-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T9WsmYVEHgeSTqrz6dxOAzx5CrOzF/NjtKs7q4Rd+r6yDfHgbyWTZ3h2zRclgvdz KP65+0twoAnXL+U/Xrtn4Q== 0000950123-01-000292.txt : 20010123 0000950123-01-000292.hdr.sgml : 20010123 ACCESSION NUMBER: 0000950123-01-000292 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010112 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ERIE INDEMNITY CO CENTRAL INDEX KEY: 0000922621 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 250466020 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-44061 FILM NUMBER: 1508038 BUSINESS ADDRESS: STREET 1: 100 ERIE INSURANCE PL CITY: ERIE STATE: PA ZIP: 16530 BUSINESS PHONE: 8148702000 MAIL ADDRESS: STREET 1: 100 ERIE INSURANCE PLACE CITY: ERIE STATE: PA ZIP: 16530 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HAGEN SUSAN HIRT CENTRAL INDEX KEY: 0001100591 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O ROGER W RICHARDS STREET 2: 100 STATE STREET - STE 440 CITY: ERIE STATE: PA ZIP: 16507-1456 BUSINESS PHONE: 8144550370 MAIL ADDRESS: STREET 1: C/O ROGER W RICHARDS STREET 2: 100 STATE STREET - STE 440 CITY: ERIE STATE: PA ZIP: 16507-1456 SC 13D/A 1 y44318sc13da.txt AMENDMENT NO. 3 TO SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 3 ) ERIE INDEMNITY COMPANY (Name of Issuer) Class B Common Stock (Title of Class of Securities) 29530P-201 (CUSIP Number) SUSAN HIRT HAGEN c/o ROGER W. RICHARDS, ESQ. RICHARDS & ASSOCIATES, P.C. 100 STATE STREET, SUITE 440 ERIE, PENNSYLVANIA 16507-1456 (814) 455-0370 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) With a copy to: LAWRENCE LEDERMAN, ESQ. ROBERT S. REDER, ESQ. MILBANK, TWEED, HADLEY & McCLOY LLP 1 CHASE MANHATTAN PLAZA NEW YORK, NY 10005 January 12, 2001 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /. 2 SCHEDULE 13D CUSIP NO.: 29530P-201 (1) NAME OF REPORTING PERSON: Susan Hirt Hagen I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) /X/ (3) SEC USE ONLY (4) SOURCE OF FUNDS: Not Applicable (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / (6) CITIZENSHIP OR PLACE OF ORGANIZATION: United States NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 12 (8) SHARED VOTING POWER: 1,170 (9) SOLE DISPOSITIVE POWER: 12 (10) SHARED DISPOSITIVE POWER: 1,170 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,182 (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /X/ (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 38.5% (14) TYPE OF REPORTING PERSON: IN 2 3 This Amendment No. 3 amends the statement on Schedule 13D originally filed with the Securities and Exchange Commission on December 10, 1999 (as amended, the "Schedule 13D"), with respect to the Class B Common Stock, no par value (the "Class B Common Stock"), of Erie Indemnity Company, a Pennsylvania corporation (the "Company"). Other than as set forth herein, there has been no material change in the information set forth in the Schedule 13D. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Schedule 13D. This Amendment No. 3 is being filed by Susan Hirt Hagen ("Mrs. Hagen"). ITEM 4. PURPOSE OF TRANSACTION. Item 4 of the Schedule 13D is hereby amended to add the following: In December 1999, Mrs. Hagen submitted a proposal to the Nominating Committee of the Company's Board of Directors identifying eleven individuals (including herself) as potential candidates for election to the Board of Directors at the 2000 Annual Meeting of Shareholders of the Company. The Nominating Committee rejected all of Mrs. Hagen's candidates and, in so doing, failed to renominate Mrs. Hagen to the Board. On April 24, 2000, the President Judge of the Erie County Pennsylvania Court of Common Pleas, Hon. William R. Cunningham, granted Mrs. Hagen a preliminary injunction enjoining the Company from prohibiting her from nominating candidates for election as directors at the 2000 Annual Meeting. A copy of the Opinion and Order of April 24, 2000 by Judge Cunningham is attached hereto as Exhibit 5 and incorporated herein by reference. Accordingly, at the 2000 Annual Meeting, Mrs. Hagen nominated her eleven candidates to stand for election in opposition to the candidates nominated by the Nominating Committee. Five of Mrs. Hagen's nominees (Patricia Garrison-Corbin, Susan Hirt Hagen, Samuel P. Katz, Claude C. Lilly III and Henry N. Nassau) and seven Nominating Committee nominees were duly elected by the shareholders. As a result, five incumbent directors were not re-elected. For the 2001 Annual Meeting, which is tentatively scheduled for April 24, 2001, Mrs. Hagen has not heard of nor seen a report of the Nominating Committee regarding its slate of nominees for election as directors at that meeting. Mrs. Hagen also does not know whether and to what extent the size of the Board will be increased or whether the Nominating Committee will nominate all of the current directors, including the five directors nominated by Mrs. Hagen and elected at the 2000 Annual Meeting. The Company's advance notice Bylaw provides that, for the 2001 Annual Meeting, shareholders must submit the names of proposed nominees for election as directors at that meeting between December 12, 2000 and January 12, 2001. In the absence of an announced slate from the Nominating Committee, and in light of the advance notice provisions of the Company's Bylaws, Mrs. Hagen is forced to act now to propose candidates for election as directors to assure that highly qualified, experienced and independent individuals dedicated to safeguarding the core principles practiced by H.O. Hirt, the Company's co-founder, and to responding to the long-range goals and needs of the Company, its shareholders and its other constituencies will be nominated for election to the Board. Therefore, on January 12, 2001, Mrs. Hagen delivered a Notice of Shareholder Proposals With Respect to 2001 Annual Meeting (the "Notice") to the Nominating Committee of the Board and the Secretary of the Company in accordance with the advance notice provisions of the Company's Bylaws. The Notice describes five shareholder proposals to be offered at the 3 4 2001 Annual Meeting, including a proposal that nine individuals (the "Hagen Nominees"), five of whom (Patricia Garrison-Corbin, Susan Hirt Hagen, Samuel P. Katz, Claude C. Lilly, III and Henry N. Nassau) currently serve on the Board, be considered by the Nominating Committee of the Board of Directors for election as directors at the 2001 Annual Meeting. Assuming that the size of the Board remains at 12 and that the five Hagen Nominees who are current members of the Board and at least two additional Hagen Nominees are a part of the Nominating Committee slate, Mrs. Hagen has indicated to the Company a willingness to support the selection by the Nominating Committee of any of the following other current directors: Samuel P. Black, III, F. William Hirt, Stephen A. Milne, John M. Petersen and Robert C. Wilburn. If any of the five Hagen Nominees who are current directors and at least two other Hagen Nominees are not selected by the Nominating Committee when it announces its slate, the Notice also constitutes a proposal by Mrs. Hagen to nominate all of those Hagen Nominees not included on the Nominating Committee's slate for election as directors of the Company at the 2001 Annual Meeting. Mrs. Hagen has indicated to the Company that while she prefers that the size of the Board remain at 12, which management has stated is the ideal size, if the Board is increased beyond 12 she will nominate all the Hagen Nominees that are not included on the Nominating Committee slate. In addition, she has reserved the right to nominate additional candidates at the 2001 Annual Meeting if the size of the Board is increased above 16, the current maximum number permitted by the Company's Bylaws. Mrs. Hagen has agreed to indemnify each Hagen Nominee who does not currently serve as a director of the Company from and against any losses incurred by such Hagen Nominee resulting from, relating to or arising out of the nomination of such Hagen Nominee for election as a director of the Company at the 2001 Annual Meeting. Each Hagen Nominee has agreed to be named a nominee for election as director of the Company at the 2001 Annual Meeting and to serve if nominated and elected as a director. The Notice also proposes three amendments to the Company's Bylaws for consideration by the shareholders at the 2001 Annual Meeting. The first such amendment would require that the Company publicly disclose the names of the Nominating Committee's nominees for election as directors at the next Annual Meeting of shareholders in advance of the date of such meeting, and that shareholders present any additional nominees no later than 30 days after the public announcement of the Nominating Committee's nominees. The second such amendment would impose higher independence standards for membership on certain committees of the Board. The third such amendment would create a Principal Officers Selection Committee for purposes of implementing procedures for the selection of the Company's principal officers and their successors from time to time. Except as described above in this Item, Mrs. Hagen has no present plans or proposals that relate to or would result in any of the actions enumerated in paragraphs (a) to (j) of Item 4 of Schedule 13D. 4 5 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Item 7 of the Schedule 13D is hereby amended to add the following exhibits: 5. Opinion and Order of April 24, 2000 by Hon. William R. Cunningham, President Judge, Court of Common Pleas, Erie County, Pennsylvania, 83 Erie County L.J. 120 (C.P. Erie Cty. 2000). 6. Letter to Erie Indemnity Company from Susan Hirt Hagen in relation to Notice of Shareholder Proposals With Respect to 2001 Annual Meeting, dated January 12, 2001. 7. Notice of Shareholder Proposals With Respect to 2001 Annual Meeting, dated January 12, 2001. 8. Form of Indemnification Agreement by and between Mrs. Hagen and each of the Hagen Nominees who is not currently serving as a director of the Company. 5 6 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. /s/ Susan Hirt Hagen Susan Hirt Hagen January 12, 2001 6 7 EXHIBIT INDEX Exhibit Description 1. Letter to Erie Indemnity Company from Susan Hirt Hagen in relation to Notice of Shareholder Proposals With Respect to 2000 Annual Meeting, dated December 29, 1999 (previously filed in Amendment No. 1 to the Schedule 13D dated December 29, 1999). 2. Notice of Shareholder Proposals With Respect to 2000 Annual Meeting, dated December 29, 1999 (previously filed in Amendment No. 1 to the Schedule 13D dated December 29, 1999). 3. Form of Indemnification Agreement by and between Mrs. Hagen and each Hagen Nominee (previously filed in Amendment No. 1 to the Schedule 13D dated December 29, 1999). 4. Complaint, Motion for a Preliminary Injunction and a Supporting Memorandum of Law filed on March 9, 2000 by Susan Hirt Hagen in the Court of Common Pleas, Erie County, Pennsylvania against the Company (previously filed in Amendment No. 2 to the Schedule 13D dated March 9, 2000). 5. Opinion and Order of April 24, 2000 by Hon. William R. Cunningham, President Judge, Court of Common Pleas, Erie County, Pennsylvania, 83 Erie County L.J. 120 (C.P. Erie Cty. 2000). 6. Letter to Erie Indemnity Company from Susan Hirt Hagen in relation to Notice of Shareholder Proposals With Respect to 2001 Annual Meeting, dated January 12, 2001. 7. Notice of Shareholder Proposals With Respect to 2001 Annual Meeting, dated January 12, 2001. 8. Form of Indemnification Agreement by and between Mrs. Hagen and each of the Hagen Nominees who is not currently serving as a director of the Company. 7 EX-99.5 2 y44318ex99-5.txt OPINION AND ORDER BY HON. WILLIAM R. CUNNINGHAM 1 EXHIBIT 5 IN THE COURT OF COMMON PLEAS OF ERIE COUNTY, PENNSYLVANIA ORPHAN'S COURT DIVISION TRUST OF HENRY ORTH HIRT, SETTLOR TRUST UNDER AGREEMENT RESTATED DECEMBER 22, 1980 WITH RESPECT TO SUSAN HIRT HAGEN NO. 100-1998 AND TRUST OF HENRY ORTH HIRT, SETTLOR TRUST UNDER AGREEMENT RESTATED DECEMBER 22, 1980 WITH RESPECT TO F. W. HIRT NO. 101-1998 IN THE COURT OF COMMON PLEAS OF ERIE COUNTY, PENNSYLVANIA CIVIL DIVISION NO. 10902 OF 2000 SUSAN HIRT HAGEN v. ERIE INDEMNITY COMPANY In the interest of judicial economy, consolidated herein are several matters filed under each of the above docket numbers. Specifically, addressed within is Susan Hirt Hagen's Motion for Preliminary Injunction (and the accompanying Petitions to Intervene); two separate Petitions for a Preliminary Injunction filed by F. W. Hirt as well as the Petition of F. W. Hirt to Enjoin Susan Hirt Hagen and Bankers Trust Company from breaching a fiduciary duty and wasting trust assets. Upon consideration of the pleadings and briefs, evidence adduced at hearings held April 3, 2000 and April 20, 2000, oral argument and applicable law (including legislative history or the lack thereof), the following Findings of Fact and Conclusions of Law are hereby entered. 8 2 FINDINGS OF FACT 1. Erie Indemnity Company (hereinafter the "Company") is a Pennsylvania corporation serving as the attorney-in-fact for the Erie Insurance Exchange (the "Exchange"). The principal business activity of the Company is the management of the Exchange. 2. The Company was founded by H. O. Hirt in 1925. The Company has two classes of common stock registered under the Securities Exchange Act of 1934. The Company's Class A common stock is publicly traded on NASDAQ; this stock does not have voting rights. Instead, voting rights are vested in the Company's Class B common stock, which stock is not traded publicly. 3. Over the course of his lifetime, H. O. Hirt acquired 76.22 percent of the Company's Class B voting common stock. H. O. Hirt placed the Class B stock in a trust which became irrevocable upon his death on June 13, 1982. 4. The H. O. Hirt Trusts (hereinafter the "Trusts") are actually two separate but equal Trusts, each for the benefit of his two children. Specifically, 38.11 percent of the Class B stock was placed in a trust for the benefit of H. O. Hirt's son, F. W. Hirt and a like amount placed in a trust for H. O. Hirt's daughter, Susan Hirt Hagen. Each of these trusts operate under the same terms, including management by three co-trustees. The co-trustees consist of F. W. Hirt and Susan Hirt Hagen as individual trustees and Bankers Trust as corporate trustee. It takes a majority vote of the three co-trustees for action to be taken on behalf of either Trust. 5. Susan Hirt Hagen, in addition to being the beneficial owner of Class B stock through her father's Trust, separately owns twelve shares of voting Class B common stock of the Company. 6. Laurel A. Hirt is the daughter of F. W. Hirt, granddaughter of H. O. Hirt and a beneficiary under the H. O. Hirt trust created for her father. 9 3 7. F. W. Hirt has been a member of the Board of Directors of the Company since 1965 and continues to have a distinguished career as Chairman of the Board of the Company. Susan Hirt Hagen likewise has a lengthy history of service to the Company, having been a member of the Board of Directors since 1980. 8. On August 16, 1999, the Board of Directors of the Company amended the by-laws to provide, inter alia, certain time frames for a shareholder to submit to the Nominating Committee any nomination(s) for director(s) to the Board. 9. The annual meeting of the Board of Directors of the Company is scheduled for April 25, 2000. In compliance with the Company's by-laws as amended August 16, 1999, Susan Hirt Hagen, by a letter dated December 29, 1999 to Jan Van Gorder, Executive Vice President, Secretary and General Counsel of the Company, tendered the nomination of eleven individuals for positions as directors to the Board. Additionally, Susan Hirt Hagen timely filed a Schedule 13(d) with the Securities and Exchange Commission stating her intention to nominate an alternative slate of directors for election at the annual meeting on April 25, 2000. An amended Schedule 13(d) was subsequently filed identifying the eleven candidates tendered by Susan Hirt Hagen. 10. Susan Hirt Hagen stated her intention in the above documents to personally appear at the annual meeting and nominate her candidates for election to the Board if the Nominating Committee did not do so. 11. Consistent with this statement, Susan Hirt Hagen, in her capacity as a Director, appeared at a duly-constituted meeting of the Board of Directors on March 7, 2000 and presented a resolution asking the Board to recognize her ability as an owner of Class B stock to nominate a Board candidate at the annual meeting. The Board voted to table the Hagen resolution. A poll was then taken, with ten Board members taking the position that all nominations must come 10 4 through the Nominating Committee; one Board member made no comment and one Board member stated his opinion that the poll was a waste of time. 12. A special Board meeting of the Company's Directors was held on March 14, 2000, to hear the report of the Nominating Committee. During the meeting, the Board voted twelve to one, with Susan Hirt Hagen the lone dissenting vote, to defeat the Hagen resolution to allow her as an owner of voting shares of Class B stock to nominate a director to the Board of Directors. The Board also voted (12-1 with Hagen dissenting) to accept the recommendation of the Nominating Committee to reduce the Board from thirteen to twelve directors and to propose for election all incumbent Board members, except Susan Hirt Hagen. 13. Subsequently, Susan Hirt Hagen filed a complaint seeking injunctive and declaratory relief to allow her as an owner of Class B stock to nominate a candidate for director of the Company. 14. Petitions to Intervene have been filed on behalf of the H. O. Hirt Trusts, F. W. Hirt (limited to opposing the intervention of the H. O. Hirt Trusts) and Laurel A. Hirt. 15. On April 3, 2000, a hearing was held on the Motion for Preliminary Injunction as filed by Susan Hirt Hagen. Prior to the hearing, F. W. Hirt filed a Petition for Preliminary Injunction seeking to enjoin the H. O. Hirt Trustees from participating in this action. While it is almost unprecedented for a party to file a complaint in the morning and have a hearing that same day, the hearing held April 3, 2000 included a record developed for F. W. Hirt's Petition for an injunction since it involved the same set of operative facts. 16. On April 17, 2000, F. W. Hirt launched a two-prong attack by seeking to enjoin the H. O. Hirt Trustees from "breaching fiduciary duties" and asking for an injunction to preclude the Trustees from nominating a candidate for director at the April 25, 2000 meeting or 11 5 voting for any candidate nominated by any entity other than the Nominating Committee. An evidentiary hearing was held on these Petitions on April 20, 2000. CONCLUSIONS OF LAW 1. The rights of an owner of voting share(s) of stock in a corporation inherently include the right to nominate a candidate for director of the corporation. There is no law in Pennsylvania divesting the owner of voting shares of the substantive right to nominate a candidate for a board directorship. 2. Section 1405(c)(4) of the Pennsylvania Insurance Holding Company Act does not limit nor prohibit an owner of voting shares of stock in an insurance holding company from nominating a candidate to the board of directors. See 40 P.S. Section 991.1405(c)(4). Nor does Section 1405(c)(4) create an exclusive mechanism via the Nominating Committee for the nomination of director candidates. Instead, Section 1405(c)(4) simply provides a method of independently assessing appropriate candidates for directorships and communicating to the voting shareholders the views of the Board and/or management. The recommendation of the Nominating Committee is not binding on voting shareholders, who remain free to nominate other candidates. Ultimately it is up to the shareholders, as owners of the company, to determine who should be on the board of directors. To accept the argument of Erie Indemnity Company means the real or actual Board election occurs in the Nominating Committee because the Committee would control the names submitted for election. Hence, the Board could be self-perpetuating as the Nominating Committee is not obligated to accept any nomination(s) from any voting shareholder. In this scenario, not only is there no accountability of the Nominating Committee to the voting shareholders, but the result is tantamount to a Communist election in which there is only one slate of candidates available to voters. 12 6 Further, if the Trustees of the H. O. Hirt Trusts, as owners of over 76 percent of the voting stock, do not agree with the nominations from the Nominating Committee, the Trustees have no other choice(s). If the Trustee choose to abstain from voting, then a small minority of shareholders determine the entire control of the Company. If all voting shareholders rejected the slate tendered by the Nominating Committee, then the Company is in a state of anarchy. Each of these scenarios is an absurd result not intended by the legislature in enacting Section l405(c)(4). Setting aside the personal agendas of every party in this litigation, if there existed a substantive policy disagreement between the voting shareholders and the board of directors, under the Company's interpretation of Section 1405(c)(4), the owners of the Company would have little or no ability to change the directors of the Company. While the Company and F. W. Hirt have gone to great lengths to disparage Susan Hirt Hagen as an unworthy controlling stockholder, the same analysis applies equally to a board of directors who pose a threat to the health of the Company.(1) Historically, there has always been a remedy for an owner of a company to remove detrimental director(s). Section 1405(c)(4) does not usurp the fundamental and traditional power of an owner to remove a director by nominating a director whose interests align with that of the owner. Otherwise there would be little meaning or value to the ownership of voting shares of stock because such shareholders are mere rubber stamps for the Nominating Committee. The language of Section 1405(c)(4) and its legislative history is important for what it does not say. If the legislature intended to provide the Nominating Committee with the exclusive power to nominate a director, the legislature would have stated so in the statute. The absence of the use of the word exclusive is glaring and consistent with the legislative history. If in fact the Insurance Holding Company Act created a special breed of corporate entity as the Company argues, and in so doing took the unusual and perhaps unconstitutional step of abrogating a voting - -------- (1) Under no circumstances is the Court expressing an opinion about the performance of the current Board of Directors of the Company. 13 7 shareholders substantive property right to nominate a director, the legislative history should have reflected such an intent. Section 1405(c)(3) of the Insurance Holding Act provides that not less than one-third of the directors of an insurance holding company and members of each committee be comprised of an independent person (meaning the person cannot be an officer, employee or a controlling shareholder). See 40 P.S. Section 991.1405(c)(3). Logically then, the statute allows the remaining two-thirds of the Board or a committee to consist of officers, employees and/or controlling shareholders. As such, the law clearly envisions a controlling shareholder having an opportunity to serve as a director of an insurance holding company. However, under the Company's interpretation, the controlling shareholder could never become a director if the Nominating Committee opposed it. In conclusion, this Court finds that any owner of Class B common stock of Erie Indemnity Company is entitled to nominate a candidate for director to the Board of Directors at any annual meeting of the Company (assuming compliance with valid by-laws). 3. The Court was not asked, nor is any opinion rendered, on the validity of the by-laws of the Company as enacted August 16, 1999. However, to the extent the Company argues its by-laws preclude an owner of voting shares from nominating a director candidate at the annual meeting, the argument is without legal merit. An insurance holding company cannot through its by-laws appropriate or eliminate a substantive property right of a voting shareholder to nominate a director candidate. 4. Susan Hirt Hagen, because of her timely filing of Schedule 13(d) submissions with the Security Exchange Commission and her letter of December 29, 1999 to the Company, has complied with the by-laws of the Company as enacted August 16, 1999. Accordingly, Susan Hirt Hagen is entitled to tender the nomination of a candidate or candidates for directorship(s) at the annual meeting of the Company on April 25, 2000 or any adjournment thereof. 14 8 5. Susan Hirt Hagen has met all of the requirements for a preliminary injunction to issue. She has made a strong showing on the merits in light of this Court's interpretation of Section 1405(c)(4). She will also suffer irreparable harm since the Company intends to deny her sole opportunity to nominate a director to the Board. As a matter of law, the Company cannot deny Hagen her substantive right to nominate a director. The issuance of an injunction does not substantially harm any other party, including the Company. As a publicly-traded company, there is an annual risk the voting shareholders will replace or remove directors with whom the shareholders are dissatisfied. Accordingly, the only available remedy is to let the injunction issue. 6. As owners of 76.22 shares of the voting Class B common stock of Erie Indemnity Company, the Trusts have a vital interest in the outcome of this litigation and are therefore entitled to intervene. As a direct beneficiary of her father's Trust, Laurel A. Hirt has a vital interest in the outcome of this litigation and is therefore entitled to intervene. Likewise, F. W. Hirt has a basis to intervene. 7. It is black-letter law that a trustee has a fiduciary obligation to act in the best interest of the trust. In the case sub judice, the sole asset of the H. O. Hirt Trusts is 76.22 percent of the Class B common voting stock of the Company. Unquestionably, the Trustees have a duty to protect and preserve this Trust corpus. The position of F. W. Hirt that Bankers Trust and Susan Hirt Hagen have breached a fiduciary obligation by voting to intervene in this litigation and assert the right of the Trusts to nominate a director is untenable. The argument of F. W. Hirt is perhaps understandable if he is wearing his hat as Chairman of the Board of the Company; it is however, unacceptable when he is wearing his hat as a Trustee of the H. O. Hirt Trusts. Unfortunately, F. W. Hirt, who by reputation is a kind, humble and generous man, is seemingly blinded by his animosity towards his sister or his loyalty to present management 15 9 and/or the Board. There is no plausible reason, other than possibly to save the Trusts the cost of litigation, for a Trustee not to take the action as asserted by Bankers Trust and Susan Hirt Hagen. For a Trustee to sit idly by and allow the loss of a substantive right to nominate a director to the sole asset of the Trusts, with the inevitable diminution in value of the Trust corpus, is incomprehensible. The position of F. W. Hirt certainly places at risk not only his future ability to change directors of the Company, but it also handcuffs the ability of future beneficiaries under the Trusts to do so. Accordingly, Bankers Trust and Susan Hirt Hagen have not breached a fiduciary duty nor wasted the assets of the Trusts in seeking to participate in the declaration of the right of the Trusts to nominate a director for the Company. BY THE COURT: /s/ William R. Cunningham ------------------------------- WILLIAM R. CUNNINGHAM President Judge Date: April 24, 2000 ------------------------- 16 10 IN THE COURT OF COMMON PLEAS OF ERIE COUNTY, PENNSYLVANIA ORPHAN'S COURT DIVISION TRUST OF HENRY ORTH HIRT, SETTLOR TRUST UNDER AGREEMENT RESTATED DECEMBER 22, 1980 WITH RESPECT TO SUSAN HIRT HAGEN NO. 100-1998 AND TRUST OF HENRY ORTH HIRT, SETTLOR TRUST UNDER AGREEMENT RESTATED DECEMBER 22, 1980 WITH RESPECT TO F. W. HIRT NO. 101-1998 IN THE COURT OF COMMON PLEAS OF ERIE COUNTY, PENNSYLVANIA CIVIL DIVISION NO. 10902 OF 2000 SUSAN HIRT HAGEN v. ERIE INDEMNITY COMPANY ORDER AND NOW to-wit this 24th day of April 2000, based on the foregoing Findings of Fact and Conclusions of Law, the following Order is hereby entered: 1. The Petition of the Trustees of the H. O. Hirt Trust to intervene is GRANTED. The Petition of F. W. Hirt to intervene is hereby GRANTED as is the Petition of Laurel A. Hirt. 2. The request for a Preliminary Injunction filed by Susan Hirt Hagen at Docket Number 10902-2000 is hereby GRANTED such that Erie Indemnity Company, through its Directors and Officers, is enjoined from prohibiting Susan Hirt Hagen from nominating a candidate or candidates for director to the Board of Directors of Erie Indemnity Company at the annual meeting on April 25, 2000 or any adjournment thereof. Susan Hirt Hagen shall post bond in the amount of $5,000.00. 3. The Petitions for Preliminary Injunctions filed by F. W. Hirt are hereby DENIED as without a basis in fact or law. 17 11 4. The Petition of F. W. Hirt to Enjoin Susan Hirt Hagen and Bankers Trust from breaching a fiduciary duty is hereby DENIED as without a basis in law or fact. BY THE COURT: /s/ William R. Cunningham ---------------------------------- WILLIAM R. CUNNINGHAM President Judge cc: All counsel 18 EX-99.6 3 y44318ex99-6.txt LETTER TO ERIE INDEMNITY COMPANY 1 EXHIBIT 6 [Susan Hirt Hagen Letterhead] January 12, 2001 VIA HAND DELIVERY Erie Indemnity Company 100 Erie Insurance Place Erie, Pennsylvania 16530 Attention: Jan Van Gorder, Esq., Corporate Secretary Dear Mr. Van Gorder: Enclosed is a Notice of Shareholder Proposals with respect to the 2001 Annual Meeting of Erie Indemnity Company, together with a copy of Amendment No. 3 to my Schedule 13D which is being filed with the Securities and Exchange Commission today. The Notice sets forth several shareholder proposals. The Notice proposes nine individuals (the "Hagen Nominees"), five of whom (Ms. Garrison-Corbin, myself and Messrs. Katz, Lilly and Nassau) currently serve on the Board, for consideration by the Nominating Committee of the Board of Directors for election as directors at the 2001 Annual Meeting, tentatively scheduled for April 24, 2001. Each of the Hagen Nominees is a highly qualified, experienced and independent individual dedicated to safeguarding the core principles practiced by my father, H.O. Hirt, the Company's co-founder, and to responding to the long-range goals and needs of the Company, its shareholders and its other constituencies. Assuming that the size of the Board remains at 12 and that the five Hagen Nominees who are current members of the Board and at least two additional Hagen Nominees are a part of the Nominating Committee slate, I would be willing to support the selection by the Nominating Committee of any of the following other current directors: Samuel P. Black, III, F. William Hirt, Stephen A. Milne, John M. Petersen and Robert C. Wilburn. If any of the five Hagen Nominees who are current directors and at least two other Hagen Nominees are not selected by the Nominating Committee when it announces its slate, the Notice also sets forth a proposal, which I would place before the shareholders at the Annual Meeting, for the nomination of all of the Hagen Nominees not included on the Nominating Committee's slate for election as directors of the Company at the Annual Meeting. As you know, on April 24, 2000, Judge Cunningham validated the fundamental right of voting shareholders to directly nominate director candidates and, therefore, I would expect the Company's full cooperation in permitting me to present this proposal to my fellow shareholders at the Annual Meeting. While I prefer that the size of the Board remain at 12, which management has stated is the ideal size, if the Board is increased beyond 12, I will nominate all the Hagen Nominees that are not included on the Nominating Committee's slate. In addition, I reserve the right to nominate additional candidates at the Annual Meeting if the size of the Board is increased above 16, the current maximum number permitted by the Company's Bylaws. I would have preferred to wait until the Nominating Committee announced its nominees before determining whether it was necessary to propose the Hagen Nominees, but as a result of 19 2 management's continued opposition to the repeal of the Company's advance notice bylaw, a voting shareholder such as myself is forced to act now, far in advance of knowing who the Nominating Committee might select, in order to preserve my right to recommend candidates to the shareholders at the 2001 Annual Meeting. In the absence of the advance notice bylaw, and with the benefit of knowing the Nominating Committee's nominees, I may have decided not to act at all or to have acted differently, and would have avoided the needless public appearance of dissension about the manner in which the Company is being governed. As I have argued since its adoption less than two years ago, the advance notice bylaw, as applicable to voting shareholders who have a right to propose Board candidates directly to shareholders, is an unnecessary and inappropriate provision for a company such as Erie Indemnity in which there are a handful of voting shareholders, all of them well known to the Company, and one of which has held a substantial controlling interest for many years. Accordingly, the Notice also proposes certain amendments to the advance notice bylaw (including a requirement that the Nominating Committee present its nominees in advance of each Annual Meeting) for consideration by the shareholders at the 2001 Annual Meeting. Taken together, these amendments would permit voting shareholders sufficient time within which to consider the proposed Board candidates. The Notice also proposes an amendment to the Bylaws that would impose a higher standard for independence in order for directors to qualify for service on Board committees. The current standards, though meeting the basic requirements of the Pennsylvania Insurance Holding Company Act, are not broad enough to capture certain significant relationships between the Company and its Board members which may compromise, or at least appear to compromise, the independence of those Board members from management's influence. As a final matter, the Notice also proposes that, in the interest of good corporate governance, the Bylaws be amended to require that the Board appoint a Principal Officers Selection Committee responsible for implementing procedures for selecting the Company's principal officers and choosing their successors. The Bylaws currently provide that the Executive Compensation Committee is responsible for recommending the selection of the Company's principal officers to the Board, but neither that Committee nor the Board currently has adopted any formal guidelines with respect to the selection of principal officers and their successors who are elected by the Board. Thank you for your consideration of this letter and the enclosed Notice. Sincerely, /s/ Susan Hirt Hagen -------------------------------- Susan Hirt Hagen cc: John M. Petersen Chairperson, Nominating Committee 20 EX-99.7 4 y44318ex99-7.txt NOTICE OF SHAREHOLDERS PROPOSAL 1 EXHIBIT 7 [Susan Hirt Hagen Letterhead] January 12, 2001 VIA HAND DELIVERY Jan Van Gorder, Esq., Corporate Secretary Erie Indemnity Company 100 Erie Insurance Place Erie, Pennsylvania 16530 Nominating Committee of the Board of Directors Erie Indemnity Company 100 Erie Insurance Place Erie, Pennsylvania 16530 Attention: Jan Van Gorder, Esq., Corporate Secretary Re: Shareholder Proposals With Respect To 2001 Annual Meeting Dear Mr. Van Gorder: I am hereby submitting this notice (the "Notice") to Erie Indemnity Company (the "Company") in accordance with the requirements of Sections 2.07(a) and (b) of the Amendment and Restatement of Bylaws of the Company, dated August 16, 1999 (the "Bylaws"). My business address is 100 State Street, Suite 440, Erie, Pennsylvania 16507-1456. I am the owner of 12 shares of Class B Common Stock, no par value per share, of the Company (the "Class B Common Stock"), and the beneficiary of one of two trusts under a trust agreement created by my father, Henry Orth Hirt, co-founder of the Company (the "Trusts"). The Trusts beneficially own 2,340 shares of Class B Common Stock: I am the beneficiary of one of the Trusts which holds 1,170 shares of Class B Common Stock; and my brother, F. William Hirt, is the beneficiary of the other Trust which holds 1,170 shares of Class B Common Stock. For further information on my ownership of the Company's securities, reference should be made to Annex C attached to this Notice. I hereby notify the Company of five shareholder proposals in respect of the 2001 Annual Meeting of Shareholders of the Company (the "Annual Meeting"), tentatively scheduled for April 24, 2001: (1) I propose the following persons (the "Hagen Nominees") for consideration by the Nominating Committee of the Company for election to the Board of Directors of the Company (the "Board") at the Annual Meeting: Kenneth B. Frank * Patricia Garrison-Corbin * Susan Hirt Hagen 21 2 Louis V. Imundo, Jr., Ph.D. Hon. Linda S. Kaiser, Esq., CPCU * Samuel P. Katz * Claude C. Lilly, III, Ph.D., CLU, CPCU * Henry N. Nassau, Esq. Richard J. Pinola, CPA ----------------- * Current Directors I believe the Hagen Nominees are appropriate candidates for election at the Annual Meeting. (2) If any of the five Hagen Nominees who are current directors and at least two other Hagen Nominees are not selected by the Nominating Committee when it announces its slate, this Notice also constitutes my proposal to nominate all of the Hagen Nominees not included on the Nominating Committee's slate for election as directors of the Company at the Annual Meeting. I will appear at the Annual Meeting to nominate such Hagen Nominees for election to the Board. In the event that the size of the Board is increased beyond 12, I will nominate all the Hagen Nominees that are not included on the Nominating Committee slate. In addition, I reserve the right to nominate additional candidates at the Annual Meeting if the size of the Board is increased above 16, the current maximum number permitted by the Company's Bylaws. (3) To permit shareholders sufficient time within which to consider and propose the nomination of candidates to stand for election to the Company's Board of Directors, I propose that the advance notice provision adopted in 1999, which is embodied in Section 2.07(a) of the Bylaws of the Company, be amended to read as follows (capitalized letters indicate additions; [+] indicates deletions): "(a) Shareholder Proposals Relating to Candidates for Election as Directors. NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS MAY BE MADE AT ANY MEETING OF SHAREHOLDERS AT WHICH DIRECTORS ARE TO BE ELECTED (I) BY OR AT THE DIRECTION OF THE NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS, OR (II) BY ANY SHAREHOLDER WHO IS ENTITLED TO VOTE AT ANY MEETING AT WHICH SUCH DIRECTORS ARE TO BE ELECTED AND WHO COMPLIES WITH THE NOTICE PROCEDURES SET FORTH IN THIS SECTION 2.07(A) (A "DIRECTOR NOMINATION"). (1) A Shareholder, whether or not entitled to vote in the election of Directors, may propose to the Nominating Committee of the Board of Directors one or more persons who the Shareholder believes would be appropriate candidates for election by Shareholders as a Director at any meeting of Shareholders at which Directors are to be elected (A "SHAREHOLDER NOMINATION PROPOSAL"). [+] (2) A SHAREHOLDER NOMINATION PROPOSAL OR DIRECTOR NOMINATION shall be made by notice in writing, delivered in person or by first class United States mail 22 3 postage prepaid or by reputable overnight delivery service, to the Nominating Committee of the Board of Directors of the corporation to the attention of the Secretary of the corporation at the principal office of the corporation, within the time limits specified herein and otherwise in accordance with this Section 2.07(a). (3) In the case of an annual meeting of Shareholders, any such written SHAREHOLDER NOMINATION Proposal must be received by the Nominating Committee not less than 90 calendar days nor more than 120 calendar days before the first anniversary of the date on which the corporation first mailed its proxy statement to Shareholders for the annual meeting of Shareholders in the immediately preceding year; provided, however, that in the case of an annual meeting of Shareholders that is called for a date which is not within 30 calendar days before or after the first anniversary date of the annual meeting of Shareholders in the immediately preceding year, any such written SHAREHOLDER NOMINATION Proposal by a Shareholder must be received by the Nominating Committee within five business days after the earlier of the date the corporation shall have mailed notice to its Shareholders that an annual meeting of Shareholders will be held, issued a press release, filed a periodic report with the Securities and Exchange Commission (the "SEC"), or otherwise publicly disseminated notice that an annual meeting of Shareholders will be held. (4) In the case of a special meeting of Shareholders, any such written SHAREHOLDER NOMINATION Proposal by a Shareholder must be received by the Nominating Committee within five business days after the earlier of the date that the corporation shall have mailed notice to its Shareholders that a special meeting of Shareholders will be held, issued a press release, filed a periodic report with the SEC, or otherwise publicly disseminated notice that a special meeting of Shareholders will be held. (5) THE CORPORATION SHALL PUBLICLY ANNOUNCE THE NOMINATING COMMITTEE'S NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS: (I) IN THE CASE OF AN ANNUAL MEETING OF SHAREHOLDERS, NOT LESS THAN 30 CALENDAR DAYS NOR MORE THAN 90 CALENDAR DAYS BEFORE THE FIRST ANNIVERSARY OF THE DATE ON WHICH THE CORPORATION FIRST MAILED ITS PROXY STATEMENT TO SHAREHOLDERS FOR THE ANNUAL MEETING OF SHAREHOLDERS IN THE IMMEDIATELY PRECEDING YEAR; PROVIDED, HOWEVER, THAT IN THE CASE OF AN ANNUAL MEETING OF SHAREHOLDERS THAT IS CALLED FOR A DATE WHICH IS NOT WITHIN 30 CALENDAR DAYS BEFORE OR AFTER THE FIRST ANNIVERSARY DATE OF THE ANNUAL MEETING OF SHAREHOLDERS IN THE IMMEDIATELY PRECEDING YEAR, SUCH PUBLIC ANNOUNCEMENT SHALL BE MADE WITHIN FIVE BUSINESS DAYS FOLLOWING THE LAST DAY ON WHICH SHAREHOLDER NOMINATION PROPOSALS MUST BE RECEIVED BY THE NOMINATING COMMITTEE; OR (II) IN THE CASE OF A SPECIAL MEETING OF SHAREHOLDERS, IN THE NOTICE MAILED TO SHAREHOLDERS OR OTHER PUBLICLY DISSEMINATED NOTICE IN ACCORDANCE WITH PARAGRAPH (4) ABOVE THAT SUCH SPECIAL MEETING WILL BE HELD. (6) ANY SUCH WRITTEN DIRECTOR NOMINATION MUST BE RECEIVED BY THE NOMINATING COMMITTEE: (I) IN THE CASE OF AN ANNUAL MEETING OF SHAREHOLDERS, NOT MORE 23 4 THAN 30 CALENDAR DAYS FOLLOWING THE CORPORATION'S PUBLIC ANNOUNCEMENT OF THE NOMINATING COMMITTEE'S NOMINEES FOR DIRECTOR IN CONNECTION WITH SUCH MEETING, OR (II) IN THE CASE OF A SPECIAL MEETING OF SHAREHOLDERS, WITHIN FIVE BUSINESS DAYS AFTER THE EARLIER OF THE DATE THAT THE CORPORATION SHALL HAVE MAILED NOTICE TO ITS SHAREHOLDERS THAT A SPECIAL MEETING OF SHAREHOLDERS WILL BE HELD, ISSUED A PRESS RELEASE, FILED A PERIODIC REPORT WITH THE SEC, OR OTHERWISE PUBLICLY DISSEMINATED NOTICE THAT A SPECIAL MEETING OF SHAREHOLDERS WILL BE HELD; PROVIDED THAT, IN EITHER CASE, IF NO SUCH PUBLIC ANNOUNCEMENT IS MADE BY THE CORPORATION, ANY SUCH WRITTEN DIRECTOR NOMINATION MUST BE RECEIVED AT ANY TIME PRIOR TO THE ANNUAL OR SPECIAL MEETING OF SHAREHOLDERS. (7) Such written SHAREHOLDER NOMINATION Proposal OR DIRECTOR NOMINATION by a Shareholder shall set forth (A) the name and address of the Shareholder who has made the proposal, (B) the name, age, business address and, if known, residence address of each person so proposed, (C) the principal occupation or employment for the past five years of each person so proposed, (D) the number of shares of capital stock of the corporation beneficially owned within the meaning of SEC Rule 13d-1 by each person so proposed and the earliest date of acquisition of any such capital stock, (E) a description of any arrangement or understanding between each person so proposed and the proposing Shareholder with respect to such person's proposal, election as a Director, and actions to be proposed or taken by such person if elected as a Director, (F) the written consent of each person so proposed to serve as a Director if nominated and elected as a Director and (G) such other information regarding each such person as would be required under the proxy solicitation rules of the SEC if proxies were to be solicited for the election as a Director of each person so proposed. (8) If a written SHAREHOLDER NOMINATION Proposal OR A WRITTEN DIRECTOR NOMINATION by a Shareholder submitted to the Nominating Committee fails, in the reasonable judgment of the Nominating Committee, to contain the information specified in clause (7) hereof or is otherwise deficient, the Chairperson of the Nominating Committee shall, as promptly as is practicable under the circumstances, provide written notice to the Shareholder of such failure or deficiency in the written SHAREHOLDER NOMINATION Proposal OR DIRECTOR NOMINATION by a Shareholder and such Shareholder shall have five business days from receipt of such notice to submit a revised SHAREHOLDER NOMINATION Proposal OR DIRECTOR NOMINATION that corrects such failure or deficiency in all material respects." I will appear at the Annual Meeting to present this proposal. (4) To ensure that the Committees of the Board of Directors are composed of Directors who are sufficiently independent of management and the Company, I propose that the following sections of the Bylaws of the Company be amended as indicated below (capitalized letters indicate additions; [+] indicates deletions) and that a new Section 3.17 be added at the end of Article III of the Bylaws of the Company as indicated below: 24 5 - Proposed Amendment to Paragraph (a) of Section 3.07. Executive Committee: "(a) General Rule. There shall be an Executive Committee which, except as provided in subsection (b), shall have and exercise all power and authority of the Board of Directors between meetings of the Board. The Executive Committee shall consist of not fewer than three (3) regular members including the Chief Executive Officer of the corporation who shall be Chairman of the Executive Committee, unless another member shall be designated by resolution of the Board. All of the regular members shall be designated by resolution of the Board. Not less than one-third of the committee must be Directors who are [+] INDEPENDENT (AS SUCH TERM IS DEFINED IN SECTION 3.17 BELOW). The Executive Committee shall meet at any time and place designated and at least six hours oral or written notice given by or on behalf of the Chairman of the Executive Committee, and shall report promptly to the entire Board of Directors the substance of any action taken by the Executive Committee, which action may be changed by the Board without prejudice to intervening rights." - Proposed Amendment to Paragraph (a) of Section 3.08. Audit Committee and Audit: "(a) Appointment. The Board of Directors shall appoint annually an Audit Committee which shall consist of not less than three (3) Directors who are [+] INDEPENDENT (AS SUCH TERM IS DEFINED IN SECTION 3.17 BELOW). The Audit Committee shall determine the nature and extent of the audit of the corporation. The Audit Committee shall determine the nature and extent of the audit of the records and of the verification and certification of the accounts of the corporation, and not later than at the last meeting of the Board in a calendar year, shall recommend to the Board the engagement and compensation of an independent Certified Public Accountant or firm of such accountants to audit the said records and certify the said accounts for the ensuing calendar year. In making said audit, verification and certification, said accountant or firm shall be under the direction of the Audit Committee and shall be responsible to and shall report to the Board of Directors and not to the officers of the corporation. The Chief Executive Officer and the President, if not also the Chief Executive Officer, shall be non-voting, ex-officio members of the Audit Committee." - Proposed Amendment to Section 3.09. Nominating Committee: "The Board of Director shall appoint annually a Nominating Committee which shall consist of not less than three (3) Directors who are [+] INDEPENDENT (AS SUCH TERM IS DEFINED IN SECTION 3.17 BELOW). The Nominating Committee shall, prior to the Annual Meeting, determine and nominate candidates for the office of Directors of the corporation to be elected by the shareholders to serve terms as established by the bylaws and until their successors are appointed." 25 6 - Proposed Amendment to Section 3.10. Executive Compensation Committee: "The Board of Directors shall appoint annually an Executive Compensation Committee which shall consist of not less than three (3) Directors who are [+] INDEPENDENT (AS SUCH TERM IS DEFINED IN SECTION 3.17 BELOW). The Executive Compensation Committee shall be responsible for evaluating the performance of the principal officers of the corporation and recommending to the Board of Directors the [+] compensation of the principal officers. The Executive Compensation Committee shall also be responsible for the drafting of reports, disclosures, evaluations and other documents relating to executive compensation for filing with State and Federal regulatory authorities." - Proposed Amendment to Section 3.12. Other Committees: "The Board of Directors may designate from time to time any other committees as the Board may deem necessary and appropriate. The Board may set the number of members of any such committee and may appoint such members. Not less than one-third of any committee created hereunder must be Directors who are [+] INDEPENDENT (AS SUCH TERM IS DEFINED IN SECTION 3.17 BELOW)." - Proposed Addition of Section 3.17. Definition of Independent: "SECTION 3.17. DEFINITION OF INDEPENDENT. FOR PURPOSES OF THIS ARTICLE III, A DIRECTOR SHALL NOT BE "INDEPENDENT" IF HE OR SHE (I) IS, OR HAS BEEN WITHIN THE PREVIOUS TWO YEARS, AN EMPLOYEE OR OFFICER OF OR AN AGENT OR CONSULTANT FOR THE CORPORATION OR ANY ENTITY CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH THE CORPORATION, (II) HAS DURING THE CURRENT YEAR, OR HAS HAD DURING EITHER OF THE PREVIOUS TWO YEARS, ANY BUSINESS RELATIONSHIP WITH THE CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION THAT WOULD BE REQUIRED TO BE DISCLOSED UNDER PARAGRAPH (B) OF ITEM 404 OF REGULATION S-K PROMULGATED BY THE SEC IF PROXIES WERE TO BE SOLICITED BY THE CORPORATION FOR THE ELECTION AS A DIRECTOR OF SUCH PERSON OR (III) IS A BENEFICIAL OWNER OF A CONTROLLING INTEREST IN THE VOTING STOCK OF THE CORPORATION OR ANY ENTITY CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH THE CORPORATION." I will appear at the Annual Meeting to present this proposal. (5) One of the most important fiduciary duties of a Board of Directors is to make sure that plans and procedures are in place for the selection of highly competent and motivated principal officers and to ensure that there are appropriate succession plans for those principal officers. In fact, the Pennsylvania Insurance Holding Company Act requires that the corporation have a committee consisting of independent directors charged with the responsibility for recommending to the Board the selection of principal officers. The Company Bylaws presently provide for the selection of principal officers by the same small committee which deals with executive compensation issues and does not provide for the creation of a succession process 26 7 at all. Therefore, in the interest of assuring the implementation of fair and efficient procedures where none currently exist for selecting the principal officers of the Company and their successors from time to time, I propose that a new Section 3.18 be added at the end of Article III of the Bylaws of the Company as follows, thereby creating a Principal Officers Selection Committee composed of truly independent directors to deal exclusively with critically important selection and succession planning issues: "Section 3.18 Principal Officers Selection Committee. The Board of Directors shall appoint annually a Principal Officers Selection Committee consisting of all of the Directors then serving on the Board who are Independent (as such term is defined in Section 3.17 above). The Principal Officers Selection Committee shall (i) meet from time to time to implement and review procedures for the identification, selection and employment of the Company's various principal officers and their successors elected by the Board of Directors under Section 4.02 of these Bylaws, (ii) appoint an advisory panel with whom the Committee shall consult on a regular basis, such panel to consist of any Director who is not Independent solely by reason of clause (iii) of the definition of such term, the corporation's Chief Executive Officer and any other current or former principal officer of the corporation as the Committee may deem appropriate, (iii) have the authority to retain a professional search firm as well as other professional advisors (including independent legal counsel) and (iv) take such other steps as it believes are necessary and appropriate to identify principal officers and their successors for the corporation. In the first year of its existence, the Principal Officers Selection Committee shall include in the corporation's second quarter Form 10-Q and Form 10-K, and thereafter shall include in the corporation's proxy statement, a report to the Shareholders describing the Committee's activities since its previous report to Shareholders, including the number of meetings held, and the procedures that it has adopted for the identification, selection and retention of principal officers and their successors." I will appear at the Annual Meeting to present this proposal. * * * I hereby advise you that certain information relating to each of the Hagen Nominees as required by the Bylaws is set forth herein and in Annexes A through I of this Notice. Except as set forth herein or in any of such Annexes, to the best of my knowledge (i) no Hagen Nominee, other than myself, current director Henry N. Nassau (who purchased 1,000 shares of Class A stock on the open market on June 9, 2000) and current director Claude C. Lilly, III (who purchased 200 shares of Class A stock on the open market on May 26, 2000 and 500 shares of Class A stock on the open market on November 20, 2000), owns any securities of the Company or any parent or subsidiary of the Company, directly or indirectly, beneficially or of record, or has purchased or sold any securities of the Company within the past two years, and none of their associates beneficially owns, directly or indirectly, any securities of the Company, (ii) no Hagen Nominee, his or her associates or any member of his or her immediate family, has any arrangement or understanding with any person (a) with respect to any future employment by the Company or its affiliates or (b) with respect to future transactions to which the Company or any of its affiliates will or may be a party, nor any material interest, direct or indirect, in any 27 8 transaction, or series of similar transactions, that has occurred since January 1, 1999 or any currently proposed transaction, or series of similar transactions, to which the Company or any of its subsidiaries was or is a party and in which the amount involved exceeds $60,000, (iii) no Hagen Nominee is, or was within the past year, a party to any contract, arrangement or understanding with any person with respect to any securities of the Company, including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits or the giving or withholding of proxies, (iv) no Hagen Nominee or any of his or her associates has any arrangement or understanding with any person pursuant to which he or she was or is to be selected as a director, nominee or officer of the Company, and (v) there is no other information with respect to any Hagen Nominee that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required by the rules and regulations of the Securities and Exchange Commission (the "SEC") promulgated under the Securities Exchange Act of 1934, as amended. Although not specifically required to be disclosed by the proxy solicitation rules promulgated by the SEC, in the interest of full disclosure, I do want to point out that one of the Hagen Nominees, current director Henry N. Nassau, along with my husband, serve as directors of Bliley Technologies, Inc., a private company owned by Roger W. Richards, Esq., who serves as legal counsel for my family. Matters disclosed in any part of this Notice, including the Annexes, should be deemed disclosed for all purposes of this Notice. The written consent of each Hagen Nominee to be nominated and to serve as a director of the Company is attached to each such Hagen Nominee's Annex to this Notice. There are no arrangements or understandings between myself and any Hagen Nominee and any other person with respect to the proposals contained in this Notice, the election of each Hagen Nominee as a director, or any actions to be proposed or taken by any Hagen Nominee if elected as a director, except that I have agreed to indemnify each Hagen Nominee who is not currently serving as a director of the Company from and against any losses incurred by such Hagen Nominee resulting from, relating to or arising out of the nomination of such Hagen Nominee for election as a director of the Company at the Annual Meeting. The reason for, and the general effect of, the proposals relating to the nomination of candidates for director included in this Notice is to cause the election of a Board a majority of whose members are dedicated to safeguarding the core principles practiced by my father, H.O. Hirt, the Company's co-founder, and to responding to the long-range goals and needs of the Company, its shareholders and its other constituencies. The reasons for, and the general effect of, the other proposals included in this Notice are to permit voting shareholders sufficient time within which to consider the Nominating Committee's proposed Board candidates before they are required to present nominees of their own; to impose a higher standard for independence to qualify for service on Board committees in order to ensure the independence of Board members from the influence of management; and to appoint a committee specifically responsible for creating and implementing selection and succession plans and procedures for the Company's principal officers where none currently exist. Each of the proposals included in this Notice is a proper matter for shareholder action. This Notice sets forth information which is equivalent to the information that would be required under the proxy solicitation rules of the SEC if proxies were solicited for shareholder consideration of the proposals included in this Notice at a meeting of shareholders, including information required if proxies were solicited for the election of the Hagen Nominees as 28 9 directors of the Company. I do not currently intend to solicit proxies for the Annual Meeting, but will bear all costs if proxies are solicited. Sincerely, /s/ Susan Hirt Hagen ------------------------------- Susan Hirt Hagen Enclosures: Annexes A-I cc: John M. Petersen Chairperson, Nominating Committee 29 10 ANNEX A
Name: KENNETH B. FRANK (the "Nominee") Age: 56 Business address: The Technology Group, Inc. One North Charles Street, Suite 1300 Baltimore, MD 21201 Residence address: 1808 Dixon Road Baltimore, MD 21209
Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 1989-Present: Founder, President and CEO The Technology Group, Inc. Baltimore, MD (Software development company)
The corporation listed above is not a parent, subsidiary or other affiliate of Erie Indemnity Company. The Nominee does not hold any positions or offices with Erie Indemnity Company. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: None Set forth below are the number of shares of capital stock of Erie Indemnity Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. None The Nominee and Mrs. Hagen have entered into an Indemnification Agreement, a copy of which is attached hereto. Also attached hereto is the written consent of the Nominee to be named as a nominee for election as a director of Erie Indemnity Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen contained within the Indemnification Agreement with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 30 11 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 5, 2001 /s/ Kenneth B. Frank ------------------------- Kenneth B. Frank 31 12 ANNEX B Name: PATRICIA GARRISON-CORBIN (the "Nominee"), a current Director Age: 53 Business address: P.G. Corbin & Company, Inc. Two Commerce Square, Suite 3420 2001 Market Street Philadelphia, PA 19103 Residence address: 1828 Delancey Street Philadelphia, PA 19103 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 1986-Present: Founder, President and CEO P.G. Corbin & Company, Inc. Philadelphia, PA (Financial advisory and investment management services for municipalities) The corporation listed above is not a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company, except that of director of the Company and certain affiliates and subsidiaries. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: Sole stockholder/director of P.G. Corbin Asset Management, Inc. Sole stockholder of company which is managing partner of The Delancey Capital Group Erie Indemnity Company Erie Family Life Insurance Company Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. None Attached is the written consent of the Nominee to be named as a nominee for election as a director of Erie Indemnity Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 32 13 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 8, 2001 /s/ Patricia Garrison-Corbin ---------------------------- Patricia Garrison-Corbin 33 14 ANNEX C Name: SUSAN HIRT HAGEN (the "Nominee"), a current Director Age: 65 Business address: 100 State Street, Suite 440 Erie, PA 16507-1456 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 1967-Present: Co-Trustee, H.O. Hirt Trusts 1990-1999: Managing Partner, Hagen Herr & Peppin None of the entities listed above is a parent, subsidiary or other affiliate of the Erie Indemnity Company (the "Company"), except for the H.O. Hirt Trusts which hold 76.22% of the controlling Class B stock of the Company. The Nominee does not hold any positions or offices with the Company, except that of director of the Company and certain affiliates and subsidiaries. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: Erie Indemnity Company Eric Family Life Insurance Company Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock: 12 shares Class B stock, 1990 1,170 shares Class B stock held by H.O. Hirt Trusts, 1967 6,658,800 shares Class A stock, 1954 10,092,900 shares Class A stock held by Hagen Family Limited Partnership of which Nominee is a limited partner, 1989 Mrs. Hagen has entered into an Indemnification Agreement with each Hagen Nominee who is not currently serving as a director of the Company. Mrs. Hagen also has obtained the written consent of each Hagen Nominee to be named as a nominee for election as a director of the Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between Mrs. Hagen and each Hagen Nominee with respect to the proposals contained in the Notice, the election of the Hagen Nominee as a director, and actions to be proposed or taken by the Hagen Nominee if elected as director, see the Notice to which this Annex is attached. 34 15 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 5, 2001 /s/ Susan Hirt Hagen -------------------- Susan Hirt Hagen 35 16 ANNEX D Name: LOUIS V. IMUNDO, JR., Ph.D. Age: 58 Business address: 6116 Old Spanish Trail Dayton, OH 45459 Residence address: 6116 Old Spanish Trail Dayton, OH 45459 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 1990-Present: President Louis V. Imundo, Inc. Dayton, OH (Arbitration and mediation services) None of the entities listed above is a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: None Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. None The Nominee and Mrs. Hagen have entered into an Indemnification Agreement, a copy of which is attached hereto. Also attached is the written consent of the Nominee to be named as a nominee for election as a director of the Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen contained within the Indemnification Agreement with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 36 17 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 7, 2001 /s/ Louis V. Imundo, Jr. ---------------------------- Louis V. Imundo, Jr. 37 18 ] ANNEX E Name: HON. LINDA SUSAN KAISER, ESQ., CPCU (the "Nominee") Age: 44 Business address: Saul Ewing LLP Centre Square West 1500 Market Street - 38th Floor Philadelphia, PA 19102 Residence address: 313 Monroe Street Philadelphia, PA 19147 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. June 2000-Present: Partner, Saul Ewing LLP Philadelphia, PA July 1997-June 2000: Senior Vice President, General Counsel and Secretary Reliance Insurance Company Philadelphia, PA January 1995-June 1997: Insurance Commissioner, Commonwealth of Pennsylvania Harrisburg, PA None of the entities listed above is a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: None Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. None 38 19 The Nominee and Mrs. Hagen have entered into an Indemnification Agreement, a copy of which is attached hereto. Also attached is the written consent of the Nominee to be named as a nominee for election as a director of the Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen contained within the Indemnification Agreement with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 39 20 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 5, 2001 /s/ Linda Susan Kaiser ---------------------------- Linda Susan Kaiser 40 21 ANNEX F Name: SAMUEL P. KATZ (the "Nominee"), a current Director Age: 51 Business address: Enter Sport Capital Advisors, Inc. One Presidential Boulevard, Suite 422 Bala Cynwyd, PA 19004 Residence address: 325 West Allens Lane Philadelphia, PA 19119 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 2000-Present: President and CEO Greater Philadelphia First Foundation Philadelphia, PA (Non-profit corporation) 1997-Present: Founder, President and CEO Enter Sport Capital Advisors, Inc. Bala Cynwyd, PA (Private investment development and consulting firm) 1994-1997: Partner, Stafford Capital Partners, L.P. Philadelphia, PA (Investment company and developer) None of the entities listed above is a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company, except that of director of the Company and certain affiliates and subsidiaries. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: Erie Indemnity Company Erie Family Life Insurance Company Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. None 41 22 Attached is the written consent of the Nominee to be named as a nominee for election as a director of Erie Indemnity Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 42 23 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 4, 2001 /s/ Samuel P. Katz ----------------------- Samuel P. Katz 43 24 ANNEX G Name: CLAUDE C. LILLY, III, Ph.D., CLU, CPCU (the "Nominee"), a current Director Age: 54 Business address: Belk College of Business Administration University of North Carolina Charlotte 9201 University City Boulevard Charlotte, NC 28223 Residence address: 10700 Tavernay Parkway Charlotte, NC 28262 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. May 2000-Present: Dean Belk College of Business Administration, University of North Carolina Charlotte July 1998-April 2000: Interim Dean Belk College of Business Administration, University of North Carolina Charlotte August 1997-Present: James H. Harris Chair of Risk Management and Insurance Belk College of Business Administration, University of North Carolina Charlotte August 1995-January 1996: CEO Quinstone, Inc. Quincy, FL (Manufacturing - on leave from Florida State University) August 1981-August 1997: Professor of Risk Management and Insurance, Florida State University, Tallahassee, FL 44 25 None of the entities listed above is a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company, except that of director of the Company and certain affiliates and subsidiaries. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: Erie Indemnity Company Erie Family Life Insurance Company Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. 700 shares of Class A stock, 2000 Attached is the written consent of the Nominee to be named as a nominee for election as a director of Erie Indemnity Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 45 26 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 8, 2001 /s/ Claude C. Lilly, III --------------------------- Claude C. Lilly, III 46 27 ANNEX H Name: HENRY N. NASSAU, ESQ. (the "Nominee"), a current Director Age: 46 Business address: Internet Capital Group, Inc. 435 Devon Park Drive, Suite 803 Wayne, PA 19087 Residence address: Wilson Farm 113A Swedesford Road Malvern, PA 19355 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 2000-Present: Director, Higher Mountain, Inc. (Internet procurement company) 2000-Present Director, PaperExchange, Inc. (ICGE backed vertical exchange for the paper industry) May 1999-Present: Managing Director, General Counsel & Secretary Internet Capital Group, Inc. (NASDAQ: ICGE) (Internet holding company) 1999-Present: Director, CourtLink, Inc. (ICGE backed legal internet companies) 1999-Present: Director, Bliley Technologies, Inc. (Electronics component manufacturer) September 1987-May 1999: Partner and Chairman of the Business Department (5/97-5/99) Dechert Price & Rhoads Philadelphia, PA (Law firm) None of the entities listed above is a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company, except that of director of the Company and certain affiliates and subsidiaries. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: 47 28 Erie Indemnity Company Erie Family Life Insurance Company Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. 1,000 shares of Class A stock, 2000 Attached is the written consent of the Nominee to be named as a nominee for election as a director of Erie Indemnity Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 48 29 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 8, 2001 /s/ Henry N. Nassau ----------------------- Henry N. Nassau 49 30 ANNEX I Name: RICHARD J. PINOLA, CPA Age: 54 Business address: 1818 Market Street Thirty-Third Floor Philadelphia, PA 19103-3614 Residence address: 1322 N. Tulip Drive West Chester, PA 19380 Set forth below is a brief description of the Nominee's business experience during the past five years, including the Nominee's principal occupations and employment during the past five years; the name and principal business of any corporation or other organization in which such occupations and employment were carried on and the Nominee's current principal occupation or employment. 1994-Present: Director K-Tron International, Inc. (NASDAQ: KTII) Pitman, NJ (Producer of process control and material handling equipment) 1992-Present: Chairman and CEO Right Management Consultants, Inc. (NASDAQ: RMCI) Philadelphia, PA (Career management and human resource consulting) 1968-1991 President and Chief Operating Officer Penn Mutual Life Insurance Company Philadelphia, PA (Diversified financial services) None of the entities listed above is a parent, subsidiary or other affiliate of Erie Indemnity Company (the "Company"). The Nominee does not hold any positions or offices with the Company. The Nominee currently is a director of the following companies that have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are subject to the requirements of Section 15(d) of such Act or that are registered as an investment company under the Investment Company Act of 1940: K-Tron International, Inc. (NASDAQ: KTII) Right Management Consultants, Inc. (NASDAQ: RMCI) Set forth below are the number of shares of capital stock of the Company beneficially owned by the Nominee within the meaning of SEC Rule 13d-1 and earliest date of acquisition of such capital stock. None 50 31 The Nominee and Mrs. Hagen have entered into an Indemnification Agreement, a copy of which is attached hereto. Also attached is the written consent of the Nominee to be named as a nominee for election as a director of the Company and to serve if nominated and elected as a director. For a description of the arrangements and understanding between the Nominee and Mrs. Hagen contained within the Indemnification Agreement with respect to the proposals contained in the Notice, the election of the Nominee as a director, and actions to be proposed or taken by the Nominee if elected as director, see the Notice to which this Annex is attached. 51 32 CONSENT OF NOMINEE The undersigned hereby consents to being named as a nominee for election as a director of the Company at the Annual Meeting (or any special meeting of the stockholders of Erie Indemnity Company (the "Company") called for that purpose) in any materials submitted by on or behalf of myself to the Company or filed by on or behalf of myself or the Company with the Securities and Exchange Commission, and further consents to serve as a director of the Company if elected at the Annual Meeting (or at any special meeting of stockholders of the Company called for that purpose.) Dated: January 5, 2001 /s/ Richard J. Pinola ------------------------ Richard J. Pinola 52 EX-99.8 5 y44318ex99-8.txt FORM OF INDEMNIFICATION AGREEMENT 1 EXHIBIT 8 INDEMNIFICATION AGREEMENT AGREEMENT dated as of January __, 2001 between Susan Hirt Hagen ("Mrs. Hagen") and the undersigned nominee (the "Indemnitee"). WHEREAS, Mrs. Hagen has asked and the Indemnitee has agreed that Mrs. Hagen may nominate the Indemnitee for election to the Board of Directors of Erie Indemnity Company (the "Company") at the 2001 annual meeting of stockholders of the Company (the "Annual Meeting"); and WHEREAS, Mrs. Hagen and/or her affiliates may, in appropriate circumstances, solicit proxies from the stockholders of the Company in support of the Indemnitee's election as a director of the Company at the Annual Meeting; NOW, THEREFORE, in consideration of the foregoing and with the understanding on the part of Mrs. Hagen that the Indemnitee is relying on this Agreement in agreeing to be a nominee of Mrs. Hagen as aforesaid and for other and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement, the following defined terms have the meanings indicated below: "Claim" means any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative, formal or informal investigative or other), whether instituted by Mrs. Hagen, any stockholder of the Company, the Company or any other party, or any inquiry or investigation that the Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding. "Expenses" means all reasonable attorney's fees and all other reasonable fees, costs, expenses and obligations paid or incurred in connection with the election of directors at the Annual Meeting or related matters, including without limitation, investigating, defending or participating (as a party, witness or otherwise) in (including on appeal), or preparing to defend or participate in, any Claim relating to any Indemnifiable Event. "Indemnifiable Event" means any event or occurrence relating to or directly or indirectly arising out of, or any action taken or omitted to be taken in connection with the election of directors at the Annual Meeting or related matters, but not in the Indemnitee's capacity as a director of the Company if the Indemnitee is so elected. "Loss" means any and all damages, judgments, fines, penalties, amounts paid or payable in settlement, deficiencies, losses and Expenses (including all interest, assessments, and other charges paid or payable in connection with or respect of such Losses). 2. Indemnification. (a) In the event the Indemnitee in his capacity as a nominee of Mrs. Hagen for election to the Company's Board of Directors at the Annual Meeting was, is or becomes a party to or other participant in, or is threatened to be made a party to or other 53 2 participant in, a Claim by reason of (or arising or allegedly arising in any manner out of or relating to in whole or in part) an Indemnifiable Event or Indemnitee's being a nominee of Mrs. Hagen for election to the Company's Board of Directors at the Annual Meeting, Mrs. Hagen to the fullest extent permitted by applicable law shall indemnify and hold harmless the Indemnitee from and against any and all Losses suffered, incurred or sustained by the Indemnitee or to which the Indemnitee becomes subject, resulting from, arising out of or relating to such Claim (it being understood that except as provided in Section 2(c) with respect to Expenses, reimbursements of any such Losses shall be made as soon as practicable but in any event no later than 15 days after written request (a "Claim Notice") is made to Mrs. Hagen accompanied by supporting documentation). The Indemnitee shall give Mrs. Hagen written notice of any Claim (accompanied by such reasonable supporting documentation as may be in the Indemnitee's possession) as soon as practicable after the Indemnitee becomes aware thereof; provided that the failure of the Indemnitee give such notice shall not relieve Mrs. Hagen of her indemnification obligations under this Agreement, except to the extent that such failure materially prejudices the rights of Mrs. Hagen. (b) In the case of the commencement of any action against the Indemnitee in respect of which the Indemnitee may seek indemnification from Mrs. Hagen hereunder, Mrs. Hagen will be entitled to participate therein, including, without limitation, the negotiation and approval of any settlement of such action and, to the extent that Mrs. Hagen may wish to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee, and after notice from Mrs. Hagen to the Indemnitee of Mrs. Hagen's election so to assume the defense thereof, together with Mrs. Hagen's written acknowledgement and agreement that she will fully indemnify the Indemnitee under the terms of this Agreement with regard to such Claim, Mrs. Hagen will not be liable to the Indemnitee under this Agreement for any Expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than reasonable costs of investigation and preparation therefor (including, without limitation, appearing as a witness and reasonable fees and expenses of legal counsel in connection therewith). If in any action for which indemnity may be sought hereunder Mrs. Hagen shall not have timely assumed the defense thereof with counsel reasonably satisfactory to the Indemnitee, or the Indemnitee shall have been advised by counsel that it would constitute a conflict of interest for the same counsel to represent both the Indemnitee and Mrs. Hagen in such action, or if the Indemnitee may have separate or additional defenses with regard to such action, the Indemnitee shall have the right to employ counsel for the Indemnitee reasonably satisfactory to Mrs. Hagen in such action, in which event Mrs. Hagen shall reimburse the Indemnitee for all reasonable legal fees and expenses incurred by the Indemnitee in connection with the defense thereof. Mrs. Hagen shall in no event be liable for any settlement of any action effected without her prior written consent (which consent shall not be unreasonably withheld). Mrs. Hagen shall not settle any Claim in any manner that would impose any expense, penalty, obligation or limitation on the Indemnitee, or would contain language other than a recitation of any amounts to be paid in settlement, that could reasonably be viewed as an acknowledgement of wrongdoing on the part of the Indemnitee or as materially detrimental to the reputation of the Indemnitee, without the Indemnitee's prior written consent (which consent shall not be unreasonably withheld). (c) The Indemnitee's right to indemnification under this Section 2 of this Agreement shall include the right of the Indemnitee to be advanced by Mrs. Hagen any Expenses incurred in connection with any Indemnifiable Event as such Expenses are incurred by the Indemnitee; provided, however, that all amounts advanced in respect of such Expenses shall be repaid to Mrs. Hagen by the Indemnitee if it shall ultimately be determined in a final judgment without further 54 3 right to appeal by a court of appropriate jurisdiction that the Indemnitee is not entitled to be indemnified for such Expenses because their Loss arose as a result of the Indemnitee's gross negligence or willful misconduct. 3. Partial Indemnity, etc. If the Indemnitee is entitled under any provision of this Agreement to indemnification by Mrs. Hagen for some or a portion of any Loss, but not for all of the total amount thereof, Mrs. Hagen shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, the Indemnitee shall be indemnified against all Expenses incurred in connection therewith. 4. No Presumptions. For purposes of this Agreement, the termination of any claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court approval), or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that the Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 5. Nonexclusivity, etc. The rights of the Indemnitee hereunder shall be in addition to any other rights the Indemnitee may have under any bylaw, insurance policy, Pennsylvania corporate law or otherwise. To the extent that a change in applicable law (whether by statute or judicial decision) would permit greater indemnification by agreement than would be afforded currently under this Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 6. Amendment, etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 7. Subrogation. In the event of any payment under this Agreement, Mrs. Hagen shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, and the Indemnitee shall execute all papers reasonably required and shall take such action that may be reasonably necessary to secure such rights, including the execution of such documents necessary to enable Mrs. Hagen effectively to bring suit to enforce such rights. 8. No Duplication of Payments. Mrs. Hagen shall not be liable under this Agreement to make any payment in connection with a Claim made against the Indemnitee to the extent the Indemnitee has otherwise actually received payment (under any insurance policy, bylaw or otherwise) of the amounts otherwise indemnifiable hereunder; provided that, if the Indemnitee for any reason is required to disgorge any payment actually received, Mrs. Hagen shall be obligated to pay such amount to the Indemnitee in accordance with the other terms of this Agreement (i.e., disregarding the terms of this Section 8). 9. Termination. This Agreement shall terminate and will become null and void upon the nomination of the Indemnitee by the Nominating Committee of the Board of Directors of the Company to stand for election as a director at the Annual Meeting, and there will be no liability or obligation on the part of Mrs. Hagen under this Agreement. 55 4 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of laws. 11. Counterparts. This Agreement may be executed in one or more counterparts for the convenience of the parties hereto, all of which together shall constitute one and the same instrument. 56 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. /s/ Susan Hirt Hagen -------------------- Susan Hirt Hagen ------------------------- Indemnitee 57 -----END PRIVACY-ENHANCED MESSAGE-----