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Exhibit 10.7
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of October, 1998, by and between
MERCER MUTUAL INSURANCE COMPANY, a Pennsylvania corporation, XXXXXX INSURANCE
GROUP, INC., a Pennsylvania corporation, and XXXX X. XXXXXXXX.
Mercer Mutual Insurance Company and Xxxxxx Insurance Group, Inc. both
desire to employ Xx. Xxxxxxxx, and Xx. Xxxxxxxx is willing to serve Mercer
Mutual Insurance Company and Xxxxxx Group, Inc. on the terms and conditions
herein provided.
In order to effect the foregoing, the parties hereto desire to enter
into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS AND SPECIAL PROVISIONS. Each capitalized word and term
used herein shall have the meaning ascribed to it in the glossary appended
hereto, unless the context in which such word or term is used otherwise clearly
requires. Such glossary is incorporated herein by reference and made a part
hereof. In addition, until such time as Xxxxxx converts from mutual to stock
form and the Company acquires all of the common stock, the provisions set forth
at Appendix 1 shall apply, notwithstanding anything in this Agreement to the
contrary.
2. EMPLOYMENT. Mercer hereby agrees to employ the Executive, and the
Executive hereby agrees to serve Mercer, on the terms and conditions set forth
herein.
3. TERM OF AGREEMENT. The Executive's employment under this Agreement
shall commence on the date hereof and, except as otherwise provided herein,
shall continue until October 1, 2001; provided, however, that commencing on
October 1, 1999 and each October 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year beyond the term otherwise
established unless, prior to such October 1st date, Mercer shall not have given
a Notice of Extension.
4. POSITION AND DUTIES. The Executive shall serve as Vice President of
Mercer and the Company, and he shall have such responsibilities, duties and
authority as may, from time to time, be generally associated with such
positions. In addition, the Executive shall serve in such capacity, with respect
to each Subsidiary or affiliated company, as the Board of Directors of each such
Subsidiary or affiliated company shall designate from time to time. During the
term of this Agreement, he shall devote substantially all of his working time
and efforts to the business
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and affairs of Mercer, the Subsidiaries and affiliated companies; provided,
however, that nothing herein shall be construed as precluding him from devoting
a reasonable amount of time to civic, charitable, trade association, and similar
activities, at least to the extent he is presently devoting time.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE COMPENSATION. During the period of the Executive's
employment hereunder, Mercer shall pay to him annual base compensation
of $110,000. The Board(s) of Directors of Mercer shall periodically
review the Executive's employment performance, in accordance with
policies generally in effect from time to time, for possible merit or
cost-of-living increases in such base compensation. Except for a
reduction which is proportionate to a company-wide reduction in
executive pay, the annual base compensation paid to the Executive in
any period shall not be less than the annual base compensation paid to
him in any prior period. The frequency and manner of payment of such
base compensation shall be in accordance with Xxxxxx'x executive
payroll practices from time to time in effect. Nothing herein shall be
construed as precluding the Executive from entering into any salary
reduction or deferral plan or arrangement during the term of this
Agreement; provided, however, that his base compensation shall be
determined without regard to any such salary reduction or deferral for
purposes of calculating the amount of any compensation and benefits to
which he or his surviving spouse may be entitled under Paragraph 6, 7,
10, or 11 following his termination of employment. The amounts set
forth in the first sentence of this subparagraph shall be pro rated to
the extent such period is less than a year.
(b) INCENTIVE COMPENSATION. During the period of the
Executive's employment hereunder, he shall be entitled to participate
in all incentive plans, stock option plans, stock appreciation rights
plans, and similar arrangements maintained by Mercer for executive
officers on a basis and at award levels consistent and commensurate
with his position and duties hereunder.
(c) EMPLOYEE BENEFIT PLANS AND OTHER PLANS OR ARRANGEMENTS.
The Executive shall be entitled to participate in all Employee Benefit
Plans of Mercer on the same basis as other executive officers of
Mercer. In addition, he shall be entitled to participate in and enjoy
any other plans and arrangements which provide for sick leave,
vacation, sabbatical, or personal days, company-provided automobile,
club memberships and dues, education payment or reimbursement,
business-related seminars, and similar fringe benefits provided to or
for the executive officers of Mercer from time to time, but at least
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to the extent he is presently entitled to participate in and enjoy
such plans and arrangements.
(d) EXPENSES. During the period of the Executive's employment
hereunder, he shall be entitled to receive prompt reimbursement for all
reasonable and customary expenses, including transportation expenses,
incurred by him in performing services hereunder in accordance with the
general policies and procedures established by Mercer.
6. TERMINATION BY REASON OF DISABILITY.
(a) IN GENERAL. In the event the Executive becomes unable to
perform his duties on a full-time basis by reason of the occurrence of
his Disability and, within 30 days after a Notice of Termination is
given, he shall not have returned to the full-time performance of such
duties, his employment may be terminated by Mercer.
(b) COMPENSATION AND BENEFITS. In the event of the termination
of the Executive's employment under Subparagraph (a), Mercer shall pay
or provide the compensation and benefits set forth below:
(1) The Executive shall be paid an amount per annum
equal to the greater of (i) his highest base compensation
received during one of the two calendar years immediately
preceding the calendar year in which the Date of Termination
occurs, or (ii) his base compensation in effect immediately
prior to the Date of Termination (or prior to any reduction
which entitled him to terminate his employment for Good
Reason) for one year beginning with such Date of Termination.
The frequency and manner of payment of such amounts shall be
in accordance with Xxxxxx'x executive payroll practices from
time to time in effect.
(2) The Executive shall be paid an amount equal to
the higher of the aggregate bonus(es) paid to him with respect
to one of the two years immediately preceding the year in
which the Date of Termination occurs. Such amount shall be
paid to him in cash on each of the first and second
anniversary dates of the Date of Termination.
(3) The Executive shall be paid an amount equal to
the highest annual contribution made on his behalf (other than
his own salary reduction contributions) to each tax-qualified
and non-qualified Defined Contribution Plan of Mercer with
respect to the year in which the Date of Termination occurs or
one of the two years immediately preceding such year. The
amount separately determined for each such plan shall be
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aggregated and shall be paid to him in cash on the first
anniversary date of the Date of Termination.
(4) The Executive shall accrue benefits equal to the
excess of (i) the aggregate retirement benefits he would have
received under the terms of each tax-qualified and
non-qualified Defined Benefit Plan of Mercer as in effect
immediately prior to the Date of Termination had he (A)
continued to be employed for one more year, and (B) received
(on a pro rated basis, as appropriate) the greater of (I) the
highest compensation taken into account under each such plan
with respect to one of the two years immediately preceding the
year in which the Date of Termination occurs, or (II) his
annualized base compensation in effect immediately prior to
the Date of Termination (or prior to any reduction which
entitled him to terminate his employment for Good Reason),
over (ii) the retirement benefits he actually receives under
such plans. The frequency, manner and extent of payment of
such benefits shall be consistent with the terms of the plans
to which they relate and any elections made thereunder.
(5) The Executive and his eligible dependents shall
be entitled to continue to participate at the same aggregate
benefit levels, for one year and at no out-of-pocket or tax
cost to him, in the Welfare Benefit Plans in which he was a
participant immediately prior to the Date of Termination, to
the extent permitted under the terms of such plans and
applicable law. To the extent Mercer is unable to provide for
continued participation in a Welfare Benefit Plan, it shall
provide an equivalent benefit directly at no out-of-pocket or
tax cost to him. For purposes of the preceding two sentences,
Mercer shall be deemed to have provided a benefit at no tax
cost to him if it pays an additional amount to him or on his
behalf, with respect to those benefits which would otherwise
be nontaxable to him, calculated in a manner consistent with
the provisions of Paragraph 12.
(c) ADJUSTMENT TO CERTAIN SUBPARAGRAPH (B) COMPENSATION AND
BENEFITS. Notwithstanding the provisions of Subparagraph (b)(5),
Xxxxxx'x obligation to pay or fund any disability insurance premiums on
behalf of the Executive shall be suspended while his Disability
continues, provided the cessation of payment or funding does not result
in the termination of disability benefits. Any amounts otherwise due
under Subparagraph (b) shall be reduced (but not below zero) by the
dollar amount of disability benefits received by him pursuant to plans
or policies funded, directly at its cost, by Mercer.
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(d) EARLIER CESSATION OF CERTAIN WELFARE BENEFITS.
Notwithstanding the provisions of Subparagraph (b)(5), Mercer shall not
be required to provide, at its cost, the welfare benefits covered
therein after the later of (i) the attainment by the Executive and his
spouse (if any) of age 65, or (ii) the date specified in the relevant
plan document for benefit termination (assuming that he was employed
until age 65 or the normal retirement date, if any, specified in such
document).
(e) DEATH DURING REMAINING TERM OF AGREEMENT.
(1) In the event the Executive dies during the
remaining term of this Agreement following his termination for
Disability and he is survived by a spouse, the compensation
and benefits remaining to be paid and provided under
Subparagraph (b) shall be unaffected by his death and shall be
paid and provided to her or on her behalf; provided, however,
that the extent of her rights to the accrued benefits
described in Subparagraph (b)(4) shall be determined by
reference to the relevant plan provisions and any elections
made under such plans; and provided further, that Mercer shall
not be required to provide continued benefits with respect to
her deceased husband; and provided further, that in no event
shall Mercer be required to provide, at its cost, the other
welfare benefits described in Subparagraph (b)(5) to such
spouse and her eligible dependents after the earlier of (i)
her death, or (ii) the later of (A) her attainment of age 65,
or (B) the date specified in the relevant plan document for
benefit termination (assuming that the Executive was employed
until age 65 or the normal retirement date, if any, specified
in such document).
(2) In the event the Executive dies during the
remaining term of this Agreement following his termination for
Disability and he is not survived by a spouse, (i) Mercer
shall thereafter make the remaining payments described in
Subparagraphs (b)(1) through (b)(3) directly to his estate,
(ii) the extent of the rights of any person to the accrued
benefits described in Subparagraph (b)(4) shall be determined
by reference to the relevant plan provisions and any elections
made under such plans, and (iii) Xxxxxx'x obligation to
provide continued benefits under Subparagraph (b)(5) shall
terminate.
(f) COMPENSATION AND BENEFITS UPON EXPIRATION OF REMAINING
TERM OF AGREEMENT. Upon the expiration of the remaining term of this
Agreement following the Executive's termination for Disability, and
provided his Disability then continues, he shall be entitled to receive
the compensation and benefits provided under the terms of Xxxxxx'x
long-term
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disability plan in effect on the Date of Termination or, if greater, at
the expiration of such remaining term. Such compensation and benefits
shall continue until the earlier of (i) his death, or (ii) the later of
(A) his attainment of age 65, or (B) the date specified in the plan
document for benefit termination. To the extent Mercer is unable to
provide such compensation and benefits under its long-term disability
plan, it shall provide equivalent compensation and benefits directly at
no out-of-pocket or tax cost to him. For purposes of the preceding
sentence, Mercer shall be deemed to have provided compensation and
benefits at no tax cost to him if it pays an additional amount to him
or on his behalf, with respect to the compensation and benefits which
would otherwise be nontaxable to him, calculated in a manner consistent
with the provisions of Paragraph 12.
7. TERMINATION BY REASON OF DEATH.
(a) COMPENSATION AND BENEFITS TO SURVIVING SPOUSE. In the
event the Executive dies while he is employed under this Agreement and
is survived by a spouse, Mercer shall pay or provide the compensation
and benefits set forth below:
(1) The surviving spouse shall be paid an amount
equal to the greater of (i) the Executive's highest base
compensation received during one of the two calendar years
immediately preceding the calendar year in which the Date of
Termination occurs, or (ii) his base compensation in effect
immediately prior to the Date of Termination (or prior to any
reduction which entitled him to terminate his employment for
Good Reason) for a period of one year, beginning with such
Date of Termination. The frequency and manner of payment of
such amounts shall be in accordance with Xxxxxx'x executive
payroll practices from time to time in effect.
(2) The surviving spouse shall be paid an amount
equal to the highest payment made to Executive under each
incentive bonus plan of Mercer with respect to one of the two
years immediately preceding the year in which the Date of
Termination occurs. Such amount shall be paid in cash to her
within 30 days after the Date of Termination.
(3) The surviving spouse shall be paid an amount
equal to the sum of the highest annual contribution made on
the Executive's behalf (other than his own salary reduction
contributions) to each tax-qualified and non-qualified Defined
Contribution Plan of Mercer with respect to the year in which
the Date of Termination occurs or one of the two years
immediately preceding such year. Such amount shall be paid in
cash to her within 30 days after the Date of Termination or
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within 30 days after such amount can first be determined,
whichever is later.
(4) Subject to the following sentence, the surviving
spouse shall be paid benefits determined by reference to the
excess of (i) the aggregate retirement benefits the Executive
would have accrued under the terms of each tax-qualified and
non-qualified Defined Benefit Plan as in effect immediately
prior to the Date of Termination, had he (A) continued to be
employed for a period of one year following the Date of
Termination, and (B) received (on a pro rated basis, as
appropriate) the greater of (I) the highest compensation taken
into account under each such plan with respect to one of the
two years immediately preceding the year in which the Date of
Termination occurs, or (II) his annualized base compensation
in effect immediately prior to the Date of Termination (or
prior to any reduction which entitled him to terminate his
employment for Good Reason), over (ii) the retirement benefits
actually determined under such plans. The frequency, manner,
and extent of payment of such benefits shall be consistent
with the terms of the plans to which they relate and any
elections made thereunder.
(5) The surviving spouse and her eligible dependents
shall be entitled to continue to participate at the same
aggregate benefit levels, for a period of one year following
the Date of Termination and at no out-of-pocket or tax cost to
her, in the Welfare Benefit Plans in which the Executive was a
participant immediately prior to the Date of Termination, to
the extent permitted under the terms of such plans and
applicable law; provided, however, that Mercer shall not be
required to provide continued benefits with respect to her
deceased husband; and provided further, that Mercer shall not
thereafter be required to provide, at its cost, the other
welfare benefits covered by such plans to such spouse and her
eligible dependents after the earlier of (i) her death, or
(ii) the later of (A) her attainment of age 65, or (B) the
date specified in the relevant plan document for benefit
termination (assuming the Executive was employed until age 65
or the normal retirement date, if any, specified in such
document). To the extent Mercer is unable to provide for
continued participation in a Welfare Benefit Plan as required,
it shall provide an equivalent benefit directly at no
out-of-pocket or tax cost to her. For purposes of the
preceding two sentences, Mercer shall be deemed to have
provided a benefit at no tax cost to her if it pays an
additional amount to her or on her behalf, with respect to
those benefits which would otherwise be nontaxable to her,
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calculated in a manner consistent with the provisions
of Paragraph 12.
(b) COMPENSATION AND BENEFITS TO ESTATE, ETC. In the event the
Executive dies while he is employed under this Agreement and is not
survived by a spouse, (i) Mercer shall make the payments described in
Subparagraphs (a)(1) through (a)(3) directly to his estate, (ii) the
extent of the rights of any person to the accrued benefits described in
Subparagraph (a)(4) shall be determined by reference to the relevant
plan provisions and any elections made under such plans, and (iii)
Xxxxxx'x obligation to provide benefits under Subparagraph (a)(5) shall
terminate.
8. TERMINATION BY MERCER FOR CAUSE.
(a) IN GENERAL. In the event Mercer intends to terminate the
Executive's employment for Cause, it shall deliver a Notice of
Termination to him which specifies a Date of Termination not less than
30 days following the date of such notice, unless a shorter period of
notice is required by the principal regulator of the Company or any
affiliate of the Company.
(b) COMPENSATION. Within 30 days after the Executive's
termination under Subparagraph (a), Mercer shall pay him, in one lump
sum, his accrued but unpaid base compensation and vacation compensation
earned through the Date of Termination.
9. TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON.
(a) IN GENERAL. In the event the Executive intends to
terminate his employment without Good Reason, he shall deliver a Notice
of Termination to Mercer which specifies a Date of Termination not less
than (i) 90 days following the date of such notice, if a Change in
Control shall not have occurred, or (ii) 30 days following the date of
such notice, if a Change in Control shall have occurred.
(b) COMPENSATION. Within 30 days after the Executive's
termination under Subparagraph (a), Mercer shall pay him, in one lump
sum, his accrued but unpaid base compensation and vacation compensation
earned through the Date of Termination.
10. TERMINATION BY MERCER WITHOUT DISABILITY OR CAUSE.
(a) IN GENERAL. In the event Mercer intends to terminate the
Executive's employment for any reason other than Disability or Cause,
it shall deliver a Notice of Termination to him which specifies a Date
of Termination not less than 90 days following the date of such notice.
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(b) COMPENSATION AND BENEFITS DURING REMAINING TERM OF
AGREEMENT. In the event of the termination of the Executive's
employment under Subparagraph (a), Mercer shall pay or provide the
compensation and benefits described in Paragraph 6(b), except that all
such compensation and benefits shall be for the remaining term of this
Agreement and, with respect to Subparagraphs 6(b)(2) and (3), an
additional pro rated amount shall be paid to him in cash on the last
day of the remaining term of this Agreement. Such pro rated amount
shall be determined by reference to a fraction, the numerator of which
is the number of whole months elapsed during the year in which
termination occurs, and the denominator of which is 12.
(c) ADJUSTMENT TO CERTAIN SUBPARAGRAPH (B) COMPENSATION AND
BENEFITS. In the event the Executive suffers a Disability during the
remaining term of this Agreement following the Date of Termination,
Xxxxxx'x obligation to pay or fund any disability insurance premiums on
his behalf shall be suspended while his Disability continues, provided
the cessation of payment or funding does not result in the termination
of disability benefits. Any amounts described in Paragraph 6(b) and
otherwise payable under Subparagraph (b) shall be reduced (but not
below zero) by the dollar amount of disability benefits received by him
pursuant to plans or policies funded, directly at its cost, by Mercer.
(d) EARLIER CESSATION OF CERTAIN WELFARE BENEFITS.
Notwithstanding the provisions of Subparagraph (b), Mercer shall not be
required to provide, at its cost, the welfare benefits covered by
Paragraph 6(b)(5) after the later of (i) the attainment by the
Executive and his spouse (if any) of age 65, or (ii) the date specified
in the relevant plan document for benefit termination (assuming that he
was employed until age 65 or the normal retirement date, if any,
specified in such document).
(e) DEATH DURING REMAINING TERM OF AGREEMENT.
(1) In the event the Executive dies during the
remaining term of this Agreement following his termination
without Disability or Cause by Mercer and he is survived by a
spouse, the compensation and benefits required to be paid and
provided under Subparagraph (b) shall be unaffected by his
death and shall be paid and provided to her or on her behalf;
provided, however, that the extent of her rights to the
accrued benefits described in Paragraph 6(b)(4) shall be
determined by reference to the relevant plan provisions and
any elections made under such plans; and provided further,
that Mercer shall not be required to provide continued
benefits with respect to her deceased husband; and provided
further, that in no event shall
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Mercer be required to provide, at its cost, the other welfare
benefits described in Paragraph 6(b)(5) to such spouse and her
eligible dependents after the earlier of (i) her death, or
(ii) the later of (A) her attainment of age 65, or (B) the
date specified in the relevant plan document for benefit
termination (assuming that the Executive was employed until
age 65 or the normal retirement date, if any, specified in
such document).
(2) In the event the Executive dies during the
remaining term of this Agreement following his termination
without Disability or Cause and he is not survived by a
spouse, (i) Mercer shall thereafter make the remaining
payments described in Paragraphs 6(b)(1) through 6(b)(3)
directly to his estate, (ii) the extent of the rights of any
person to the accrued benefits described in Paragraph 6(b)(4)
shall be determined by reference to the relevant plan
provisions and any elections made under such plans, and (iii)
Xxxxxx'x obligation to provide the continued benefits
described in Paragraph 6(b)(5) shall terminate.
11. TERMINATION BY THE EXECUTIVE FOR GOOD REASON.
(a) IN GENERAL. In the event the Executive intends to
terminate his employment for Good Reason, he shall deliver a Notice of
Termination to Mercer which specifies a Date of Termination not less
than 30 days following the date of such notice.
(b) COMPENSATION AND BENEFITS DURING REMAINING TERM OF
AGREEMENT. In the event of the termination of the Executive's
employment under Subparagraph (a), Mercer shall pay or provide the
compensation and benefits described in Paragraph 6(b), except that all
such compensation and benefits shall be for the remaining term of this
Agreement and, with respect to Subparagraphs 6(b)(2) and (3), an
additional pro rated amount shall be paid to him in cash on the last
day of the remaining term of this Agreement. Such pro rated amount
shall be determined by reference to a fraction, the numerator of which
is the number of whole months elapsed during the year in which
termination occurs, and the denominator of which is 12.
(c) ADJUSTMENT TO CERTAIN SUBPARAGRAPH (B) COMPENSATION AND
BENEFITS. In the event the Executive suffers a Disability during the
remaining term of this Agreement following the Date of Termination,
Xxxxxx'x obligation to pay or fund any disability insurance premiums on
his behalf shall be suspended while his Disability continues, provided
the cessation of payment or funding does not result in the termination
of disability benefits. Any amounts described in Paragraph 6(b) and
otherwise payable under Subparagraph (b) shall be reduced (but not
below zero)
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by the dollar amount of disability benefits received by him pursuant to
plans or policies funded, directly at its cost, to Mercer.
(d) EARLIER CESSATION OF CERTAIN WELFARE BENEFITS.
Notwithstanding the provisions of Subparagraph (b), Mercer shall not be
required to provide, at its cost, the welfare benefits covered by
Paragraph 6(b)(5) after the later of (i) the attainment by the
Executive and his spouse (if any) of age 65, or (ii) the date specified
in the relevant plan document for benefit termination (assuming that he
was employed until age 65 or the normal retirement date, if any,
specified in such document).
(e) DEATH DURING REMAINING TERM OF AGREEMENT.
(1) In the event the Executive dies during the
remaining term of this Agreement following his termination for
Good Reason and he is survived by a spouse, the compensation
and benefits required to be paid and provided under
Subparagraph (b) shall be unaffected by his death and shall be
paid and provided to her or on her behalf; provided, however,
that the extent of her rights to the accrued benefits
described in Paragraph 6(b)(4) shall be determined by
reference to the relevant plan provisions and any elections
made under such plans; and provided further, that Mercer shall
not be required to provide continued benefits with respect to
her deceased husband; and provided further, that in no event
shall Mercer be required to provide, at its cost, the other
welfare benefits described in Paragraph 6(b)(5) to such spouse
and her eligible dependents after the earlier of (i) her
death, or (ii) the later of (A) her attainment of age 65, or
(B) the date specified in the relevant plan document for
benefit termination (assuming that the Executive was employed
until age 65 or the normal retirement date, if any, specified
in such document).
(2) In the event the Executive dies during the
remaining term of this Agreement following his termination for
Good Reason and he is not survived by a spouse, (i) Mercer
shall thereafter make the remaining payments described in
Paragraphs 6(b)(1) through 6(b)(3) directly to his estate,
(ii) the extent of the rights of any person to the accrued
benefits described in Paragraph 6(b)(4) shall be determined by
reference to the relevant plan provisions and any elections
made under such plans, and (iii) Xxxxxx'x obligation to
provide the continued benefits described in Paragraph 6(b)(5)
shall terminate.
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12. PROVISIONS RELATING TO EXCISE TAXES.
(a) IN GENERAL. In the event the Executive becomes liable, for
any taxable year, for the payment of an Excise Tax (because of a change
in control) with respect to the compensation and benefits payable by
Mercer under this Agreement or otherwise, Mercer shall make one or more
Gross-Up Payments to the Executive or on his behalf. The amount of any
Gross-Up Payment shall be calculated by a certified public accountant
or other tax professional designated jointly by the Executive and
Mercer. The provisions of this paragraph shall apply with respect to
the Executive's surviving spouse or estate, where relevant.
(b) METHODOLOGY FOR CALCULATION OF GROSS-UP PAYMENT. For
purposes of determining the amount of any Gross-Up Payment, the
Executive shall be deemed to pay income taxes at the highest federal,
state, and local marginal rates of tax for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in
federal income tax which could be obtained from the deduction of state
and local income taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account
at the time the Gross-Up Payment was made, the Executive shall repay to
Mercer, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to
the reduction (plus a portion of the Gross-Up Payment attributable to
the Excise Tax and the federal, state, and local income taxes imposed
on the portion of the Gross-Up Payment being repaid by the Executive to
the extent such repayment results in a reduction in Excise Tax or
federal, state, or local income tax), plus interest on the amount of
such repayment. Such interest shall be calculated by using the rate in
effect under Section 1274(d)(1) of the IRC, on the date the Gross-Up
Payment was made, for debt instruments with a term equal to the period
of time which has elapsed from the date the Gross-Up Payment was made
to the date of repayment. In the event that the Excise Tax is
subsequently determined to exceed the amount taken into account at the
time the Gross-Up Payment was made (including by reason of any payment
the existence or amount of which could not be determined at the time of
the Gross-Up Payment), Mercer shall make an additional Gross-Up Payment
with respect to the excess at the time the amount thereof is finally
determined, plus interest calculated in a manner similar to that
described in the preceding sentence.
(c) TIME OF PAYMENT. Any Gross-Up Payment provided for herein
shall be paid not later than the 30th day following the payment of any
compensation or the provision of any benefit which causes such payment
to be made; provided, however, that if the amount of such payment
cannot be finally determined on or before such day, Mercer shall
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pay on such day an estimate of the minimum amount of such payment and
shall pay the remainder of such payment (together with interest
calculated in a manner similar to that described in Subparagraph (b))
as soon as the amount thereof can be determined. In the event that the
amount of an estimated payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
Mercer to the Executive, payable on the 30th day after demand by Mercer
(together with interest calculated in a manner similar to that
described in Subparagraph (b)).
(d) Notwithstanding the provisions of this paragraph
to the contrary, the actual amounts payable hereunder as Gross-Up
Payments shall be coordinated with any similar amounts paid to the
Executive under any other contract, plan, or arrangement.
13. FEES AND EXPENSES OF THE EXECUTIVE. After a Change in Control and
except as provided in the following sentence, Mercer shall pay, within 30 days
following demand by the Executive, all legal, accounting, actuarial, and related
fees and expenses incurred by him in connection with the enforcement of this
Agreement. An arbitration panel or a court of competent jurisdiction shall be
empowered to deny payment to the Executive of such fees and expenses only if it
determines that he instituted a proceeding hereunder, or otherwise acted, in bad
faith.
14. REDUCTION FOR COMPENSATION AND BENEFITS RECEIVED UNDER MERCER
SEVERANCE POLICY, ETC. Notwithstanding anything herein to the contrary, in the
event the Executive, his surviving spouse, or any other person becomes entitled
to continued compensation and benefits hereunder by reason of the Executive's
termination of employment and, in addition, compensation or similar benefits are
payable under a severance policy, program or arrangement maintained by Mercer
(other than retirement plans), then the compensation or benefits otherwise
payable hereunder shall be reduced by the compensation or benefits provided
under such severance policy, program or arrangement.
15. MITIGATION. The Executive shall not be required to mitigate the
amount of any compensation or benefits which may become payable hereunder by
reason of his termination by seeking other employment or otherwise, nor, except
as otherwise provided in the following sentence or elsewhere herein, shall the
amount of any such compensation or benefits be reduced by any compensation or
benefits received by the Executive as the result of his employment by another
employer. Notwithstanding anything in this Agreement to the contrary, Xxxxxx'x
obligation to provide any medical and dental benefits hereunder may be
suspended, with the written concurrence of the Executive or, if applicable, his
surviving spouse during any period of time that such benefits are being provided
by reason of his or her employment.
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16. FUNDING OF COMPENSATION AND BENEFITS; ACCELERATION OF
CERTAIN PAYMENTS.
(a) GRANTOR TRUST. In the event the Executive's employment is
terminated without Cause or he terminates his employment for Good
Reason and a Change in Control has occurred as of the Date of
Termination or occurs thereafter, the Executive shall have the right to
require Mercer to establish a grantor trust (taxable to Mercer) and
fund such trust, on an actuarially sound basis, to provide the
compensation and benefits to which he is entitled hereunder, other than
those which may be paid pursuant to the provisions of Subparagraph (c).
The specific terms of such trust shall be as agreed to by the parties
in good faith; provided, however, that the trustee shall be a financial
institution independent of Mercer; and provided further, that in no
event shall Mercer be entitled to withdraw funds from the trust for its
benefit, or otherwise voluntarily assign or alienate such funds, until
such time as all compensation and benefits required hereunder are paid
and provided. The determination of the extent of required funding,
including any supplemental funding in the event of adverse investment
performance of trust assets, shall be made by an actuary or a certified
public accountant retained by each party. To the extent such
professionals cannot agree on the proper level of funding, they shall
select a third such professional whose determination shall be binding
upon the parties. Notwithstanding the foregoing, Mercer shall remain
liable for all compensation and benefits required to be paid or
provided hereunder.
(b) ALTERNATE SECURITY. In lieu of the right given to the
Executive under Subparagraph (a), he shall have the right under such
circumstances to require that Mercer provide (i) an irrevocable standby
letter of credit issued by a financial institution other than the
Company or any Subsidiary of the Company with a senior debt credit
rating of "A" or better by Xxxxx'x Investors Service or Standard &
Poor's Corporation, or (ii) other security reasonably acceptable to
him, to secure the payment of such compensation and benefits.
(c) ACCELERATED PAYMENT OF PRESENT VALUE OF CERTAIN
COMPENSATION. In the event the Executive's employment is terminated
without Cause or he terminates his employment for Good Reason and a
Change in Control has occurred as of the Date of Termination or occurs
thereafter, the Executive shall have the continuing right to demand
that the present value of the remaining payments described in
Paragraphs 6(b)(1) through (3), and payable by reason of the provisions
of Paragraph 10 or 11 (as the case may be), be paid to him in one lump
sum within 30 days after the date written demand is given. For purposes
of calculating the present value of such payments, a discount factor
shall be
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applied to each such payment which is equal to the relevant applicable
federal rate in effect on the date written demand is given by him,
determined by reference to the period of time between the date of such
notice and the scheduled time such payment would otherwise be made. In
the event any payment described in Paragraphs 6(b)(1) through (3) is
not yet determinable on the date written demand is made, the other
payments shall nonetheless be made as provided above; and the
undetermined payment shall be made within 30 days after it becomes
determinable, calculated as provided in the preceding sentence but by
treating the date on which the payment becomes determinable as the date
of written notice. Nothing in this subparagraph shall be construed as
affecting the Executive's right to one or more Gross-Up Payments in
accordance with the provisions of Paragraph 12; and a Gross-Up Payment
(if applicable) will be calculated and made with any payment made under
this subparagraph, as well as any other Gross-Up Payments that may be
required hereunder at a subsequent date.
17. WITHHOLDING TAXES. All compensation and benefits provided for
herein shall, to the extent required by law, be subject to federal, state, and
local tax withholding.
18. CONFIDENTIAL INFORMATION. The Executive agrees that subsequent to
his employment with Mercer, he will not, at any time, communicate or disclose to
any unauthorized person, without the written consent of the Mercer, any
proprietary or other confidential information concerning the Company or any
Subsidiary of the Company; provided, however, that the obligations under this
paragraph shall not apply to the extent that such matters (i) are disclosed in
circumstances where the Executive is legally obligated to do so, or (ii) become
generally known to and available for use by the public otherwise than by his
wrongful act or omission; and provided further, that he may disclose any
knowledge of insurance, financial, legal and economic principles, concepts and
ideas which are not solely and exclusively derived from the business plans and
activities of Mercer.
19. COVENANTS NOT TO COMPETE OR TO SOLICIT.
(a) Noncompetition. If the Executive's employment terminates
under Paragraph 8 or 9 prior to a Change in Control, he agrees that for
a period of 12 months after the Date of Termination he will not,
without the written consent in writing of the Board of Directors of the
Company, become an officer, employee, agent, partner, director, or a
four and nine-tenths percent or greater shareholder or equity owner of
any licensed direct property and casualty insurance company with its
corporate headquarters located within New Jersey. If at the time of the
enforcement of this paragraph a court holds that the duration, scope,
or area restrictions stated herein are unreasonable under the
circumstances then existing and, thus, unenforceable, Mercer and the
Executive
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agree that the maximum duration, scope, or area reasonable under such
circumstances shall be substituted for the stated duration, scope, or
area.
(b) Nonsolicitation. During his employment and for a period of
12 months following the Date of Termination, the Executive shall not,
whether on his own behalf or on behalf of any other individual or
business entity, solicit, endeavor to entice away from the Company, a
Subsidiary or any affiliated company, or otherwise interfere with the
relationship of the Company, a Subsidiary or any affiliated company
with any person who is, or was within the then most recent 12 month
period, an employee or associate thereof; provided, however, that this
subparagraph shall not apply following the occurrence of a Change in
Control.
20. ARBITRATION. To the extent permitted by applicable law, any
controversy or dispute arising out of or relating to this Agreement, or any
alleged breach hereof, shall be settled by arbitration in Pennington, New
Jersey, in accordance with the commercial rules of the American Arbitration
Association then in existence (to the extent such rules are not inconsistent
with the provisions of this Agreement), it being understood and agreed that the
arbitration panel shall consist of three individuals acceptable to the parties
hereto. In the event that the parties cannot agree on three arbitrators within
20 days following receipt by one party of a demand for arbitration from another
party, then the Executive and Mercer shall each designate one arbitrator and the
two arbitrators selected shall select the third arbitrator. The arbitration
panel so selected shall convene a hearing no later than 90 days following the
selection of the panel. The arbitration award shall be final and binding upon
the parties, and judgment may be entered thereon in the Pennsylvania Court of
Common Pleas or in any other court of competent jurisdiction.
21. ADDITIONAL EQUITABLE REMEDY. The Executive acknowledges and agrees
that Xxxxxx'x remedy at law for a breach or a threatened breach of the
provisions of Paragraphs 18 and 19 would be inadequate; and, in recognition of
this fact and notwithstanding the provisions of Paragraph 20, in the event of
such a breach or threatened breach by him, it is agreed that Mercer shall be
entitled to request equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction, or any other
equitable remedy which may then be available. Nothing in this paragraph shall be
construed as prohibiting Mercer from pursuing any other remedy available under
this Agreement for such a breach or threatened breach.
22. RELATED AGREEMENTS. Except as may otherwise be provided herein, to
the extent that any provision of any other agreement between Mercer and the
Executive shall limit, qualify, duplicate, or be inconsistent with any provision
of this Agreement, the provision in this Agreement shall control and such
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provision of such other agreement shall be deemed to have been superseded, and
to be of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
23. NO EFFECT ON OTHER RIGHTS. Except as otherwise specifically
provided herein, nothing contained in this Agreement shall be construed as
adversely affecting any rights the Executive may have under any agreement, plan,
policy or arrangement to the extent any such right is not inconsistent with the
provisions hereof.
24. EXCLUSIVE RIGHTS AND REMEDY. Except for any explicit rights and
remedies the Executive may have under any other contract, plan or arrangement
with Mercer, the compensation and benefits payable hereunder and the remedy for
enforcement thereof shall constitute his exclusive rights and remedy in the
event of his termination of employment.
25. DIRECTOR AND OFFICER LIABILITY INSURANCE; INDEMNIFICATION. Mercer
shall provide the Executive (including his heirs, executors, and administrators)
with coverage under a standard directors' and officers' liability insurance
policy, at Xxxxxx'x expense, in amounts consistent with amounts provided by peer
corporations to their directors and officers, and shall indemnify him as both a
director and as an officer (and his heirs, executors, and administrators) to the
fullest extent permitted under Pennsylvania law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by reason of his having
been an officer or director of Mercer or any Subsidiary or affiliated company
(whether or not he continues to be such an officer or director at the time of
incurring such expenses or liabilities). Such expenses and liabilities shall
include, but not be limited to, judgments, court costs, and attorneys' fees, and
the costs of reasonable settlements.
26. NOTICES. Any notice required or permitted under this Agreement
shall be sufficient if it is in writing and shall be deemed given (i) at the
time of personal delivery to the addressee, or (ii) at the time sent certified
mail, with return receipt requested, addressed as follows:
If to the Executive--
Xx. Xxxx X. Xxxxxxxx
0000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
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If to Mercer, or the Company--
00 Xxxxx Xxxxxxx 00
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Attention: Chairman of the Board of Directors
The name or address of any addressee may be changed at any time and from time to
time by notice similarly given.
27. NO WAIVER. The failure by any party to this Agreement at any time
or times hereafter to require strict performance by any other party of any of
the provisions, terms, or conditions contained in this Agreement shall not
waive, affect, or diminish any right of the first party at any time or times
thereafter to demand strict performance therewith and with any other provision,
term, or condition contained in this Agreement. Any actual waiver of a
provision, term, or condition contained in this Agreement shall not constitute a
waiver of any other provision, term, or condition herein, whether prior or
subsequent to such actual waiver and whether of the same or a different type.
The failure of Mercer to promptly terminate the Executive's employment for Cause
or the Executive to promptly terminate his employment for Good Reason shall not
be construed as a waiver of the right of termination, and such right may be
exercised at any time following the occurrence of the event giving rise to such
right.
28. JOINT AND SEVERAL OBLIGATIONS OF MERCER AND THE COMPANY. Mercer and
the Company shall be jointly and severally liable for all compensation and
benefits that may become payable hereunder to or on behalf of the Executive or,
if applicable, his surviving spouse, estate or beneficiaries.
29. SURVIVAL. Notwithstanding the nominal termination of this Agreement
and the Executive's employment hereunder, the provisions hereof which specify
continuing obligations, compensation and benefits, and rights (including the
otherwise applicable term hereof) shall remain in effect until such time as all
such obligations are discharged, all such compensation and benefits are
received, and no party or beneficiary has any remaining actual or contingent
rights hereunder.
30. SEVERABILITY. In the event any provision in this Agreement shall be
held illegal or invalid for any reason, such illegal or invalid provision shall
not affect the remaining provisions hereof, and this Agreement shall be
construed, administered and enforced as though such illegal or invalid provision
were not contained herein.
31. BINDING EFFECT AND BENEFIT. The provisions of this Agreement shall
be binding upon and shall inure to the benefit of the successors and assigns of
Mercer and the executors, personal
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representatives, surviving spouse, heirs, devisees, and legatees
of the Executive.
32. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
among the parties with respect to the subject matter hereof, and it supersedes
all prior discussions and oral understandings of the parties with respect
thereto.
33. NO ASSIGNMENT. This Agreement, and the benefits and obligations
hereunder, shall not be assignable by any party hereto except by operation
of law.
34. NO ATTACHMENT. Except as otherwise provided by law, no right to
receive compensation or benefits under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation, or to set off, execution, attachment, levy, or similar
process, and any attempt, voluntary or involuntary, to effect any such action
shall be null and void.
35. CAPTIONS. The captions of the several paragraphs and subparagraphs
of this Agreement have been inserted for convenience of reference only. They
constitute no part of this Agreement and are not to be considered in the
construction hereof.
36. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed one and the same instrument which
may be sufficiently evidenced by any one counterpart.
37. NUMBER. Wherever any words are used herein in the singular form,
they shall be construed as though they were used in the plural form, as the
context requires, and vice versa.
38. APPLICABLE LAW. Except to the extent preempted by federal law, the
provisions of this Agreement shall be construed, administered, and enforced in
accordance with the domestic internal law of the State of New Jersey.
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39. GUARANTEE. The business entities executing this Agreement as
Guarantor shall be liable as payment guarantors of the obligations of Mercer and
the Company hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
it to be executed, as of the date first above written.
/s/ XXXX X. XXXXXXXX (SEAL)
-------------------------------
XXXX X. XXXXXXXX
MERCER MUTUAL INSURANCE COMPANY
By: /s/ XXXXXXX X. XXXX
-------------------------------
Attest: /s/ XXXXXX X. XXXX
---------------------------
XXXXXX INSURANCE GROUP, INC.
By: /s/ XXXXXXX X. XXXX
-------------------------------
Attest: /s/ XXXXXX X. XXXX
---------------------------
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APPENDIX 1
The parties hereto acknowledge that the corporate reorganization of
Mercer (pursuant to which Mercer will demutualize under Pennsylvania law) and
certain other related transactions involving Mercer have not occurred as of the
date of this Agreement, so that literal application of the terms of this
Agreement prior thereto may be inappropriate or otherwise not feasible.
Accordingly, pending the occurrence of such demutualizations and related
transactions, the parties agree that this Agreement shall be construed,
administered and enforced, to the maximum extent practical, in a manner
consistent with the spirit and reasonably inferable intent hereof.
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GLOSSARY
"BOARD OF DIRECTORS" means the board of directors of the
relevant corporation.
"CAUSE" means (i) a documented repeated and willful failure by the
Executive to perform his duties, but only after written demand and only if
termination is effected by action taken by a vote of (A) prior to a Change in
Control, at least a majority of the directors of the Company then in office, or
(B) after a Change in Control, at least 80% of the nonofficer directors of the
Company then in office, (ii) his final conviction of a felony, (iii) conduct by
him which constitutes moral turpitude which is directly and materially injurious
to the Company or any Subsidiary or affiliated company, (iv) willful material
violation of corporate policy, or (v) the issuance by the regulator of the
Company or any Subsidiary or affiliated company of an unappealable order to the
effect that he be permanently discharged.
For purposes of this definition, no act or failure to act on the part of the
Executive shall be considered "willful" unless done or omitted not in good faith
and without reasonable belief that the action or omission was in the best
interest of the Company or any of its Subsidiaries or affiliated companies.
"CHANGE IN CONTROL" means the occurrence of any of the
following events:
(a) any Person (except (i) the Company or any Subsidiary or
prior affiliate of the Company, or (ii) any Employee Benefit Plan (or
any trust forming a part thereof) maintained by the Company or any
Subsidiary or prior affiliate of the Company) is or becomes the
beneficial owner, directly or indirectly, of the Company's securities
representing 19.9% or more of the combined voting power of the
Company's then outstanding securities, or 50.1% or more of the combined
voting power of a Material Subsidiary's then outstanding securities,
other than pursuant to a transaction described in Clause (c);
(b) there occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of the Company or a
Material Subsidiary to another entity, except to an entity controlled
directly or indirectly by the Company;
(c) there occurs a merger, consolidation, share exchange,
division or other reorganization of or relating to the Company,
unless--
(i) the shareholders of the Company immediately
before such merger, consolidation, share exchange,
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division or reorganization own, directly or indirectly,
immediately thereafter at least two-thirds of the combined
voting power of the outstanding voting securities of the
Surviving Company in substantially the same proportion as
their ownership of the voting securities immediately before
such merger, consolidation, share exchange, division or
reorganization; and
(ii) the individuals who, immediately before such
merger, consolidation, share exchange, division or
reorganization, are members of the Incumbent Board continue to
constitute at least two-thirds of the board of directors of
the Surviving Company; provided, however, that if the
election, or nomination for election by the Company's
shareholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such director shall,
for the purposes hereof, be considered a member of the
Incumbent Board; and provided further, however, that no
individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of
either an actual or threatened Election Contest or Proxy
Contest, including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; and
(iii) no Person (except (A) the Company or any
Subsidiary or prior affiliate of the Company, (B) any Employee
Benefit Plan (or any trust forming a part thereof) maintained
by the Company or any Subsidiary or prior affiliate of the
Company, or (C) the Surviving Company or any Subsidiary or
prior affiliate of the Surviving Company) has beneficial
ownership of 19.9% or more of the combined voting power of the
Surviving Company's outstanding voting securities immediately
following such merger, consolidation, share exchange, division
or reorganization;
(d) a plan of liquidation or dissolution of the Company, other
than pursuant to bankruptcy or insolvency laws, is adopted; or
(e) during any period of two consecutive years, individuals
who, at the beginning of such period, constituted the Board of
Directors of the Company cease for any reason to constitute at least a
majority of such Board of Directors, unless the election, or the
nomination for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period;
provided, however, that no individual shall be considered a member of
the Board of Directors of the Company at the beginning of such period
if
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such individual initially assumed office as a result of either an
actual or threatened Election Contest or Proxy Contest, including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred if a Person becomes the beneficial owner, directly or indirectly, of
securities representing 19.9% or more of the combined voting power of the
Company's then outstanding securities solely as a result of an acquisition by
the Company of its voting securities which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person; provided, however, that if a Person becomes a beneficial owner of
19.9% or more of the combined voting power of the Company's then outstanding
securities by reason of share repurchases by the Company and thereafter becomes
the beneficial owner, directly or indirectly, of any additional voting
securities of the Company, then a Change in Control shall be deemed to have
occurred with respect to such Person under Clause (a).
Notwithstanding anything contained herein to the contrary, if the Executive's
employment is terminated and he reasonably demonstrates that such termination
(i) was at the request of a third party who has indicated an intention of taking
steps reasonably calculated to effect a Change in Control and who effects a
Change in Control, or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes hereof, a Change in Control shall be deemed to have occurred on the day
immediately prior to the date of such termination of his employment.
"COMPANY" means Xxxxxx Insurance Group, Inc., a Pennsylvania (stock)
corporation, and any successor thereto.
"DATE OF TERMINATION" means:
(a) if the Executive's employment is terminated for
Disability, 30 days after the Notice of Termination is given (provided
that he shall not have returned to the performance of his duties on a
full-time basis during such 30-day period);
(b) if the Executive's employment terminates by reason of his
death, the date of his death;
(c) if the Executive's employment is terminated by Mercer for
Cause, the date specified in the Notice of Termination;
(d) if the Executive's employment is terminated by him without
Good Reason, the date specified in the Notice of Termination;
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(e) if the Executive's employment is terminated by Mercer for
any reason other than for Disability or Cause, the date specified in
the Notice of Termination; or
(f) if the Executive's employment is terminated by him for
Good Reason, the date specified in the Notice of Termination;
provided, however that the Date of Termination shall mean the actual date of
termination in the event the parties mutually agree to a date other than that
described above.
"DEFINED BENEFIT PLAN" has the meaning ascribed to such term
in Section 3(35) of ERISA.
"DEFINED CONTRIBUTION PLAN" has the meaning ascribed to such
term in Section 3(34) of ERISA.
"DISABILITY" has the meaning ascribed to the term "permanent
and total disability" in Section 22(e)(3) of the IRC.
"ELECTION CONTEST" means a solicitation with respect to the election or
removal of directors that is subject to the provisions of Rule 14a-11 of the
1934 Act.
"EMPLOYEE BENEFIT PLAN" has the meaning ascribed to such
term in Section 3(3) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and as the same may be amended from time to time.
"EXCISE TAX" means the tax imposed by Section 4999 of the IRC (or any
similar tax that may hereafter be imposed by federal, state or local law).
"EXECUTIVE" means Xxxxxxx X. Xxxx, an individual residing in
Pennington, New Jersey.
"GOOD REASON" means:
(a) prior to a Change in Control--
(i) a change in the Executive's status or position, or any
material diminution in his duties or responsibilities;
(ii) a reduction in the Executive's base compensation, other
than a reduction which is proportionate to a company-wide
reduction in executive pay;
(iii) a failure to increase the Executive's base
compensation, consistent with his performance rating,
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within 24 months since the last increase, other than similar
treatment on a company-wide basis for executives or a
voluntary deferral by him of an increase;
(iv) delivery to the Executive of a Notice of
Nonextension; or
(v) any purported termination of the Executive's
employment which is not in accordance with the terms of this
Agreement; and
(b) after a Change in Control--
(i) a change in the Executive's status or position, or any
material diminution in his duties or responsibilities;
(ii) any increase in the Executive's duties inconsistent
with his position;
(iii) any reduction in the Executive's base compensation;
(iv) a failure to increase the Executive's base
compensation, consistent with his performance review, within 12
months of the last increase; or a failure to consider Executive
for an increase within 12 months of his last performance review;
(v) a failure to continue in effect any Employee Benefit
Plan in which the Executive participates, including (whether or
not they constitute Employee Benefit Plans) incentive bonus, stock
option, or other qualified or nonqualified plans of deferred
compensation (A) other than as a result of the normal expiration
of such a plan, or (B) unless such plan is merged or consolidated
into, or replaced with, a plan with benefits which are of equal or
greater value;
(vi) requiring the Executive to be based anywhere other than
the county where his principal office was located immediately
prior to the Change in Control;
(vii) refusal to allow the Executive to attend to matters or
engage in activities in which he was permitted to engage prior to
the Change in Control;
(viii) delivery to the Executive of a Notice of
Nonextension;
(ix) failure to secure the affirmation by a Successor,
within three business days prior to a Change in Control, of this
Agreement and its or Xxxxxx'x
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continuing obligations hereunder (or where there is not at least
three business days advance notice that a Person may become a
Successor, within one business day after having notice that such
Person may become or has become a Successor); or
(x) any purported termination of the Executive's employment
which is not in accordance with the terms of this Agreement.
Notwithstanding anything herein to the contrary, at the election of the
Executive, beginning with the 181st day following a Change in Control and
continuing through the first anniversary of such Change in Control, he may
terminate his employment for any reason or no reason and such termination will
be treated as having occurred for Good Reason.
"GROSS-UP PAYMENT" means an additional payment to be made to or on
behalf of the Executive in an amount such that the net amount retained by him,
after deduction of any Excise Tax on the Total Payments and any federal, state,
and local income tax and Excise Tax on such additional payment, equals the Total
Payments.
"INCUMBENT BOARD" means the Board of Directors of the
Company as constituted at any relevant time.
"IRC" means the Internal Revenue Code of 1986, as amended and as the
same may be amended from time to time.
"MATERIAL SUBSIDIARY" means a Subsidiary whose net worth, determined
under generally accepted accounting principles, at the fiscal year end
immediately prior to any relevant time is at least 25% of the aggregate net
worth of the controlled group of corporations of which the Company is the common
parent.
"1934 ACT" means the Securities Exchange Act of 1934, as amended and as
the same may be amended from time to time.
"MERCER" means, prior to conversion from mutual to stock form, Mercer
Mutual Insurance Company, and after conversion from mutual to stock form, Mercer
Insurance Company.
"NOTICE OF EXTENSION" means a written notice delivered to or by the
Executive which advises that the Agreement will be extended as provided in
Paragraph 3.
"NOTICE OF TERMINATION" means a written notice that (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) gives the required advance notice of termination.
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"PERSON" has the same meaning as such term has for purposes of Sections
13(d) and 14(d) of the 1934 Act.
"PROXY CONTEST" means the solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors of the Company.
"SUBSIDIARY" means any business entity of which a majority of its
voting power or its equity securities or equity interests is owned, directly or
indirectly by the Company.
"SUCCESSOR" means any Person that succeeds to, or has the practical
ability to control (either immediately or with the passage of time), Xxxxxx'x
business directly, by merger or consolidation, or indirectly, by purchase of
Xxxxxx'x voting securities or all or substantially all of its assets.
"SURVIVING COMPANY" means the business entity that is a resulting
company following a merger, consolidation, share exchange, division or other
reorganization of or relating to the Company.
"TOTAL PAYMENTS" means the compensation and benefits that become
payable under the Agreement or otherwise (and which may be subject to an Excise
Tax) by reason of the Executive's termination of employment, determined without
regard to any Gross-Up Payments that may also be made.
"WELFARE BENEFIT PLAN" has the meaning ascribed to the term "employee
welfare benefit plan" in Section 3(1) of ERISA. For purposes of determining the
Executive's or his dependents' right to continued welfare benefits hereunder
following his termination of employment, the meaning of such term shall include
any retiree health plan maintained by Mercer at any time after the relevant Date
of Termination, notwithstanding the fact that the Executive is not a participant
therein prior to such date.
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