**EMPLOYMENT AGREEMENT**     **AGREEMENT**made as of the 1st day of October 1, 2006, by and among **BICUS SERVICES CORPORATION**,a Pennsylvania corporation, **MERCER INSURANCE GROUP, INC,**a Pennsylvania corporation, **MERCERINSURANCE COMPANY**, a Pennsylvania corporation, and **PAUL R. CORKERY**.     Bicus Services Corporation, a wholly-owned subsidiary of Mercer Insurance Company, desires toemploy Mr. Corkery, and Mr. Corkery is willing to serve Bicus Services Corporation on the terms andconditions herein provided.     In order to effect the foregoing, the parties hereto desire to enter into an employmentagreement on the terms and conditions set forth below. Accordingly, in consideration of thepremises and the respective covenants and agreements of the parties contained herein, and intendingto be legally bound hereby, the parties hereto agree as follows:     1. **Definitions****.**Each capitalized word and term used herein shall have the meaningascribed to it in the glossary appended hereto, unless the context in which such word or term isused otherwise clearly requires. Such glossary is incorporated herein by reference and made a parthereof.     2. **Employment****.**The Company hereby agrees to employ the Executive, and the Executivehereby agrees to serve the Company, on the terms and conditions set forth herein.     3. **Term of Agreement****.**The Executive’s employment under this Agreement shall commenceon the date of this Agreement and, except as otherwise provided herein, shall continue until March31, 2008; provided, however, that commencing on March 31, 2007 and each March 31 thereafter, theterm of this Agreement shall automatically be extended for one additional year beyond the termotherwise established unless, prior to such March 31st date, the Company shall not have given aNotice of Extension in the form attached hereto as Exhibit A.     4. **Position and Duties****.**The Executive shall serve as a Senior Vice President of theCompany, and he shall have such responsibilities, duties and authority as may, from time to time,be generally associated with such positions. In addition, the Executive shall serve in suchcapacity, with respect to each Subsidiary or Affiliate, as the Board of Directors of each suchSubsidiary or Affiliate shall designate from time to time. During the term of this Agreement, heshall devote substantially all of his working time and efforts to the business and affairs of theCompany, the Subsidiaries and the Affiliate; provided, however, that nothing herein shall beconstrued as precluding him from devoting a reasonable amount of time to civic, charitable, tradeassociation, and similar activities, at least to the extent he is presently devoting time.     5. **Compensation and Related Matters****.**     **Base Compensation****.**During the period of the Executive’s employment hereunder, theCompany shall pay to him annual base compensation of $200,000.     Thereafter, the Board of Directors of the Company shall periodically review the Executive’semployment performance, in accordance with policies generally in effect from time to time, forpossible merit or cost-of-living increases in such base compensation. Except for a
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reduction which is proportionate to a company-wide reduction in executive pay, the annual basecompensation paid to the Executive in any period shall not be less than the annual basecompensation paid to him in any prior period. The frequency and manner of payment of such basecompensation shall be in accordance with the Company’s executive payroll practices from time totime in effect. Nothing herein shall be construed as precluding the Executive from entering intoany salary reduction or deferral plan or arrangement during the term of this Agreement; provided,however, that his base compensation shall be determined without regard to any such salary reductionor deferral for purposes of calculating the amount of any compensation and benefits to which he orhis surviving spouse may be entitled under Paragraph 6, 7, 10, or 11 following his termination ofemployment. The amounts set forth in the first sentence of this subparagraph shall be pro rated tothe extent such period is less than a year.          (a) **Incentive Compensation****.**During the period of the Executive’s employmenthereunder, he shall be entitled to participate in all incentive plans, stock option plans, stockappreciation rights plans, and similar arrangements maintained by the Company or its Affiliates forexecutive officers on a basis and at award levels consistent and commensurate with his position andduties hereunder.          (b) **Employee Benefit Plans and Other Plans or Arrangements****.**The Executive shall beentitled to participate in all Employee Benefit Plans of the Company and its Affiliates on the samebasis as other executive officers of the Company. In addition, he shall be entitled to participatein and enjoy any other plans and arrangements that provide for sick leave, vacation, sabbatical, orpersonal days, education payment or reimbursement, business-related seminars, and similar fringebenefits provided to or for the executive officers of the Company and its Affiliates from time totime, but at least to the extent he is presently entitled to participate in and enjoy such plansand arrangements.          (c) **Expenses****.**During the period of the Executive’s employment hereunder, he shall beentitled to receive prompt reimbursement for all reasonable and customary expenses, includingtransportation expenses, incurred by him in performing services hereunder in accordance with thegeneral policies and procedures established by the Company.     6. **Termination By Reason of Disability****.**          (a) **In General****.**In the event the Executive becomes unable to perform his duties on afull-time basis by reason of the occurrence of his Disability and, within 30 days after a Notice ofTermination is given, he shall not have returned to the full-time performance of such duties, hisemployment may be terminated by the Company.          (b) **Compensation and Benefits****.**In the event of the termination of the Executive’semployment under Subparagraph (a), the Company shall pay or provide the compensation and benefitsset forth below:          (1) The Executive shall be paid an amount per annum equal to the greater of (i) hishighest base compensation received during one of the two calendar years immediatelypreceding the calendar year in which the Date of Termination occurs, or (ii) his basecompensation in effect immediately prior to the Date of Termination (or prior to anyreduction which entitled him to terminate his employment for Good Reason) for one yearbeginning with such Date of Termination. The frequency and manner of
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payment of such amounts shall be in accordance with the Company’s executive payrollpractices from time to time in effect.          (2) The Executive shall be paid an amount equal to the higher of the aggregatebonus(es) paid to him with respect to one of the two years immediately preceding the year inwhich the Date of Termination occurs. Such amount shall be paid to him in cash on the firstanniversary date of the Date of Termination.          (3) The Executive shall be paid an amount equal to the highest annual contribution madeon his behalf (other than his own salary reduction contributions) to each tax-qualified andnon-qualified Defined Contribution Plan of the Company or its Affiliates with respect to theyear in which the Date of Termination occurs or one of the two years immediately precedingsuch year. The amount separately determined for each such plan shall be aggregated andshall be paid to him in cash on the first anniversary date of the Date of Termination.          (4) The Executive shall accrue benefits equal to the excess of (i) the aggregateretirement benefits he would have received under the terms of each tax-qualified andnon-qualified Defined Benefit Plan of the Company or its Affiliates as in effect immediatelyprior to the Date of Termination had he (A) continued to be employed for one more year, and(B) received (on a pro rated basis, as appropriate) the greater of (I) the highestcompensation taken into account under each such plan with respect to one of the two yearsimmediately preceding the year in which the Date of Termination occurs, or (II) hisannualized base compensation in effect immediately prior to the Date of Termination (orprior to any reduction which entitled him to terminate his employment for Good Reason), over(ii) the retirement benefits he actually receives under such plans. The frequency, mannerand extent of payment of such benefits shall be consistent with the terms of the plans towhich they relate and any elections made thereunder.          (5) The Executive and his eligible dependents shall be entitled to continue toparticipate at the same aggregate benefit levels, for one year and at no out-of-pocket ortax cost to him, in the Welfare Benefit Plans in which he was a participant immediatelyprior to the Date of Termination, to the extent permitted under the terms of such plans andapplicable law. To the extent the Company or its Affiliates are unable to provide forcontinued participation in a Welfare Benefit Plan, it shall provide an equivalent benefitdirectly at no out-of-pocket or tax cost to him. For purposes of the preceding twosentences, the Company shall be deemed to have provided a benefit at no tax cost to him ifit pays an additional amount to him or on his behalf, with respect to those benefits whichwould otherwise be nontaxable to him, calculated in a manner consistent with the provisionsof Paragraph 12.          (c) **Adjustment to Certain Subparagraph (b) Compensation and Benefits****.**Notwithstandingthe provisions of Subparagraph (b)(5), the Company or its Affiliates’ obligation to pay or fund anydisability insurance premiums on behalf of the Executive shall be suspended while his Disabilitycontinues, provided the cessation of payment or funding does not result in the termination ofdisability benefits. Any amounts otherwise due under Subparagraph (b) shall be reduced (but notbelow zero) by the dollar amount of disability benefits received by him pursuant to plans orpolicies funded, directly at its cost, by the Company or its Affiliates.
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          (d) **Earlier Cessation of Certain Welfare Benefits****.**Notwithstanding the provisions ofSubparagraph (b)(5), neither the Company nor an Affiliate shall be required to provide, at itscost, the welfare benefits covered therein after the later of (i) the attainment by the Executiveand his spouse (if any) of age 65, or (ii) the date specified in the relevant plan document forbenefit termination (assuming that he was employed until age 65 or the normal retirement date, ifany, specified in such document).          (e) **Death During Remaining Term of Agreement****.**          (1) In the event the Executive dies during the remaining term of this Agreementfollowing his termination for Disability and he is survived by a spouse, the compensationand benefits remaining to be paid and provided under Subparagraph (b) shall be unaffected byhis death and shall be paid and provided to her or on her behalf; provided, however, thatthe extent of her rights to the accrued benefits described in Subparagraph (b)(4) shall bedetermined by reference to the relevant plan provisions and any elections made under suchplans; and provided further, that neither the Company nor an Affiliate shall be required toprovide continued benefits with respect to her deceased husband; and provided further, thatin no event shall the Company or an Affiliate be required to provide, at its cost, the otherwelfare benefits described in Subparagraph (b)(5) to such spouse and her eligible dependentsafter the earlier of (i) her death, or (ii) the later of (A) her attainment of age 65, or(B) the date specified in the relevant plan document for benefit termination (assuming thatthe Executive was employed until age 65 or the normal retirement date, if any, specified insuch document).          (2) In the event the Executive dies during the remaining term of this Agreementfollowing his termination for Disability and he is not survived by a spouse, (i) the Companyor an Affiliate shall thereafter make the remaining payments described in Subparagraphs(b)(1) through (b)(3) directly to his estate, (ii) the extent of the rights of any person tothe accrued benefits described in Subparagraph (b)(4) shall be determined by reference tothe relevant plan provisions and any elections made under such plans, and (iii) the Companyand its Affiliates’ obligation to provide continued benefits under Subparagraph (b)(5) shallterminate.          (f) **Compensation and Benefits Upon Expiration of Remaining Term of Agreement****.**Uponthe expiration of the remaining term of this Agreement following the Executive’s termination forDisability, and provided his Disability then continues, he shall be entitled to receive thecompensation and benefits provided under the terms of the Company or an Affiliates’ long-termdisability plan in effect on the Date of Termination or, if greater, at the expiration of suchremaining term. Such compensation and benefits shall continue until the earlier of (i) his death,or (ii) the later of (A) his attainment of age 65, or (B) the date specified in the plan documentfor benefit termination. To the extent the Company or an Affiliate is unable to provide suchcompensation and benefits under its long-term disability plan, it shall provide equivalentcompensation and benefits directly at no out-of-pocket or tax cost to him. For purposes of thepreceding sentence, the Company or the Affiliate shall be deemed to have provided compensation andbenefits at no tax cost to him if it pays an additional amount to him or on his behalf, withrespect to the compensation and benefits which would otherwise be nontaxable to him, calculated ina manner consistent with the provisions of Paragraph 12.
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     7. **Termination By Reason of Death****.**          (a) **Compensation and Benefits to Surviving Spouse****.**In the event the Executive dieswhile he is employed under this Agreement and is survived by a spouse, the Company or an Affiliateshall pay or provide the compensation and benefits set forth below:               (1) The surviving spouse shall be paid an amount equal to the greater of (i) theExecutive’s highest base compensation received during one of the two calendar yearsimmediately preceding the calendar year in which the Date of Termination occurs, or (ii) hisbase compensation in effect immediately prior to the Date of Termination (or prior to anyreduction which entitled him to terminate his employment for Good Reason) for a period ofone year, beginning with such Date of Termination. The frequency and manner of payment ofsuch amounts shall be in accordance with the Company’s executive payroll practices from timeto time in effect.               (2) The surviving spouse shall be paid an amount equal to the highest payment made toExecutive under each incentive bonus plan of the Company with respect to one of the twoyears immediately preceding the year in which the Date of Termination occurs. Such amountshall be paid in cash to her within 30 days after the Date of Termination.               (3) The surviving spouse shall be paid an amount equal to the sum of the highest annualcontribution made on the Executive’s behalf (other than his own salary reductioncontributions) to each tax-qualified and non-qualified Defined Contribution Plan of theCompany or an Affiliate with respect to the year in which the Date of Termination occurs orone of the two years immediately preceding such year. Such amount shall be paid in cash toher within 30 days after the Date of Termination or within 30 days after such amount canfirst be determined, whichever is later.               (4) Subject to the following sentence, the surviving spouse shall be paid benefitsdetermined by reference to the excess of (i) the aggregate retirement benefits the Executivewould have accrued under the terms of each tax-qualified and non-qualified Defined BenefitPlan as in effect immediately prior to the Date of Termination, had he (A) continued to beemployed for a period of one year following the Date of Termination, and (B) received (on apro rated basis, as appropriate) the greater of (I) the highest compensation taken intoaccount under each such plan with respect to one of the two years immediately preceding theyear in which the Date of Termination occurs, or (II) his annualized base compensation ineffect immediately prior to the Date of Termination (or prior to any reduction whichentitled him to terminate his employment for Good Reason), over (ii) the retirement benefitsactually determined under such plans. The frequency, manner, and extent of payment of suchbenefits shall be consistent with the terms of the plans to which they relate and anyelections made thereunder.               (5) The surviving spouse and her eligible dependents shall be entitled to continue toparticipate at the same aggregate benefit levels, for a period of one year following theDate of Termination and at no out-of-pocket or tax cost to her, in the Welfare Benefit Plansin which the Executive was a participant immediately prior to the Date of Termination, tothe extent permitted under the terms of such plans and applicable
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law; provided, however, that neither the Company nor its Affiliates shall be requiredto provide continued benefits with respect to her deceased husband; and provided further,that neither the Company nor its Affiliates shall thereafter be required to provide, at itscost, the other welfare benefits covered by such plans to such spouse and her eligibledependents after the earlier of (i) her death, or (ii) the later of (A) her attainment ofage 65, or (B) the date specified in the relevant plan document for benefit termination(assuming the Executive was employed until age 65 or the normal retirement date, if any,specified in such document). To the extent the Company or an Affiliate is unable to providefor continued participation in a Welfare Benefit Plan as required, it shall provide anequivalent benefit directly at no out-of-pocket or tax cost to her. For purposes of thepreceding two sentences, the Company or the Affiliate shall be deemed to have provided abenefit at no tax cost to her if it pays an additional amount to her or on her behalf, withrespect to those benefits which would otherwise be nontaxable to her, calculated in a mannerconsistent with the provisions of Paragraph 12.          (b) **Compensation and Benefits to Estate, Etc****.**In the event the Executive dies whilehe is employed under this Agreement and is not survived by a spouse, (i) the Company or anAffiliate shall make the payments described in Subparagraphs (a)(1) through (a)(3) directly to hisestate, (ii) the extent of the rights of any person to the accrued benefits described inSubparagraph (a)(4) shall be determined by reference to the relevant plan provisions and anyelections made under such plans, and (iii) the Company and its Affiliates’ obligation to providebenefits under Subparagraph (a)(5) shall terminate.     8. **Termination By the Company for Cause****.**          (a) **In General****.**In the event the Company intends to terminate the Executive’semployment for Cause, it shall deliver a Notice of Termination to him which specifies a Date ofTermination not less than 30 days following the date of such notice, unless a shorter period ofnotice is required by the principal regulator of any Affiliate of the Company.          (b) **Compensation****.**Within 30 days after the Executive’s termination under Subparagraph(a), the Company shall pay him, in one lump sum, his accrued but unpaid base compensation andvacation compensation earned through the Date of Termination.     9. **Termination By the Executive Without Good Reason****.**          (a) **In General****.**In the event the Executive intends to terminate his employmentwithout Good Reason, he shall deliver a Notice of Termination to the Company which specifies a Dateof Termination not less than (i) 90 days following the date of such notice, if a Change in Controlshall not have occurred, or (ii) 30 days following the date of such notice, if a Change in Controlshall have occurred.          (b) **Compensation****.**Within 30 days after the Executive’s termination under Subparagraph(a), the Company shall pay him, in one lump sum, his accrued but unpaid base compensation andvacation compensation earned through the Date of Termination.
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     10. **Termination By the Company Without Disability or Cause****.**          (a) **In General****.**In the event the Company intends to terminate the Executive’semployment for any reason other than Disability or Cause, it shall deliver a Notice of Terminationto him which specifies a Date of Termination not less than 90 days following the date of suchnotice.          (b) **Compensation and Benefits During Remaining Term of Agreement****.**In the event of thetermination of the Executive’s employment under Subparagraph (a), the Company or an Affiliate shallpay or provide the compensation and benefits described in Paragraph 6(b), except that all suchcompensation and benefits shall be for the remaining term of this Agreement and, with respect toSubparagraphs 6(b)(2) and (3), an additional pro rated amount shall be paid to him in cash on thelast day of the remaining term of this Agreement. Such pro rated amount shall be determined byreference to a fraction, the numerator of which is the number of whole months elapsed during theyear in which termination occurs, and the denominator of which is 12.          (c) **Adjustment to Certain Subparagraph (b) Compensation and Benefits****.**In the eventthe Executive suffers a Disability during the remaining term of this Agreement following the Dateof Termination, the Company or an Affiliate’s obligation to pay or fund any disability insurancepremiums on his behalf shall be suspended while his Disability continues, provided the cessation ofpayment or funding does not result in the termination of disability benefits. Any amountsdescribed in Paragraph 6(b) and otherwise payable under Subparagraph (b) shall be reduced (but notbelow zero) by the dollar amount of disability benefits received by him pursuant to plans orpolicies funded, directly at its cost, by the Company or an Affiliate.          (d) **Earlier Cessation of Certain Welfare Benefits****.**Notwithstanding the provisions ofSubparagraph (b), neither the Company nor an Affiliate shall be required to provide, at its cost,the welfare benefits covered by Paragraph 6(b)(5) after the later of (i) the attainment by theExecutive and his spouse (if any) of age 65, or (ii) the date specified in the relevant plandocument for benefit termination (assuming that he was employed until age 65 or the normalretirement date, if any, specified in such document).          (e) **Death During Remaining Term of Agreement****.**          (1) In the event the Executive dies during the remaining term of this Agreementfollowing his termination without Disability or Cause by the Company and he is survived by aspouse, the compensation and benefits required to be paid and provided under Subparagraph(b) shall be unaffected by his death and shall be paid and provided to her or on her behalf;provided, however, that the extent of her rights to the accrued benefits described inParagraph 6(b)(4) shall be determined by reference to the relevant plan provisions and anyelections made under such plans; and provided further, that neither the Company nor anAffiliate shall be required to provide continued benefits with respect to her deceasedhusband; and provided further, that in no event shall the Company nor an Affiliate berequired to provide, at its cost, the other welfare benefits described in Paragraph 6(b)(5)to such spouse and her eligible dependents after the earlier of (i) her death, or (ii) thelater of (A) her attainment of age 65, or (B) the date specified
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in the relevant plan document for benefit termination (assuming that the Executive wasemployed until age 65 or the normal retirement date, if any, specified in such document).          (2) In the event the Executive dies during the remaining term of this Agreementfollowing his termination without Disability or Cause and he is not survived by a spouse,(i) the Company shall thereafter make the remaining payments described in Paragraphs 6(b)(1)through 6(b)(3) directly to his estate, (ii) the extent of the rights of any person to theaccrued benefits described in Paragraph 6(b)(4) shall be determined by reference to therelevant plan provisions and any elections made under such plans, and (iii) the Company andany Affiliate’s obligation to provide the continued benefits described in Paragraph 6(b)(5)shall terminate.     11. **Termination By the Executive for Good Reason****.**          (a) **In General****.**In the event the Executive intends to terminate his employment forGood Reason, he shall deliver a Notice of Termination to the Company which specifies a Date ofTermination not less than 30 days following the date of such notice.          (b) **Compensation and Benefits During Remaining Term of Agreement****.**In the event of thetermination of the Executive’s employment under Subparagraph (a), the Company shall pay or providethe compensation and benefits described in Paragraph 6(b), except that all such compensation andbenefits shall be for the remaining term of this Agreement and, with respect to Subparagraphs6(b)(2) and (3), an additional pro rated amount shall be paid to him in cash on the last day of theremaining term of this Agreement. Such pro rated amount shall be determined by reference to afraction, the numerator of which is the number of whole months elapsed during the year in whichtermination occurs, and the denominator of which is 12.          (c) **Adjustment to Certain Subparagraph (b) Compensation and Benefits****.**In the eventthe Executive suffers a Disability during the remaining term of this Agreement following the Dateof Termination, the Company or any Affiliate’s obligation to pay or fund any disability insurancepremiums on his behalf shall be suspended while his Disability continues, provided the cessation ofpayment or funding does not result in the termination of disability benefits. Any amountsdescribed in Paragraph 6(b) and otherwise payable under Subparagraph (b) shall be reduced (but notbelow zero) by the dollar amount of disability benefits received by him pursuant to plans orpolicies funded, directly at its cost, to the Company or any Affiliate.          (d) **Earlier Cessation of Certain Welfare Benefits****.**Notwithstanding the provisions ofSubparagraph (b), neither the Company nor an Affiliate shall be required to provide, at its cost,the welfare benefits covered by Paragraph 6(b)(5) after the later of (i) the attainment by theExecutive and his spouse (if any) of age 65, or (ii) the date specified in the relevant plandocument for benefit termination (assuming that he was employed until age 65 or the normalretirement date, if any, specified in such document).          (e) **Death During Remaining Term of Agreement****.**          (1) In the event the Executive dies during the remaining term of this Agreementfollowing his termination for Good Reason and he is survived by a spouse, the compensationand benefits required to be paid and provided under Subparagraph (b)
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shall be unaffected by his death and shall be paid and provided to her or on herbehalf; provided, however, that the extent of her rights to the accrued benefits describedin Paragraph 6(b)(4) shall be determined by reference to the relevant plan provisions andany elections made under such plans; and provided further, that neither the Company nor anyAffiliate shall be required to provide continued benefits with respect to her deceasedhusband; and provided further, that in no event shall the Company or any Affiliate berequired to provide, at its cost, the other welfare benefits described in Paragraph 6(b)(5)to such spouse and her eligible dependents after the earlier of (i) her death, or (ii) thelater of (A) her attainment of age 65, or (B) the date specified in the relevant plandocument for benefit termination (assuming that the Executive was employed until age 65 orthe normal retirement date, if any, specified in such document).          (2) In the event the Executive dies during the remaining term of this Agreementfollowing his termination for Good Reason and he is not survived by a spouse, (i) either theCompany or any Affiliate shall thereafter make the remaining payments described inParagraphs 6(b)(1) through 6(b)(3) directly to his estate, (ii) the extent of the rights ofany person to the accrued benefits described in Paragraph 6(b)(4) shall be determined byreference to the relevant plan provisions and any elections made under such plans, and (iii)the Company or any Affiliate’s obligation to provide the continued benefits described inParagraph 6(b)(5) shall terminate.     12. **Provisions Relating to Excise Taxes****.**          (a) **In General****.**In the event the Executive becomes liable, for any taxable year, forthe payment of an Excise Tax (because of a change in control) with respect to the compensation andbenefits payable by the Company or an Affiliate under this Agreement or otherwise, the Companyshall make one or more Gross-Up Payments to the Executive or on his behalf. The amount of anyGross-Up Payment shall be calculated by a certified public accountant or other tax professionaldesignated jointly by the Executive and the Company. The provisions of this paragraph shall applywith respect to the Executive’s surviving spouse or estate, where relevant.          (b) **Methodology for Calculation of Gross-Up Payment****.**For purposes of determining theamount of any Gross-Up Payment, the Executive shall be deemed to pay income taxes at the highestfederal, state, and local marginal rates of tax for the calendar year in which the Gross-Up Paymentis to be made, net of the maximum reduction in federal income tax which could be obtained from thededuction of state and local income taxes. In the event that the Excise Tax is subsequentlydetermined to be less than the amount taken into account at the time the Gross-Up Payment was made,the Executive shall repay to the Company, at the time that the amount of such reduction in ExciseTax is finally determined, the portion of the Gross-Up Payment attributable to the reduction (plusa portion of the Gross-Up Payment attributable to the Excise Tax and the federal, state, and localincome taxes imposed on the portion of the Gross-Up Payment being repaid by the Executive to theextent such repayment results in a reduction in Excise Tax or federal, state, or local income tax),plus interest on the amount of such repayment. Such interest shall be calculated by using the ratein effect under Section 1274(d)(1) of the IRC, on the date the Gross-Up Payment was made, for debtinstruments with a term equal to the period of time which has elapsed from the date the Gross-UpPayment was made to the date of repayment. In the event that the Excise Tax is subsequentlydetermined to exceed the amount
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taken into account at the time the Gross-Up Payment was made (including by reason of anypayment the existence or amount of which could not be determined at the time of the Gross-UpPayment), the Company shall make an additional Gross-Up Payment with respect to the excess at thetime the amount thereof is finally determined, plus interest calculated in a manner similar to thatdescribed in the preceding sentence.          (c) **Time of Payment****.**Any Gross-Up Payment provided for herein shall be paid not laterthan the 30th day following the payment of any compensation or the provision of any benefit whichcauses such payment to be made; provided, however, that if the amount of such payment cannot befinally determined on or before such day, the Company shall pay on such day an estimate of theminimum amount of such payment and shall pay the remainder of such payment (together with interestcalculated in a manner similar to that described in Subparagraph (b)) as soon as the amount thereofcan be determined. In the event that the amount of an estimated payment exceeds the amountsubsequently determined to have been due, such excess shall constitute a loan by the Company to theExecutive, payable on the 30th day after demand by the Company (together with interest calculatedin a manner similar to that described in Subparagraph (b)).          (d) Notwithstanding the provisions of this paragraph to the contrary, the actual amountspayable hereunder as Gross-Up Payments shall be coordinated with any similar amounts paid to theExecutive under any other contract, plan, or arrangement.     13. **Fees and Expenses of the Executive****.**After a Change in Control and except asprovided in the following sentence, the Company shall pay, within 30 days following demand by theExecutive, all legal, accounting, actuarial, and related fees and expenses incurred by him inconnection with the enforcement of this Agreement. An arbitration panel or a court of competentjurisdiction shall be empowered to deny payment to the Executive of such fees and expenses only ifit determines that he instituted a proceeding hereunder, or otherwise acted, in bad faith.     14. **Reduction for Compensation and Benefits Received Under the Company Severance Policy,Etc.** Notwithstanding anything herein to the contrary, in the event the Executive, hissurviving spouse, or any other person becomes entitled to continued compensation and benefitshereunder by reason of the Executive’s termination of employment and, in addition, compensation orsimilar benefits are payable under a severance policy, program or arrangement maintained by theCompany (other than retirement plans), then the compensation or benefits otherwise payablehereunder shall be reduced by the compensation or benefits provided under such severance policy,program or arrangement.     15. **Mitigation****.**The Executive shall not be required to mitigate the amount of anycompensation or benefits which may become payable hereunder by reason of his termination by seekingother employment or otherwise, nor, except as otherwise provided in the following sentence orelsewhere herein, shall the amount of any such compensation or benefits be reduced by anycompensation or benefits received by the Executive as the result of his employment by anotheremployer. Notwithstanding anything in this Agreement to the contrary, the Company or anyAffiliate’s obligation to provide any medical and dental benefits hereunder may be suspended, withthe written concurrence of the Executive or, if applicable, his surviving spouse during any periodof time that such benefits are being provided by reason of his or her employment.
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16. **Funding of Compensation and Benefits; Acceleration of Certain Payments****.**          (a) **Grantor Trust****.**In the event the Executive’s employment is terminated withoutCause or he terminates his employment for Good Reason and a Change in Control has occurred as ofthe Date of Termination or occurs thereafter, the Executive shall have the right to require theCompany to establish a grantor trust (taxable to the Company) and fund such trust, on anactuarially sound basis, to provide the compensation and benefits to which he is entitledhereunder, other than those which may be paid pursuant to the provisions of Subparagraph (c). Thespecific terms of such trust shall be as agreed to by the parties in good faith; provided, however,that the trustee shall be a financial institution independent of the Company; and provided further,that in no event shall the Company be entitled to withdraw funds from the trust for its benefit, orotherwise voluntarily assign or alienate such funds, until such time as all compensation andbenefits required hereunder are paid and provided. The determination of the extent of requiredfunding, including any supplemental funding in the event of adverse investment performance of trustassets, shall be made by an actuary or a certified public accountant retained by each party. Tothe extent such professionals cannot agree on the proper level of funding, they shall select athird such professional whose determination shall be binding upon the parties. Notwithstanding theforegoing, the Company and its Affiliates shall remain liable for all compensation and benefitsrequired to be paid or provided hereunder.          (b) **Alternate Security****.**In lieu of the right given to the Executive underSubparagraph (a), he shall have the right under such circumstances to require that the Company orits Affiliates provide (i) an irrevocable standby letter of credit issued by a financialinstitution other than the Company or any Subsidiary of the Company with a senior debt creditrating of “A” or better by Moody’s Investors Service or Standard & Poor’s Corporation, or (ii)other security reasonably acceptable to him, to secure the payment of such compensation andbenefits.          (c) **Accelerated Payment of Present Value of Certain Compensation****.**In the event theExecutive’s employment is terminated without Cause or he terminates his employment for Good Reason,the Executive shall have the continuing right to demand that the present value of the remainingpayments described in Paragraphs 6(b)(1) through (3), and payable by reason of the provisions ofParagraph 10 or 11 (as the case may be), be paid to him in one lump sum within 10 days after thedate written demand is given. For purposes of calculating the present value of such payments, adiscount factor shall be applied to each such payment which is equal to the relevant applicablefederal rate in effect on the date written demand is given by him, determined by reference to theperiod of time between the date of such notice and the scheduled time such payment would otherwisebe made. In the event any payment described in Paragraphs 6(b)(1) through (3) is not yetdeterminable on the date written demand is made, the other payments shall nonetheless be made asprovided above; and the undetermined payment shall be made within 30 days after it becomesdeterminable, calculated as provided in the preceding sentence but by treating the date on whichthe payment becomes determinable as the date of written notice. Nothing in this subparagraph shallbe construed as affecting the Executive’s right to one or more Gross-Up Payments in accordance withthe provisions of Paragraph 12; and a Gross-Up Payment (if applicable) will be calculated and madewith any payment made under this subparagraph, as well as any other Gross-Up Payments that may berequired hereunder at a subsequent date.
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     17. **Withholding Taxes****.**All compensation and benefits provided for herein shall, tothe extent required by law, be subject to federal, state, and local tax withholding.     18. **Confidential Information****.**The Executive agrees that subsequent to his employmentwith the Company, he will not, at any time, communicate or disclose to any unauthorized person,without the written consent of the Company, any proprietary or other confidential informationconcerning the Company or any Subsidiary or any Affiliate of the Company; provided, however, thatthe obligations under this paragraph shall not apply to the extent that such matters (i) aredisclosed in circumstances where the Executive is legally obligated to do so, or (ii) becomegenerally known to and available for use by the public otherwise than by his wrongful act oromission; and provided further, that he may disclose any knowledge of insurance, financial, legaland economic principles, concepts and ideas which are not solely and exclusively derived from thebusiness plans and activities of the Company.19. **Covenants Not to Compete or to Solicit****.**          (a) **Noncompetition****.**During his employment, and if the Executive’s employmentterminates under Paragraph 8 or 9 prior to a Change in Control, then for a period of 12 monthsafter the Date of Termination, the Executive agrees he will not, without the written consent inwriting of the Board of Directors of the Company, endeavor to entice away from the Company, aSubsidiary or any Affiliate, or otherwise interfere with the relationship of the Company, aSubsidiary or any Affiliate with any person who is, or was within the then most recent 12 monthperiod, a customer, agent or supplier of the Company, a Subsidiary or any Affiliate. If at thetime of the enforcement of this paragraph a court holds that the duration, scope, or arearestrictions stated herein are unreasonable under the circumstances then existing and, thus,unenforceable, the Company and the Executive agree that the maximum duration, scope, or areareasonable under such circumstances shall be substituted for the stated duration, scope, or area.          (b) **Nonsolicitation****.**During his employment, and if the Executive’s employmentterminates under Paragraph 8 or 9 prior to a Change in Control, then for a period of 12 monthsafter the Date of Termination, the Executive shall not, whether on his own behalf or on behalf ofany other individual or business entity, solicit, endeavor to entice away from the Company, aSubsidiary or any Affiliate, or otherwise interfere with the relationship of the Company, aSubsidiary or any Affiliate with any person who is, or was within the then most recent 12 monthperiod, an employee or associate thereof; provided, however, that this subparagraph shall not applyfollowing the occurrence of a Change in Control.     20. **Arbitration****.**To the extent permitted by applicable law, any controversy ordispute arising out of or relating to this Agreement, or any alleged breach hereof, shall besettled by arbitration in Pennington, New Jersey, in accordance with the commercial rules of theAmerican Arbitration Association then in existence (to the extent such rules are not inconsistentwith the provisions of this Agreement), it being understood and agreed that the arbitration panelshall consist of three individuals acceptable to the parties hereto. In the event that the partiescannot agree on three arbitrators within 20 days following receipt by one party of a demand forarbitration from another party, then the Executive and the Company shall each designate onearbitrator and the two arbitrators selected shall select the third arbitrator. The arbitrationpanel so selected shall convene a hearing no later than 90 days following the selection of thepanel. The
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arbitration award shall be final and binding upon the parties, and judgment may be enteredthereon in the Commonwealth of Pennsylvania Court of Common Pleas or in any other court ofcompetent jurisdiction.     21. **Additional Equitable Remedy****.**The Executive acknowledges and agrees that theCompany’s remedy at law for a breach or a threatened breach of the provisions of Paragraphs 18 and19 would be inadequate; and, in recognition of this fact and notwithstanding the provisions ofParagraph 20, in the event of such a breach or threatened breach by him, it is agreed that theCompany shall be entitled to request equitable relief in the form of specific performance,temporary restraining order, temporary or permanent injunction, or any other equitable remedy whichmay then be available. Nothing in this paragraph shall be construed as prohibiting the Companyfrom pursuing any other remedy available under this Agreement for such a breach or threatenedbreach.     22. **Related Agreements****.**Except as may otherwise be provided herein, to the extentthat any provision of any other agreement between the Company and the Executive shall limit,qualify, duplicate, or be inconsistent with any provision of this Agreement, the provision in thisAgreement shall control and such provision of such other agreement shall be deemed to have beensuperseded, and to be of no force or effect, as if such other agreement had been formally amendedto the extent necessary to accomplish such purpose.     23. **No Effect on Other Rights****.**Except as otherwise specifically provided herein,nothing contained in this Agreement shall be construed as adversely affecting any rights theExecutive may have under any agreement, plan, policy or arrangement to the extent any such right isnot inconsistent with the provisions hereof.     24. **Exclusive Rights and Remedy****.**Except for any explicit rights and remedies theExecutive may have under any other contract, plan or arrangement with the Company, the compensationand benefits payable hereunder and the remedy for enforcement thereof shall constitute hisexclusive rights and remedy in the event of his termination of employment.     25. **Director and Officer Liability Insurance; Indemnification****.**The Company and Mercershall provide the Executive (including his heirs, executors, and administrators) with coverageunder a standard directors’ and officers’ liability insurance policy, at the Company and Mercer’sexpense, in amounts consistent with amounts provided by peer corporations to their directors andofficers, and shall indemnify him as both a director and as an officer (and his heirs, executors,and administrators) to the fullest extent permitted under Pennsylvania law against all expenses andliabilities reasonably incurred by him in connection with or arising out of any action, suit, orproceeding in which he may be involved by reason of his having been an officer or director of theCompany or any Subsidiary or Affiliate (whether or not he continues to be such an officer ordirector at the time of incurring such expenses or liabilities). Such expenses and liabilitiesshall include, but not be limited to, judgments, court costs, and attorneys’ fees, and the costs ofreasonable settlements.     26. **Notices****.**Any notice required or permitted under this Agreement shall besufficient if it is in writing and shall be deemed given (i) at the time of personal delivery tothe addressee, or (ii) at the time sent certified mail, with return receipt requested, addressed asfollows:
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       If to the Executive—         Mr. Paul R. Corkery    29 Skillmans Lane    Somerset, NJ 08873       If to Mercer, or the Company—         10 North Highway 31    P.O. Box 278    Pennington, NJ 08534         Attention: Chairman of the Board of DirectorsThe name or address of any addressee may be changed at any time and from time to time by noticesimilarly given.     27. **No Waiver****.**The failure by any party to this Agreement at any time or timeshereafter to require strict performance by any other party of any of the provisions, terms, orconditions contained in this Agreement shall not waive, affect, or diminish any right of the firstparty at any time or times thereafter to demand strict performance therewith and with any otherprovision, term, or condition contained in this Agreement. Any actual waiver of a provision, term,or condition contained in this Agreement shall not constitute a waiver of any other provision,term, or condition herein, whether prior or subsequent to such actual waiver and whether of thesame or a different type. The failure of the Company to promptly terminate the Executive’semployment for Cause or the Executive to promptly terminate his employment for Good Reason shallnot be construed as a waiver of the right of termination, and such right may be exercised at anytime following the occurrence of the event giving rise to such right.     28. **Joint and Several Obligations of Mercer and the Company****.**Mercer and the Companyshall be jointly and severally liable for all compensation and benefits that may become payablehereunder to or on behalf of the Executive or, if applicable, his surviving spouse, estate orbeneficiaries.     29. **Survival****.**Notwithstanding the nominal termination of this Agreement and theExecutive’s employment hereunder, the provisions hereof which specify continuing obligations,compensation and benefits, and rights (including the otherwise applicable term hereof) shall remainin effect until such time as all such obligations are discharged, all such compensation andbenefits are received, and no party or beneficiary has any remaining actual or contingent rightshereunder.     30. **Severability****.**In the event any provision in this Agreement shall be held illegalor invalid for any reason, such illegal or invalid provision shall not affect the remainingprovisions hereof, and this Agreement shall be construed, administered and enforced as though suchillegal or invalid provision were not contained herein.
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     31. **Binding Effect and Benefit****.**The provisions of this Agreement shall be bindingupon and shall inure to the benefit of the successors and assigns of the Company and the executors,personal representatives, surviving spouse, heirs, devisees, and legatees of the Executive.     32. **Entire Agreement****.**This Agreement embodies the entire agreement among the partieswith respect to the subject matter hereof, and it supersedes all prior discussions and oralunderstandings of the parties with respect thereto.     33. **No Assignment****.**This Agreement, and the benefits and obligations hereunder, shallnot be assignable by any party hereto except by operation of law.     34. **No Attachment****.**Except as otherwise provided by law, no right to receivecompensation or benefits under this Agreement shall be subject to anticipation, commutation,alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to set off,execution, attachment, levy, or similar process, and any attempt, voluntary or involuntary, toeffect any such action shall be null and void.     35. **Captions****.**The captions of the several paragraphs and subparagraphs of thisAgreement have been inserted for convenience of reference only. They constitute no part of thisAgreement and are not to be considered in the construction hereof.     36. **Counterparts****.**This Agreement may be executed in any number of counterparts, eachof which shall be deemed one and the same instrument, which may be sufficiently evidenced by anyone counterpart.     37. **Number****.**Wherever any words are used herein in the singular form, they shall beconstrued as though they were used in the plural form, as the context requires, and viceversa.     38. **Applicable Law****.**Except to the extent preempted by federal law, the provisions ofthis Agreement shall be construed, administered, and enforced in accordance with the domesticinternal law of the Commonwealth of Pennsylvania.     39. **Prior Agreements**. The execution of this Agreement terminates any and all previousemployment agreements among the Company, its Affiliates and Mr. Corkery.     40. **Joinder**. Mercer and Mercer Insurance have joined in this Agreement for thepurpose of guaranteeing the performance of the Company’s obligations hereunder.
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     **IN WITNESS WHEREOF,**the parties have executed this Agreement, or caused it to be executed, asof the date first above written.              Paul R. Corkery           BICUS SERVICE CORPORATION           By:              Attest:                    MERCER INSURANCE GROUP, INC.           By:              Attest:                    MERCER INSURANCE COMPANY           By:              Attest:           
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**GLOSSARY**     **“Affiliate”**means with respect to any Person, a Person or entity that, directly or indirectly,controls, or is controlled by, or is under common control with such Person or entity, includingwithout limitation, Mercer and Mercer Insurance Group, Inc.     **“Board of Directors”**means the board of directors of the relevant corporation.     **“Cause”**means (i) a documented repeated and willful failure by the Executive to perform hisduties, but only after written demand and only if termination is effected by action taken by a voteof (A) prior to a Change in Control, at least a majority of the directors of the Company then inoffice, or (B) after a Change in Control, at least 80% of the nonofficer directors of the Companythen in office, (ii) his final conviction of a felony, (iii) conduct by him which constitutes moralturpitude which is directly and materially injurious to the Company or any Subsidiary or affiliatedcompany, (iv) willful material violation of corporate policy, or (v) the issuance by the regulatorof the Company or any Subsidiary or Affiliate of an unappealable order to the effect that he bepermanently discharged.     For purposes of this definition, no act or failure to act on the part of the Executive shall beconsidered “willful” unless done or omitted not in good faith and without reasonable belief thatthe action or omission was in the best interest of the Company or any of its Subsidiaries orAffiliate.     **“Change in Control”**means the occurrence of any of the following events:     (a) any Person (except (i) Mercer or any Subsidiary or Affiliate of Mercer, or (ii) anyEmployee Benefit Plan (or any trust forming a part thereof) maintained by Mercer or anySubsidiary or Affiliate) is or becomes the beneficial owner, directly or indirectly, of,Mercer or any Affiliate’s securities representing 19.9% or more of the combined voting powerof Mercer or any Affiliate’s then outstanding securities, or 50.1% or more of the combinedvoting power of a Material Subsidiary’s then outstanding securities, other than pursuant toa transaction described in Clause (c);     (b) there occurs a sale, exchange, transfer or other disposition of substantially allof the assets of Mercer or a Material Subsidiary to another entity, except to an entitycontrolled directly or indirectly by Mercer or an Affiliate;     (c) there occurs a merger, consolidation, share exchange, division or otherreorganization of or relating to Mercer, unless—     (i) the shareholders of Mercer immediately before such merger, consolidation,share exchange, division or reorganization own, directly or indirectly, immediatelythereafter at least two-thirds of the combined voting power of the outstandingvoting securities of the Surviving Company in substantially the same proportion astheir ownership of the voting securities immediately before such merger,consolidation, share exchange, division or reorganization; and
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     (ii) the individuals who, immediately before such merger, consolidation, shareexchange, division or reorganization, are members of the Incumbent Board continue toconstitute at least two-thirds of the board of directors of the Surviving Company;provided, however, that if the election, or nomination for election by Mercer’sshareholders, of any new director was approved by a vote of at least two-thirds ofthe Incumbent Board, such director shall, for the purposes hereof, be considered amember of the Incumbent Board; and provided further, however, that no individualshall be considered a member of the Incumbent Board if such individual initiallyassumed office as a result of either an actual or threatened Election Contest orProxy Contest, including by reason of any agreement intended to avoid or settle anyElection Contest or Proxy Contest; and     (iii) no Person (except (A) Mercer or any Subsidiary or Affiliate of Mercer,(B) any Employee Benefit Plan (or any trust forming a part thereof) maintained byMercer or any Subsidiary or Affiliate of Mercer, or (C) the Surviving Company or anySubsidiary or Affiliate of the Surviving Company) has beneficial ownership of 19.9%or more of the combined voting power of the Surviving Company’s outstanding votingsecurities immediately following such merger, consolidation, share exchange,division or reorganization;     (d) a plan of liquidation or dissolution of Mercer, other than pursuant to bankruptcyor insolvency laws, is adopted; or     (e) during any period of two consecutive years, individuals who, at the beginning ofsuch period, constituted the Board of Directors of Mercer cease for any reason to constituteat least a majority of such Board of Directors, unless the election, or the nomination forelection by Mercer’s shareholders, of each new director was approved by a vote of at leasttwo-thirds of the directors then still in office who were directors at the beginning of theperiod; provided, however, that no individual shall be considered a member of the Board ofDirectors of Mercer at the beginning of such period if such individual initially assumedoffice as a result of either an actual or threatened Election Contest or Proxy Contest,including by reason of any agreement intended to avoid or settle any Election Contest orProxy Contest.Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred if a Personbecomes the beneficial owner, directly or indirectly, of securities representing 19.9% or more ofthe combined voting power of Mercer’s then outstanding securities solely as a result of anacquisition by Mercer of its voting securities which, by reducing the number of shares outstanding,increases the proportionate number of shares beneficially owned by such Person; provided, however,that if a Person becomes a beneficial owner of 19.9% or more of the combined voting power ofMercer’s then outstanding securities by reason of share repurchases by Mercer and thereafterbecomes the beneficial owner, directly or indirectly, of any additional voting securities ofMercer, then a Change in Control shall be deemed to have occurred with respect to such Person underClause (a).Notwithstanding anything contained herein to the contrary, if the Executive’s employment isterminated and he reasonably demonstrates that such termination (i) was at the request of a third
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party who has indicated an intention of taking steps reasonably calculated to effect a Change inControl and who effects a Change in Control, or (ii) otherwise occurred in connection with, or inanticipation of, a Change in Control which actually occurs, then for all purposes hereof, a Changein Control shall be deemed to have occurred on the day immediately prior to the date of suchtermination of his employment.     **“Company”**means Bicus Services Corporation, a Pennsylvania corporation, and any successorthereto.     **“Date of Termination”**means:     (a) if the Executive’s employment is terminated for Disability, 30 days after theNotice of Termination is given (provided that he shall not have returned to the performanceof his duties on a full-time basis during such 30-day period);     (b) if the Executive’s employment terminates by reason of his death, the date of hisdeath;     (c) if the Executive’s employment is terminated by the Company for Cause, the datespecified in the Notice of Termination;     (d) if the Executive’s employment is terminated by him without Good Reason, the datespecified in the Notice of Termination;     (e) if the Executive’s employment is terminated by the Company for any reason otherthan for Disability or Cause, the date specified in the Notice of Termination; or     (f) if the Executive’s employment is terminated by him for Good Reason, the datespecified in the Notice of Termination;provided, however that the Date of Termination shall mean the actual date of termination in theevent the parties mutually agree to a date other than that described above.     **“Defined Benefit Plan”**has the meaning ascribed to such term in Section 3(35) of ERISA.     **“Defined Contribution Plan”**has the meaning ascribed to such term in Section 3(34) of ERISA.     **“Disability”**has the meaning ascribed to the term “permanent and total disability” in Section22(e)(3) of the IRC.     **“Election Contest”**means a solicitation with respect to the election or removal of directorsthat is subject to the provisions of Rule 14a-11 of the 1934 Act.     **“Employee Benefit Plan”**has the meaning ascribed to such term in Section 3(3) of ERISA.
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     **“ERISA”**means the Employee Retirement Income Security Act of 1974, as amended and as the samemay be amended from time to time.     **“Excise Tax”**means the tax imposed by Section 4999 of the IRC (or any similar tax that mayhereafter be imposed by federal, state or local law).     **“Executive”**means Paul R. Corkery, an individual residing in Somerset, New Jersey.     **“Good Reason”**means:          (a) prior to a Change in Control—     (i) a change in the Executive’s status or position, or any material diminutionin his duties or responsibilities;     (ii) a reduction in the Executive’s base compensation, other than a reductionwhich is proportionate to a company-wide reduction in executive pay;     (iii) a failure to increase the Executive’s base compensation, consistent withhis performance rating, within 24 months since the last increase, other than similartreatment on a company-wide basis for executives or a voluntary deferral by him ofan increase;     (iv) requiring the Executive to be based more than 20 miles from his currentoffice location as of the date of this Agreement;     (v) delivery to the Executive of a Notice of Nonextension; or     (vi) any purported termination of the Executive’s employment which is not inaccordance with the terms of this Agreement; and          (b) after a Change in Control—     (i) a change in the Executive’s status or position, or any material diminutionin his duties or responsibilities;     (ii) any increase in the Executive’s duties inconsistent with his position;     (iii) any reduction in the Executive’s base compensation;     (iv) a failure to increase the Executive’s base compensation, consistent withhis performance review, within 12 months of the last increase; or a failure toconsider the Executive for an increase within 12 months of his last performancereview;     (v) a failure to continue in effect any Employee Benefit Plan in which theExecutive participates, including (whether or not they constitute Employee BenefitPlans) incentive bonus, stock option, or other qualified or nonqualified plans ofdeferred compensation (A) other than as a result of the normal expiration
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of such a plan, or (B) unless such plan is merged or consolidated into, orreplaced with, a plan with benefits which are of equal or greater value;     (vi) requiring the Executive to be based more than 20 miles from where hisprincipal office was located immediately prior to the Change in Control;     (vii) refusal to allow the Executive to attend to matters or engage inactivities in which he was permitted to engage prior to the Change in Control;     (viii) delivery to the Executive of a Notice of Nonextension;     (ix) failure to secure the affirmation by a Successor, within seven businessdays prior to a Change in Control, of this Agreement and its or the Company’scontinuing obligations hereunder (or where there is not at least three business daysadvance notice that a Person may become a Successor, within one business day afterhaving notice that such Person may become or has become a Successor); or     (x) any purported termination of the Executive’s employment which is not inaccordance with the terms of this Agreement.Notwithstanding anything herein to the contrary, at the election of the Executive, beginning withseven days prior to the Change in Control and continuing through the first anniversary of suchChange in Control, he may terminate his employment for any reason or no reason and such terminationwill be treated as having occurred for Good Reason.     **“Gross-Up Payment”**means an additional payment to be made to or on behalf of the Executive inan amount such that the net amount retained by him, after deduction of any Excise Tax on the TotalPayments and any federal, state, and local income tax and Excise Tax on such additional payment,equals the Total Payments.     **“Incumbent Board”**means the Board of Directors of Mercer or an Affiliate as constituted at anyrelevant time.     **“IRC”**means the Internal Revenue Code of 1986, as amended and as the same may be amended fromtime to time.     **“Material Subsidiary”**means a Subsidiary whose net worth, determined under generally acceptedaccounting principles, at the fiscal year end immediately prior to any relevant time is at least25% of the aggregate net worth of the controlled group of corporations of which Mercer is thecommon parent.     **“1934 Act”**means the Securities Exchange Act of 1934, as amended and as the same may beamended from time to time.     **“Mercer”**means Mercer Insurance Group, Inc., a Pennsylvania corporation and the holdingcompany for Mercer Insurance.
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     **“Mercer Insurance”**means Mercer Insurance Company, a Pennsylvania insurance company.     **“Notice of Extension”**means a written notice in the form attached hereto as Exhibit Adelivered to or by the Executive that advises that the Agreement will be extended as provided inParagraph 3.     **“Notice of Termination”**means a written notice that (i) indicates the specific terminationprovision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts andcircumstances claimed to provide a basis for termination of the Executive’s employment under theprovision so indicated, and (iii) gives the required advance notice of termination.     **“Person”**has the same meaning as such term has for purposes of Sections 13(d) and 14(d) of the1934 Act.     **“Proxy Contest”**means the solicitation of proxies or consents by or on behalf of a Personother than the Board of Directors of Mercer.     **“Subsidiary”**means any business entity of which a majority of its voting power or its equitysecurities or equity interests is owned, directly or indirectly by Mercer.     **“Successor”**means any Person that succeeds to, or has the practical ability to control (eitherimmediately or with the passage of time), Mercer’s business directly, by merger or consolidation,or indirectly, by purchase of Mercer’s voting securities or all or substantially all of its assets.     **“Surviving Company”**means the business entity that is a resulting company following a merger,consolidation, share exchange, division or other reorganization of or relating to Mercer or anyAffiliate.     **“Total Payments”**means the compensation and benefits that become payable under the Agreementor otherwise (and which may be subject to an Excise Tax) by reason of the Executive’s terminationof employment, determined without regard to any Gross-Up Payments that may also be made.     **“Welfare Benefit Plan”**has the meaning ascribed to the term “employee welfare benefit plan” inSection 3(1) of ERISA. For purposes of determining the Executive’s or his dependents’ right tocontinued welfare benefits hereunder following his termination of employment, the meaning of suchterm shall include any retiree health plan maintained by Mercer or any Affiliate at any time afterthe relevant Date of Termination, notwithstanding the fact that the Executive is not a participanttherein prior to such date.
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