed to pay Federal, State and local income taxes at the
highest marginal rate of taxation in the calendar year in which the Payment is
to be made. State and local income taxes shall be determined based upon the
state and locality of your domicile on the Date of Termination. The
determination of whether such Excise Tax is payable, the amount thereof, and the
Gross Up shall be based upon the opinion of tax counsel selected by the Employer
and acceptable to you. If such opinion is not finally accepted by the IRS upon
audit, then appropriate adjustments shall be computed (without interest but with
Gross Up, if applicable) by such tax counsel based upon the final amount of the
Excise Tax so determined. The amount shall be paid by the appropriate party in
one lump cash sum within 30 days of such computation. Notwithstanding anything
to the contrary in this Section 4(c)(v), if the Payments would be subject to
excise tax pursuant to Section 4999 of the Internal Revenue Code (the "Code")
(or any similar federal or state excise tax), but would not be so subject if the
total of such Payments would be reduced by 10% or less, then such Payments shall
be reduced by the minimum amount necessary so as not to cause the Employer to
have paid an Excess Parachute Payment as defined in Section 280G(b)(1) of the
Code and so you will not be subject to Excise Tax pursuant to Section 4999 of
the Code. The calculation of any potential reduction pursuant to this paragraph
or any disputes related thereto shall be made as described above with respect to
the calculation of the Gross Up. In the event that the amount of any Payments
that would be payable to or for your benefit under this Agreement must be
modified or reduced to comply with this provision, you shall direct which
Payments are to be modified or reduced; provided, however, that no change in the
amount of any Payment or change in the timing of the Payment shall be made
without the consent of the Employer. In no event shall the total Payments be
reduced by more than 10% in order to avoid treatment as an Excess Parachute
Payment; and
(vi) the Employer shall pay all legal fees and expenses incurred by you as a
result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to obtain
or enforce any right or benefit provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the application of
Section 4999 of the Code to any payment or benefit hereunder). Reimbursement of
such legal fees and expenses shall be made on a regular and periodic basis by
the Employer upon your presentation to the Employer of a statement of such fees
and expenses prepared by your counsel under standard and customary methods; and
(vii) the Employer shall maintain in full force and effect, for your
continued benefit for twenty-four (24) months after the Date of Termination, all
employee health and welfare benefit plans, programs or arrangements in which you
were entitled to participate immediately prior to the Date of Termination,
including, without limitation, medical and dental, life, disability, accident
and death insurance plans, provided your continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that your participation in any such plan or program is barred, the Employer
shall arrange to provide you with benefits substantially similar to those which
you would have been entitled to receive under such plans and programs. Except
for any insurance policy used by the Employer to fund any Rabbi Trust, at the
end of the period of coverage, you shall have the option to have assigned to you
at no cost and with no apportionment of prepaid premiums, any assignable
insurance policy owned by the Employer immediately preceding the Change in
Control; and
(d) You shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you or benefits including retirement benefits
provided to you as the result of employment by another employer after the Date
of Termination or otherwise.
(e) In addition to all other amounts payable to you under Section 4, and to
the extent not payable by reason of the other provisions hereof, you shall be
entitled to receive all benefits which have accrued through the Date of
Termination and are payable to you under the Extra Compensation Plan, the
Supplemental Retirement Plan, the Pension Plan, the Non-Qualified Deferred
Compensation Plan and any other plan or agreement relating to retirement
benefits.
5. Successors' Binding Agreement.
(a) The Employer 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 Employer, by agreement in form and substance
reasonably satisfactory to you, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform it if no such succession had taken place. The Employer will
also obtain agreement from such successor that it will not exercise its
non-renewal option at any time within one year from the date of the Change in
Control. Failure of the Employer to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Employer in the same amount and on
the same terms as you would be entitled hereunder if you terminated your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Employer" shall mean
the Employer as hereinbefore defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 5 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amounts would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee, or other designee or, if there
be no such designee, to your estate.
6. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Employer shall be directed to the attention of the
Corporate Secretary or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
7. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be authorized by the Board.
No waiver by either 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
provision or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in the Agreement. This
Agreement supersedes, in all respects, the Employment Agreement between the
Employer and you dated July 1, 1999; such Employment Agreement shall be
terminated and of no further force or effect effective the commencement date
hereof; and from and after the commencement date hereof you irrevocably waive
all rights under such Employment Agreement or arising therefrom. It is intended
that the benefits payable hereunder shall be considered paid to you for your
past services to the Employer and continuing services from the date hereof. Any
payment provided for hereunder shall be paid net of any applicable withholding
required under Federal, State and local law. No termination of this Agreement
shall terminate the Employer's obligation to complete the payments of all
amounts and benefits to which you became entitled, by operation of the
provisions hereof, prior to expiration hereof. This is not an employment
agreement; you remain an employee at will; in the event your employment is
terminated prior to a Change in Control for any reason or no reason, no amounts
are payable to you by reason of this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
substantive law of the Commonwealth of Pennsylvania.
8. Validity. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity of enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration before a single
arbitrator in the Commonwealth of Pennsylvania in accordance with the Commercial
Rules of the American Arbitration Association then in effect.
Notwithstanding the pendancy of any such dispute or controversy, the Employer
will continue to pay your full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, base salary and
installments under the Program) and, to the extent permitted by law, continue
you as a participant in all compensation, benefits and insurance plans in which
you were participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with paragraph 3(e) hereof.
Amounts paid under the previous sentence shall be offset against, and shall
reduce, any other amounts due under this Agreement. If the Employer is
successful in the arbitration and the arbitrator makes a specific finding that
the controversy was commenced or maintained in Bad Faith, then all amounts paid
to you pursuant to Section 4(c)(vi) and the second sentence of this Section 10
shall be repaid by you to the Employer within thirty (30) days of the award.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination during
pendancy of any dispute or controversy arising under or in connection with this
Agreement.
Very truly yours,
HARLEYSVILLE GROUP, INC.
By /s/Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Chief Executive Officer
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NAME OF EMPLOYEE
AGREED TO THIS _______________ DAY
OF __________________________________
