EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of October, 1997, by and
between MERCER MUTUAL INSURANCE COMPANY, a Pennsylvania
corporation, XXXXXX INSURANCE GROUP, INC., a Pennsylvania
corporation, and XXXXXX X. SPEAKER.
Mercer Mutual Insurance Company and Xxxxxx Group, Inc. both
desire to employ Mr. Speaker, and Mr. Speaker is willing to serve
Mercer Mutual Insurance Company and Xxxxxx Insurance 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, 2000;
provided, however, that commencing on October 1, 1998 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
Executive Vice President and Chief Operating Officer 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 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 as follows:
(i) For the period from October 1, 1997 to
March 31, 1998, at a rate not less than $115,000;
(ii) For the period from April 1, 1998 to
September 30, 1998, at an annual rate not less than
$125,000; and
(iii) For the period beginning October 1, 1998,
at an annual rate not less than $135,000.
Thereafter, 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
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
the first anniversary date 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
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.
(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
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
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,
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.
(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
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)
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.
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 Xxxxxx under this
Agreement or otherwise, Xxxxxx 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 Xxxxxx. 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 Xxxxxx, 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), Xxxxxx
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, Xxxxxx shall
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 Xxxxxx to the Executive, payable on the 30th day
after demand by Xxxxxx (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, Xxxxxx
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
Xxxxxx 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 Xxxxxx (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.
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 Xxxxxx to
establish a grantor trust (taxable to Xxxxxx) 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 Xxxxxx; and provided further,
that in no event shall Xxxxxx 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, Xxxxxx
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 Xxxxxx
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
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 Xxxxxx, he will not, at any
time, communicate or disclose to any unauthorized person, without
the written consent of the Xxxxxx, 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 Xxxxxx.
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 entity engaged in the property and casualty
insurance business 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, Xxxxxx
and the Executive 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 Xxxxxx 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
Xxxxxx 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 Xxxxxx 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 Xxxxxx 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
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 Xxxxxx, 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. Xxxxxx 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
Xxxxxx 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. Xxxxxx X. Speaker
0 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
If to Xxxxxx, 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 Xxxxxx 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 Xxxxxx and the
Company. Xxxxxx 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 Xxxxxx and the executors, personal
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.
39. Guarantee. The business entities executing this
Agreement as Guarantor shall be liable as payment guarantors of
the obligations of Xxxxxx 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/ Xxxxxx X. Speaker (SEAL)
Xxxxxx X. Speaker
XXXXXX MUTUAL INSURANCE COMPANY
By/s/ Xxxxxxx X. Xxxx
Attest: /s/ Xxxxxx Xxxx
XXXXXX INSURANCE GROUP, INC.
By /s/ Xxxxxxx X. Xxxx
Attest:/s/ Xxxxxx Xxxx
APPENDIX 1
The parties hereto acknowledge that the corporate
reorganization of Xxxxxx (pursuant to which Xxxxxx will
demutualize under Pennsylvania law) and certain other related
transactions involving Xxxxxx 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.
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,
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
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
Xxxxxx 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;
(e) if the Executive's employment is terminated by
Xxxxxx 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,
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
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.
"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.
