Exhibit 10.1

THE HANOVER INSURANCE GROUP

SECOND AMENDED AND RESTATED

2014 EMPLOYEE STOCK PURCHASE PLAN

 

 

Section 1.

Defined Terms

Exhibit A, which is incorporated by reference, defines the terms used in the
Plan and sets forth certain operational rules related to those terms.

Section 2.

Purpose of Plan

The Plan is intended to enable Eligible Employees of the Company and its
Designated Subsidiaries to use payroll deductions to purchase shares of Stock,
and thereby acquire an interest in the future of the Company.  The Plan is
intended to qualify as an “employee stock purchase plan” under Section 423 and
to be exempt from the application and requirements of Section 409A of the Code,
and is to be construed accordingly.

Section 3.

Options to Purchase Stock

Subject to adjustment pursuant to Section 17 of this Plan, the maximum aggregate
number of shares of Stock available for purchase pursuant to the exercise of
Options granted under the Plan to Eligible Employees will be 2,500,000
shares.  The shares of Stock to be delivered upon exercise of Options under the
Plan may be either shares of authorized but unissued Stock, treasury Stock, or
Stock acquired in an open-market transaction, all as the Board may
determine.  If any Option granted under the Plan expires or terminates for any
reason without having been exercised in full or ceases for any reason to be
exercisable in whole or in part, the unpurchased shares of Stock subject to such
Option will again be available for purchase pursuant to the exercise of Options
under the Plan.  If, on an Exercise Date, the total number of shares of Stock
that would otherwise be subject to Options granted under the Plan exceeds the
number of shares then available under the Plan (after deduction of all shares
for which Options have been exercised or are then outstanding), the
Administrator shall make a pro rata allocation of the shares remaining available
for the Option grants in as uniform a manner as shall be practicable and as it
shall determine to be equitable.  In such event, the Administrator shall give
written notice to each Participant of such reduction of the number of Options
affected thereby and shall similarly reduce the rate of payroll deductions, if
necessary.

 

 

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Section 4.

Eligibility

Subject to Section 14, and any exceptions and limitations set forth in Section 6
or as permitted under Section 423, or as may be provided elsewhere in the Plan,
each Employee who (a) customarily works twenty (20) hours or more per week and
for more than five (5) months per calendar year, (b) is employed by the Company
or a Designated Subsidiary, and (c) satisfies the requirements set forth in the
Plan will be an “Eligible Employee”.  Notwithstanding the above, an Employee who
is a citizen or resident of a foreign jurisdiction (without regard to whether
such Employee is also a citizen of the United States or resident alien in the
United States) shall not be an Eligible Employee with respect to the Plan if the
grant of an Option to such Employee is prohibited under the laws of the
Employee’s foreign jurisdiction or compliance with the laws of the foreign
jurisdiction would cause the Plan or an Option to violate the requirements of
Section 423.  In no event, however, may an Employee be granted an Option under
the Plan if, immediately after the Option is granted, the Employee would own (or
pursuant to Section 424(d) of the Code would be deemed to own) stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of its Parent or Subsidiaries, if any.  The
Administrator may, for Option Periods that have not yet commenced, establish
additional eligibility requirements not inconsistent with Section 423.

Section 5.

Option Periods

The Plan will generally be implemented by a series of “Option Periods,” which
may be sequential and/or overlapping.  Unless otherwise determined by the
Administrator, the Option Periods will be the six-month periods commencing
January 1 and ending June 30 and commencing July 1 and ending December 31 of
each year (each, a “Six-Month Option Period”).  The Administrator may also
designate other Option Periods.  Each June 30 and December 31 and each other end
of an Option Period designated by the Administrator will be an “Exercise
Date”.  The Administrator may change the Exercise Date and the commencement
date, ending date and duration of the Option Periods to the extent permitted by
Section 423.

Section 6.

Option Grant

Subject to the limitations set forth in Section 4, Section 8 and Section 10 and
the Maximum Share Limit, on the first day of an Option Period, each Participant
automatically will be granted an Option to purchase shares of Stock on the
Exercise Date; provided, however, that no Participant will be granted an Option
under the Plan that permits the Participant’s right to purchase shares of Stock
under the Plan and under all other employee stock purchase plans of the Company
and its Parent and Subsidiaries, if any, to accrue at a rate that exceeds
$25,000 in Fair Market Value (or such other maximum as may be prescribed from
time to time by the Code) for each calendar year during which any Option granted
to such Participant is outstanding at any time, as determined in accordance with
Section 423(b)(8) of the Code.  

Section 7.

Method of Participation

To participate in an Option Period, an Eligible Employee must execute and
deliver to the Administrator a participation election form in accordance with
the procedures prescribed by and in a form acceptable to the Administrator and,
in so doing, the Eligible Employee will thereby become a Participant as of the
first day of such Option Period.  With respect to Six-Month Option Periods, such
Eligible Employee will remain a Participant with respect to subsequent Six-Month
Option Periods until his or her participation in the Plan is terminated as
provided herein.  Such participation election must be delivered no later than 10
business days prior to the first day of an Option Period, or such other time as
specified by the Administrator.  

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A Participant’s election, with respect to a Six-Month Option Period, will remain
in effect for subsequent Six-Month Option Periods unless the Participant files a
new election not less than 10 business days prior to the first day of a
Six-Month Option Period (or such other time as specified by the Administrator)
or the Participant’s Option is cancelled pursuant to Section 14 or Section
15.  During an Option Period, elections and rates of contribution to the Plan
may not be increased or decreased, except that a Participant may terminate his
or her election by canceling his or her Option in accordance with Section 14.

Section 8.

Method of Payment

The Administrator will prescribe the method or methods of payment available for
a Participant to pay for shares of Stock purchased upon the exercise of an
Option, including by cash, check or with accumulated payroll deductions credited
to the Participant’s Account.  To use payroll deductions, if permitted, a
Participant must execute and deliver to the Administrator a payroll deduction
authorization form in accordance with the procedures prescribed by and in a form
acceptable to the Administrator subject to complying with any minimum and
maximum amounts that may be deducted per pay period in accordance with the terms
of the Plan.  With respect to Six-Month Option Periods, a Participant’s payroll
deduction authorization, if any, will remain in effect for subsequent Six-Month
Option Periods unless the Participant files a new payroll deduction
authorization not less than 10 business days prior to the first day of a
Six-Month Option Period (or such other time as specified by the Administrator)
or the Participant’s Option is cancelled pursuant to Section 14 or Section
15.  During an Option Period, payroll deductions may not be increased or
decreased, except that a Participant may terminate his or her payroll deduction
by canceling his or her Option in accordance with Section 14.

Each payroll deduction authorization will request payroll deductions in an
amount equal to a percentage (expressed as a whole percentage) of the
Participant’s total base compensation per payroll period, including base pay or
base salary, overtime and shift differentials, or a fixed dollar amount, as
determined by the Administrator.  If the Administrator determines that another
limit shall be imposed hereunder or that eligible compensation shall be defined
in a different manner, determinations shall be made in a manner that satisfies
the requirements of Treasury Regulation Section 1.423-2(f)(2).

All payroll deductions made pursuant to this 8 will be credited to the
Participant’s Account.  Amounts credited to a Participant’s Account will not be
required to be set aside in trust or otherwise segregated from the Company’s
general assets.

Section 9.

Purchase Price

The Purchase Price of shares of Stock issued pursuant to the exercise of an
Option on each Exercise Date will be eighty-five percent (85%) (or such greater
percentage specified by the Administrator to the extent permitted under Section
423) of a one of the following, as selected by the Administrator prior to the
commencement of the relevant Option Period:

(a)the Fair Market Value of a share of Stock on the date on which the Option was
granted pursuant to Section 6 (i.e., the first day of the Option Period);

(b)the Fair Market Value of a share of Stock on the date on which the Option is
deemed exercised pursuant to Section 10 (i.e., the Exercise Date); or

(c)the lesser of (a) and (b).

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Section 10.

Exercise of Options

Subject to the limitations set forth in Section 6, Section 8 and this Section
10, with respect to each Option Period, on the applicable Exercise Date, each
Participant will be deemed to have exercised his or her Option and (a) if the
Participant has an Account, the accumulated payroll deductions in the
Participant’s Account will be applied to purchase the greatest number of whole
shares of Stock (rounded down to the nearest whole share) that can be purchased
with such Account balance at the applicable Purchase Price or (b) if the
Purchase Price is paid by check or other means acceptable to the Administrator,
the amount remitted by the Participant will be applied to purchase the greatest
number of whole shares of Stock (rounded down to the nearest whole share) that
can be purchased with such amount at the applicable Purchase Price; provided,
however, in either case that no more than 1,000 shares of Stock may be purchased
by a Participant on any Exercise Date, or such lesser number as the
Administrator may prescribe in accordance with Section 423 (the “Maximum Share
Limit”).  As soon as practicable thereafter, shares of Stock so purchased will
be placed, in book-entry form, into a record keeping account in the name of the
Participant.  No fractional shares will be purchased.  Prior to the commencement
of an Option Period, the Administrator shall determine whether any payroll
deductions accumulated in a Participant’s Account or amounts paid by check or
otherwise that are not sufficient to purchase a full share will be retained or
deposited, as applicable, in the Participant’s Account for the subsequent Option
Period, subject to earlier withdrawal by the Participant as provided in Section
14 hereof, or returned to the Participant or his or her designated beneficiary
or legal representative, as applicable, without interest, as soon as
administratively practicable after the Exercise Date or earlier withdrawal, as
applicable.

Except as provided above with respect to fractional shares, any amount of
payroll deductions in a Participant’s Account or amounts paid by check or
otherwise that are not used for the purchase of shares of Stock, whether because
of the Participant’s withdrawal from participation in an Option Period or for
any other reason, will be returned to the Participant or his or her designated
beneficiary or legal representative, as applicable, without interest, as soon as
administratively practicable after such withdrawal or other event, as
applicable.

If the Participant’s accumulated payroll deductions or amounts paid by check or
otherwise on the Exercise Date would otherwise enable the Participant to
purchase shares of Stock in excess of the Maximum Share Limit, the excess of
such amount over the aggregate Purchase Price of the shares of Stock actually
purchased will be returned to the Participant, without interest, as soon as
administratively practicable after such Exercise Date.

Notwithstanding any provision of the Plan to the contrary, no Option may be
exercised after 27 months from its grant date.

Section 11.

Restrictions on Transfer; Plan Accounts; Disqualifying Dispositions

By electing to participate in the Plan, each Participant agrees to be subject to
the restrictions and covenants set forth in this Section 11.

Shares of Stock purchased under the Plan will be subject to a restriction
prohibiting the transfer, sale, pledge or alienation of such shares of Stock by
a Participant, other than by will or by the laws of descent and distribution,
for a period of six (6) months (or such other period as may be determined by the
Administrator) from the date on which such shares of Stock are purchased by the
Participant hereunder.  

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In addition, and without limiting the foregoing, for such period determined by
the Administrator, all shares of Stock purchased under the Plan by a Participant
will be subject to a restriction prohibiting the transfer of such shares of
Stock by the Participant from the account where such shares of Stock are
initially held until such shares are sold through the Plan’s custodian and
record keeper.

By electing to participate in the Plan, each Participant agrees to provide such
information about any transfer of Stock acquired under the Plan that occurs
within two years after the first day of the Option Period in which such Stock
was acquired and within one year after the acquisition of such Stock as may be
requested by the Company or any Designated Subsidiary in order to assist such
entity in complying with applicable tax laws.  

Section 12.

Interest

No interest will be payable on any amount held in the Account of any
Participant.

Section 13.

Taxes

Payroll deductions will be made on an after-tax basis.  The Administrator will
have the right, as a condition to exercising an Option, to make such provision
as it deems necessary to satisfy its obligations to withhold federal, state,
local income or other taxes incurred by reason of the purchase or disposition of
shares of Stock under the Plan.  In the Administrator’s discretion and subject
to applicable law, such tax obligations may be paid in whole or in part by
delivery of shares of Stock to the Company, including shares of Stock purchased
under the Plan, valued at Fair Market Value, but not in excess of the minimum
statutory amounts required to be withheld.  

Section 14.

Cancellation and Withdrawal

A Participant who holds an Option under the Plan may cancel all (but not less
than all) of his or her Option and terminate his or her participation and/or
payroll deduction authorization by revoking such authorization by written notice
delivered to the Administrator, which, to be effective with respect to an
upcoming Exercise Date, must be delivered not later than 10 business days prior
to such Exercise Date (or such other time as specified by the Administrator).
Upon such termination and cancellation, the balance in the Participant’s Account
or any amounts paid by other means will be returned to the Participant, without
interest, as soon as administratively practicable thereafter. If a Participant
cancels or otherwise terminates an Option, in order to participate in future
Option Periods, the Participant must affirmatively execute and deliver a new
election to participate in accordance with Section 7.

Section 15.

Termination of Employment; Death of Participant

Upon the termination of a Participant’s employment with the Company (or a
Designated Subsidiary, as applicable) for any reason or the death of a
Participant during an Option Period prior to an Exercise Date or in the event
the Participant ceases to qualify as an Eligible Employee, the Participant will
cease to be a Participant, any Option held by him or her under the Plan will be
deemed canceled, the balance in the Participant’s Account or amounts paid by
other means will be returned to the Participant (or his or her estate or
designated beneficiary in the event of the Participant’s death), without
interest, as soon as administratively practicable thereafter, and the
Participant will have no further rights under the Plan.

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Section 16.

Equal Rights; Participant’s Rights Not Transferable

All Participants granted Options under the Plan will have the same rights and
privileges consistent with the requirements set forth in Section 423. Any Option
granted under the Plan will be exercisable during the Participant’s lifetime
only by him or her and may not be sold, pledged, assigned, or transferred in any
manner.  In the event any Participant violates or attempts to violate the terms
of this Section 16, as determined by the Administrator in its sole discretion,
any Options held by him or her may be terminated by the Company and, upon the
return to the Participant of the balance of his or her Account or any amounts
paid by other means, without interest, all of the Participant’s rights under the
Plan will terminate.

Section 17.

Change in Capitalization; Merger

In the event of any change in the outstanding Stock by reason of a stock
dividend, split-up, recapitalization, merger, consolidation, reorganization, or
other capital change, the aggregate number and type of shares of Stock available
under the Plan, the number and type of shares of Stock granted under any
outstanding Options, the maximum number and type of shares of Stock purchasable
under any outstanding Option, and the purchase price per share of Stock under
any outstanding Option will be appropriately adjusted; provided, that no such
adjustment will be made unless the Administrator is satisfied that it will not
constitute a modification of the rights granted under the Plan or otherwise
disqualify the Plan as an employee stock purchase plan under the provisions of
Section 423.

In the event of a sale of all or substantially all of the Stock or a sale of all
or substantially all of the assets of the Company, or a merger or similar
transaction in which the Company is not the surviving corporation or that
results in the acquisition of the Company by another person, the Administrator
may, in its discretion, (a) if the Company is merged with or acquired by another
corporation, provide that each outstanding Option will be assumed or exchanged
for a substitute Option granted by the acquiror or successor corporation or by a
parent or subsidiary of the acquiror or successor corporation, (b) cancel each
outstanding Option and return the balances in Participants’ Accounts or any
amounts paid by other means to the Participants, and/or (c) pursuant to Section
19, terminate the Option Period on or before the date of the proposed sale,
merger or similar transaction.

Section 18.

Administration of Plan

The Plan will be administered by the Administrator, which will have the right to
determine any questions which may arise regarding the interpretation and
application of the provisions of the Plan and to make, administer, and interpret
such rules and regulations as it deems necessary or advisable.  All
determinations and decisions by the Administrator regarding the interpretation
or application of the Plan will be final and binding on all Participants.

The Administrator may specify the manner in which Employees are to provide
notices and payroll deduction authorizations.  Notwithstanding any requirement
of “written notice” herein, the Administrator may permit Employees to provide
notices and payroll deduction authorizations electronically.

Section 19.

Amendment and Termination of Plan

The Board reserves the right at any time or times to amend the Plan to any
extent and in any manner it may deem advisable, by action of the Board;
provided, that any amendment that would be treated as the adoption of a new plan
for purposes of Section 423 will have no force or effect unless approved by the
shareholders of the Company within 12 months before or after its adoption.

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The Plan may be suspended or terminated at any time by the Company, by action of
the Board.  In connection therewith, the Board may provide, in its sole
discretion, either that outstanding Options will be exercisable either at the
Exercise Date for the applicable Option Period or on such earlier date as the
Board may specify (in which case such earlier date will be treated as the
Exercise Date for the applicable Option Period), or that the balance of each
Participant’s Account or any amounts paid by other means will be returned to the
Participant, without interest.

Section 20.

Approvals

Notwithstanding anything herein to the contrary, the obligation of the Company
to issue and deliver shares of Stock under the Plan will be subject to the
approval required of any governmental authority in connection with the
authorization, issuance, sale or transfer of said shares of Stock, to any
requirements of any national securities exchange applicable thereto, and to
compliance by the Company with other applicable legal requirements in effect
from time to time.

Section 21.

Participants’ Rights as Shareholders and Employees

A Participant will have no rights or privileges as a shareholder of the Company
and will not receive any dividends in respect of any shares of Stock covered by
an Option granted hereunder until such Option has been exercised, full payment
has been made for such shares of Stock, and the shares of Stock have been issued
to the Participant.

Nothing contained in the provisions of the Plan will be construed as giving to
any Employee the right to be retained in the employ of the Company or any
Designated Subsidiary or as interfering with the right of the Company or any
Designated Subsidiary to discharge, promote, demote or otherwise re-assign any
Employee from one position to another within the Company any Designated
Subsidiary at any time.

Section 22.

Governing Law

Subject to overriding federal law, the Plan will be governed by and interpreted
consistently with the laws of the State of Delaware, except as may be necessary
to comply with applicable requirements of federal law.

Section 23.

Effective Date and Term

The Company’s shareholders approved the Plan at the Company’s 2014 annual
meeting on May 20, 2014 (the “Effective Date”) and no rights will be granted
hereunder after the earliest to occur of (a) the Plan’s termination by the
Company, (b) the issuance of all shares of Stock available for issuance under
the Plan or (c) the day before the 10-year anniversary of the date the Company’s
shareholders approve the Plan.  The Plan was amended and restated on September
22, 2020.    

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EXHIBIT A

Definition of Terms

 

The following terms, when used in the Plan, will have the meanings and be
subject to the provisions set forth below:

 

“401(k) Plan”:  A savings plan qualifying under Section 401(k) of the Code that
is sponsored by the Company or one of its Subsidiaries for the benefit of its
employees.

 

“Account”:  A payroll deduction account maintained in the Participant’s name on
the books of the Company or a Designated Subsidiary.

 

“Administrator”:  The Compensation Committee of the Board and its delegates,
except that the Compensation Committee may delegate its authority under the Plan
to a sub-committee comprised of one or more of its members, to members of the
Board, or to officers or employees of the Company to the extent permitted by
applicable law.  In each case references herein to the Administrator refer, as
applicable, to such persons or groups so delegated to the extent of such
delegation. 

 

“Board”:  The Board of Directors of the Company.

 

“Code”:  The U.S. Internal Revenue Code of 1986 as from time to time amended and
in effect, or any successor statute as from time to time in effect.

 

“Company”:  The Hanover Insurance Group, Inc.

 

“Designated Subsidiary”: A Subsidiary of the Company that has been designated by
the Board or the Compensation Committee of the Board from time to time as
eligible to participate in the Plan.  Exhibit B sets forth the Designated
Subsidiaries as of the Effective Date.

 

“Effective Date”:  The date set forth in Section 23 of the Plan.

 

“Eligible Employee”:  Any Employee who meets the eligibility requirements set
forth in Section 4 of the Plan.

 

“Employee”:  Any person who is employed by the Company or a Designated
Subsidiary.  For the avoidance of doubt, independent consultants and independent
contractors are not “Employees.”

 

“Exercise Date”:  The date set forth in Section 5 of the Plan or otherwise
designated by the Administrator with respect to a particular Option Period on
which a Participant will be deemed to have exercised the Option granted to him
or her for such Option Period.

 

“Fair Market Value”:  

 

(a) If the Stock is readily traded on an established national exchange or
trading system (including the Nasdaq Global Market), the closing price of the
Stock as reported by the principal exchange on which such Stock is traded;
provided, however, that if such day is not a trading day, Fair Market Value will
mean the reported closing price of the Stock for the immediately preceding day
that is a trading day.  

 

(b) If the Stock is not traded on an established national exchange or trading
system, the average of the bid and ask prices for such Stock where the bid and
ask prices are quoted.

 

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(c) If the Stock cannot be valued pursuant to clauses (a) or (b), the value as
determined in good faith by the Board in its sole discretion.

 

“Maximum Share Limit”:  The meaning set forth in Section 10 of the Plan.

 

“Option”:  An option granted pursuant to the Plan entitling the holder to
acquire shares of Stock upon payment of the Purchase Price per share of Stock.

 

“Option Period”:  An offering period established in accordance with Section 5 of
the Plan.

 

“Parent”: A “parent corporation” as defined in Section 424(e) of the Code.

 

“Participant”:  An Eligible Employee who elects to enroll in the Plan.

 

“Plan”:  The Hanover Insurance Group Second Amended and Restated 2014 Employee
Stock Purchase Plan, as from time to time amended and in effect.

 

“Purchase Price”:  The price per share of Stock with respect to an Option Period
determined in accordance with Section 9 of the Plan.

 

“Section 423”:  Section 423 of the Code and the regulations thereunder.

 

“Stock”:  Common stock of the Company, par value $0.01 per share.

 

“Subsidiary”:  A “subsidiary corporation” as defined in Section 424(f) of the
Code.

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EXHIBIT B

Designated Subsidiaries

 

 

The Hanover Insurance Company

 

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