Exhibit 10.2
PENN MILLERS HOLDING CORPORATION
OPEN MARKET SHARE PURCHASE INCENTIVE PLAN
ARTICLE 1
INTRODUCTION
Section 1.1 Purpose. The purpose of the Penn Millers Holding Corporation Open
Market Share Purchase Incentive Plan (the “Plan”) is to attract, retain and
motivate certain key employees of the Penn Millers Holding Corporation (the
“Company”) and its subsidiaries, to focus the efforts of employees on continued
improvement in the profitability of the Company, and to promote the success and
enhance the value of the Company by requiring employees to increase their stock
ownership in the Company. The Plan is a cash-based long-term incentive plan that
provides award opportunities based on achievement of performance goals over a
two-year or three-year period.
Section 1.2 Effective Date. The “Effective Date” of the Plan is [January 1,
2010].
Section 1.3 Administration. The Plan will be administered by the Compensation
Committee (the “Committee”). The Committee, from time to time, may adopt any
rules and procedures it deems necessary or desirable for the proper and
efficient administration of the Plan that are consistent with the terms of the
Plan. Any notice or document required to be given or filed with the Committee
will be properly given or filed if delivered to or mailed by registered mail,
postage paid, to the Corporate Secretary of the Board of Directors, Penn Millers
Holding Corporation, 72 North Franklin Street, Wilkes-Barre, Pennsylvania
18773-0016. For purposes of this Plan, the term “Compensation Committee” shall
mean the Compensation Committee of the Board of Directors of the Company (the
“Board”), which Committee shall be composed of two or more members of the Board,
all of whom are (a) “non-employee directors” as such term is defined under the
rules and regulations adopted from time to time by the Securities and Exchange
Commission pursuant to Section 16(b) of the Securities Exchange Act of 1934, (b)
“outside directors” within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “Code”), and (c) independent under any applicable
stock listing agreement with, or rules of, any exchange or electronic trading
system.
Section 1.4 Supplements. The provisions of the Plan may be modified by
supplements to the Plan. The terms and provisions of each supplement are a part
of the Plan and supersede any other provisions of the Plan to the extent
necessary to eliminate any inconsistencies between the supplement and any other
Plan provisions.

 

 

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ARTICLE 2
ELIGIBILITY AND PARTICIPATION
Section 2.1 Eligibility. Any employee of the Company is eligible to become a
“Participant” in the Plan, provided the employee is designated as a Participant
by the Committee in writing.
Section 2.2 Participation. A designated employee or otherwise eligible employee
will become a Participant as of the later of the Effective Date or the date
specified by the Committee. Any Participant may be removed as an active
Participant by the Committee effective as of any date.
ARTICLE 3
AWARDS
Section 3.1 Awards. At the beginning of each Performance Period, the Committee
may, in its discretion, make an Award to a Participant. Each Award will be equal
to a percentage of the Participant’s annual base salary at the beginning of the
Performance Period as described in the applicable Award Agreement.
(a) Performance Period. Unless otherwise provided in an Award Agreement, a
“Performance Period” is a rolling three-calendar-year period over which an Award
can be earned.
(b) Award Agreement. An “Award” to a Participant will be evidenced by a written
“Award Agreement” issued by the Company to a Participant that specifies the
Performance Goals, the Performance Period, and other necessary terms and
conditions applicable to the Award. Such Award Agreement will be substantially
in the form of Exhibit A attached hereto.
(c) Award Levels. Participants will receive varying Awards based on their
position with the Company.
(d) Discretionary Award. The President and Chief Executive Officer may recommend
to the Committee, and the Committee, with respect to the President and Chief
Executive Officer, may recommend to the Board, that an additional discretionary
Award (the “Discretionary Award”) be made to a Participant to address external
market considerations, including for recruiting purposes.
(e) Final Award. The “Final Award” is the amount of an Award as adjusted based
upon the level at which the Performance Goals have been achieved, including any
Discretionary Award, that is ultimately paid to a Participant under the Plan for
a Performance Period. Final Awards may be modified up or down at the Committee’s
discretion to account for performance that is not captured in the Performance
Goals. The Committee in its discretion may also consider Extraordinary
Occurrences when assessing performance results and determining Final Awards.
“Extraordinary Occurrences” mean those events that, in the opinion and
discretion of the Committee, are outside the significant influence of the
Participant or the Company and are likely to have a significant unanticipated
effect, whether positive or negative, on the Company’s operating and/or
financial results.

 

 

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Section 3.2 Performance Goals. The vesting of an Award shall be subject to the
satisfaction of one or more Performance Goals, which shall be set forth in an
Award Agreement. “Performance Goals” are one or more goals established by the
Committee that relate to one or more Performance Criteria. “Performance
Criteria” means any objective determination based on one or more of the
following areas of performance of the Company, a subsidiary, or any division,
department, or group of either which includes, but is not limited to: earnings,
cash flow, revenue, financial ratios, market performance, shareholder return,
operating income or profits (including earnings before interest, taxes,
depreciation and amortization), earnings per share, return on assets, return on
equity, return on investment, stock price, expense reduction, systems
conversion, special projects as determined by the Committee, increases in book
value, and acquisition integration initiatives. Performance Goals shall be
established by the Committee prior to the issuance of an Award.
(a) Establishment of Performance Goals. Performance Goals for Performance
Periods commencing on and after [January 1, 2010], will be communicated to
Participants in writing after they have been established by the Committee.
(b) Achievement Level. Three achievement levels will be defined for each
Performance Goal.
(i) Threshold. The “Threshold” achievement level is the minimum achievement
level accepted for a Performance Goal.
(ii) Target. The “Target” achievement level is the planned achievement level for
a Performance Goal.
(iii) Maximum. The “Maximum” achievement level is achievement that substantially
exceeds the Target achievement level.
(c) [Interpolation. Achievement levels between Threshold — Target and Target —
Maximum will be interpolated in a consistent manner as determined by the
Committee.]
Section 3.3 Earning and Vesting of Awards. Generally, an Award will become
earned, and therefore vested, if:
(a) the applicable Performance Goals for the Performance Period are satisfied;
and
(b) the Participant is actively employed on the last day of the Performance
Period.
The value of Awards will be calculated in accordance with the applicable Award
Agreement.

 

 

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Section 3.4 Effect of Termination of Service.
(a) In General. If a Participant incurs a Termination of Service for any reason
other than a reason set forth in subsection 3.4(b), then any portion of an Award
which has not otherwise become vested as of the date of Termination of Service
will be forfeited, effective as of the date of such termination. For purposes of
the Plan, “Termination of Service” means the occurrence of any act or event or
any failure to act, that actually or effectively causes or results in a
Participant ceasing, for whatever reason, to be an employee of the Company,
including, but not limited to, death, Disability, retirement, termination by the
Company of the Participant’s employment (whether for Cause or otherwise), and
voluntary resignation or termination by the Participant of his or her employment
for any reason.
(b) Termination Due to Death, Disability, or after Age 65. Notwithstanding the
provisions of Section 3.3 and subsection 3.4(a), if a Participant incurs an
involuntary Termination of Service due to death or Disability after reaching age
55 or 10 years of service with the Company, any portion of an Award which has
not otherwise become vested as of the date of such Termination of Service will
be treated as earned and vested, effective as of the date of such Termination of
Service, at the Target level and in a pro rata manner equivalent to the period
of time during the Performance Periods the Participant participated in the Plan
prior to the Termination of Service. Notwithstanding the provisions of
Section 3.3 and subsection 3.4(a), if a Participant incurs a Termination of
Service for any reason other than by the Company for Cause after reaching age
65, any portion of his or her Award eligible to become earned and vested in the
Performance Periods in which the termination occurs will, to the extent the
Performance Goals for such Performance Periods are satisfied, be treated as
earned and vested, effective as of the last day of such Performance Periods in
which the Termination of Service occurs, in a pro rata manner equivalent to the
period of time during the Performance Periods the Participant participated in
the Plan.
(i) For purposes of the Plan, “Disability” means “permanent and total
disability” as defined in Code Section 22(e)(3).
(ii) For purposes of the Plan, “Cause” will mean “cause” as defined under a
Participant’s employment agreement with the Company or if there is no such
agreement, or if such agreement does not define “cause,” “Cause” will mean:
(A) any government regulatory agency recommends or orders in writing that the
Company or a subsidiary terminate the employment of a Participant or relieve him
or her of his or her duties;
(B) a Participant is convicted of or enters a plea of guilty or nolo contendere
to a felony, a crime of falsehood, or a crime involving fraud or moral
turpitude, or the actual incarceration of a Participant for a period of 45
consecutive days;
(C) a determination by the Committee that a Participant willfully failed to
follow the lawful instructions of the Board or any officer of the Company or a
subsidiary after such Participant’s receipt of written notice of such
instructions, other than a failure resulting from the Participant’s Disability;

 

 

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(D) a determination by the Committee that a Participant willfully or
continuously failed to substantially and satisfactorily perform his duties with
the Company or a subsidiary (other than any such failure resulting from the
Participant’s Disability), within a reasonable period of time after a demand for
substantial performance or notice of lack of substantial or satisfactory
performance is delivered to the Participant; or
(E) a determination by the Committee that a Participant has failed to conform to
an applicable code of conduct of the Company.
For purposes of the Plan, no act, or failure to act, on a Participant’s part
shall be deemed “willful” unless done, or omitted to be done, by such
Participant not in good faith and without reasonable belief that such
Participant’s action or omission was in the best interest of the Company. In
addition, term “code of conduct” shall meant the policies and procedures related
to employment of employees by the Company or a subsidiary set forth in the
Company’s employee handbook or any similar document. The code of conduct may be
amended and updated at any time. The term “code of conduct” shall also include
any other policy or procedure that may be adopted by the Company or a subsidiary
and communicated to employees.
Section 3.5 Effect of Change in Control. Notwithstanding the provisions of
Sections 3.3 and 3.4, if a Change in Control of the Company occurs, then any
portion of an Award which has not otherwise become vested as of the date of the
Change in Control will be treated as earned and vested, effective as of the date
of the Change in Control, at the Target level and in a pro rata manner
equivalent to the period of time during the Performance Periods the Participant
participated in the Plan prior to the Change in Control. “Change in Control” of
the Company will mean a “Change in Control” as defined in the Penn Millers Stock
Incentive Plan, as may be amended from time to time.
Section 3.6 Payment of Awards; Open Market Purchases.
(a) A Final Award will be paid in a single sum cash payment by March 15th of the
year following the year in which the Award becomes vested. Compensation will be
paid upon approval by the Committee. However, in the event of a Change in
Control, payment of a Final Award will be made in a single sum on the date on
which the Change in Control occurs.
(b) Within 30 days following payment of a Final Award to a Participant, the
Participant shall purchase on the open market the number of shares of Common
Stock equal to the value of such Final Award (less applicable federal, state,
and local taxes) divided by the fair market value of a share of Common Stock on
the date of such purchase, rounding any fractional shares to the nearest lower
whole share. Within 30 days following such purchase of such shares of Common
Stock, the Participant will submit proof of such purchase to the satisfaction of
the Committee. The Committee will develop appropriate procedures for
Participants to demonstrate the purchase of shares of Common Stock on the open
market in accordance with this subsection. Notwithstanding the foregoing, in the
event a Final Award is paid to a Participant at or following his or her
Termination of Service as provided in subsection 3.4(b) or a Change in Control,
the provisions of this subsection 3.6(b) shall not apply with respect to such
Final Award.

 

 

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(c) In the event that the Committee determines in its sole discretion that a
Participant fails to comply with the requirements of subsection 3.6(b) above,
the Committee shall have the right to recover, to the fullest extent permitted
by law, the value of the most recent Final Award (less applicable federal,
state, and local taxes) paid to the Participant.
(d) Nothing in this Section 3.6 shall preclude the Committee from providing
additional restrictions with respect to the transfer of Common Stock purchased
by reason of the requirements of subsection 3.6(b).
(e) Shares purchased pursuant to subsection 3.6(b) shall be subject to the
Company’s insider trading policy (including but not limited to any blackout
period), securities pre-clearance policy, stock ownership guidelines, and any
other restrictions that may be imposed from time to time on the Company’s
employees by the Company or applicable law.
(f) For purposes of the Plan, “Common Stock” means the common stock of the
Company (par value $0.01 per share) as described in the Company’s Articles of
Incorporation, or such other stock as shall be substituted therefor.
Section 3.7 Forfeiture and Recovery of Awards.
(a) Notwithstanding anything in this Plan to the contrary, the Company reserves
the right to withhold, reduce, eliminate, amend, modify or suspend Awards or the
payment of Final Awards based on a Participant’s failure to adhere to the
Company’s stock ownership guidelines.
(b) Notwithstanding anything in this Plan to the contrary, if a Participant
shall engage in any “harmful activity” (as defined herein) while employed by the
Company or a subsidiary or during the six-month period thereafter, then (a) all
amounts of cash received by the Participant in connection with the payment of a
Final Award shall inure to the benefit of the Company and (b) any and all Awards
that have not yet vested and any and all Final Awards that have not yet been
paid shall immediately be forfeited. If any cash inures to the benefit of the
Company under this subsection, the Participant shall pay cash to the Company
within 30 days after receiving written notice from the Company that the
Participant has engaged in a harmful activity. The determination by the
Committee as to whether a Participant engaged in “harmful activity” while
employed by the Company or a subsidiary or during the six-month period
thereafter shall be final and conclusive, unless otherwise determined by a
majority of disinterested members of the Board.
(c) A “harmful activity” shall have occurred if a Participant shall do any one
or more of the following:
(i) Engage in any fraud or intentional misconduct that is a significant
contributing factor to the Company having to restate all or a portion of its
financial statement(s).
(ii) Engage in activities that would constitute grounds for the Company or a
subsidiary to terminate the Participant’s employment by reason of a Termination
or Dismissal for Cause (as defined in the Company’s Stock Incentive Plan) or for
Cause (as defined in an applicable employment agreement between the Participant
and the Company and/or a subsidiary), whether or not the Participant is employed
at the time the Participant engages in such activities.

 

 

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(iii) Solicit or hire any employees of the Company or a subsidiary or induce any
of such employees to terminate their employment relationship with the Company or
a subsidiary.
(iv) Solicit, induce, or attempt to solicit or induce any customer, supplier, or
other entity doing business with the Company of a subsidiary to cease doing
business with the Company or a subsidiary or, in the case of a customer, to
place agribusiness insurance, as that term is commonly understood in the
industry, with any competitor of the Company or a subsidiary. For purposes of
the foregoing provision, the term “customer” shall mean a business that the
Company or a subsidiary insures on the date that the Participant’s employment
terminates (or has insured during the previous twelve months) and a broker who
has placed business with the Company or a subsidiary on the date that the
Participant’s employment terminates but only with respect to those clients of
the broker for which the broker has placed business with the Company or a
subsidiary in the 12-month period preceding the date that the Participant’s
employment terminates.
(v) Directly or indirectly, own, manage, operate, render services for (as a
consultant or an advisor), or accept any employment with (i) Nationwide
Agribusiness Insurance Company, Michigan Millers Insurance Company, or Westfield
Insurance Company, or any of their successors in interest or (ii) the
agribusiness insurance business of any other insurance company whose business
has, or could reasonably be expected to have, a material adverse effect on the
Company’s or a subsidiary’s business insurance business.
(vi) Directly or indirectly, own, manage, operate, render services for (as a
consultant or an adviser), or accept any employment with, within a 50-mile
radius of Wilkes-Barre, Pennsylvania, any other property and casualty insurance
or reinsurance line of business to the extent that such ownership, management,
operating, rendering of services, or employment (and the activities necessarily
incident thereto) have, or could reasonably be expected to have, a material
adverse effect on the Company’s or a subsidiary’s business insurance business.
(vii) For any reason, in any fashion, form or manner, either directly or
indirectly, divulge, disclose or communicate to any person, firm, corporation,
or other business entity, in any manner whatsoever, any confidential information
or trade secrets concerning the business of the Company or a subsidiary,
including, without limiting the generality of the foregoing, any customer lists
or other customer identifying information, the techniques, methods or systems of
the Company’s or a subsidiary’s operations or management, any information
regarding their respective financial matters, or any other material information
concerning the business of the Company or a subsidiary, their manner of
operation, plan, or other material data. The provisions of this subsection shall
not apply to (i) information that is public knowledge other than as result of
Participant’s authorized disclosure; (ii) information disseminated by the
Company or a subsidiary to third parties in the ordinary course of business;
(iii) information lawfully received by the Participant from a third party who,
based upon inquiry by the Participant, is not bound by a confidential
relationship to the Company or a subsidiary; or (iv) information disclosed under
a requirement of law or as directed by applicable legal authority having
jurisdiction over the Participant.

 

 

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ARTICLE 4
ADMINISTRATION
Section 4.1 Appointment of the Committee. The Committee, or a duly authorized
officer or officers of the Company empowered by the Committee to act on its
behalf under sub-section 4.2(d), will be responsible for administering the Plan,
will be charged with the full power and the responsibility for administering the
Plan in all its details, and will be vested with full authority to make such
rules and regulations as it deems necessary or desirable to administer the Plan
and to interpret the provisions of the Plan, unless otherwise determined by a
majority of the disinterested members of the Board.
Section 4.2 Powers and Responsibilities of the Committee. Subject to the terms,
provisions and conditions of the Plan and subject to review and approval by a
majority of the disinterested members of the Board, the Committee will have all
powers necessary to administer the Plan, including, but not limited to, the
power to construe and interpret the Plan document, to decide all questions
relating to an individual’s eligibility to participate in the Plan, to determine
the amount of any Award, to determine the date or dates when Awards will be
made, determine the Performance Criteria and establish Performance Goals with
respect thereto, to be applied to an Award, to prescribe the form, which shall
be consistent with the Plan, of the Award Agreement evidencing any Awards made
under the Plan, to determine the amount, manner and timing of any distribution
of benefits under the Plan, to resolve any claim for benefits in accordance with
Article 5, and to appoint or employ advisors, including legal counsel, to render
advice with respect to any of the Committee’s responsibilities under the Plan.
Any construction, interpretation, or application of the Plan by the Committee
will be final, conclusive and binding. Any determination, decision, or action of
the Committee in connection with the construction, interpretation,
administration, or application of the Plan shall be final, conclusive, and
binding upon all Participants and any person claiming under or through a
Participant, unless otherwise determined by a majority of the disinterested
members of the Board.
(a) Records and Reports. The Committee will be responsible for maintaining
sufficient records to determine each Participant’s eligibility to participate in
the Plan.
(b) Rules and Decisions. The Committee may adopt such rules as it deems
necessary, desirable, or appropriate in the administration of the Plan. All
rules and decisions of the Committee will be applied uniformly and consistently
to all Participants in similar circumstances. When making a determination or
calculation, the Committee will be entitled to rely upon information furnished
by a Participant, the Company, or the legal counsel of the Company.
(c) Application for Benefits. The Committee may require a Participant to
complete and file with it an application for a benefit, and to furnish all
pertinent information requested by it. The Committee may rely upon all such
information so furnished to it, including the Participant’s current mailing
address.

 

 

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(d) Delegation. The Committee may authorize one or more officers of the Company
to perform administrative responsibilities on its behalf under the Plan. Any
such duly authorized officer will have all powers necessary to carry out the
administrative duties delegated to such officer by the Committee.
Section 4.3 Income and Employment Tax Withholding. The Company will withhold
from payments to Participants of their Awards, to the extent required by law,
all applicable federal, state, and local taxes.
Section 4.4 Plan Expenses. The expenses incurred for the administration and
maintenance of the Plan will be paid by the Company.
ARTICLE 5
BENEFIT CLAIMS
While a Participant need not file a claim to receive his or her benefit under
the Plan, if he or she wishes to do so, a claim must be made in writing and
filed with the Committee. If a claim is denied, the Committee will furnish the
claimant with written notice of its decision. A claimant may request a full and
fair review of the denial of a claim for benefits by filing a written request
with the Committee.
ARTICLE 6
AMENDMENT AND TERMINATION OF THE PLAN
Section 6.1 Amendment or Termination of the Plan. The Board may amend or
terminate the Plan at any time in its sole discretion. Notwithstanding the
foregoing, no amendment, modification, suspension, or termination of the Plan
shall in any manner adversely affect any Award theretofore made under the Plan
without the consent of the Participant; provided, however, that the Committee
may, in its sole and absolute discretion and without the consent of such
Participant, amend, modify, suspend, or terminate the Plan or any Award
Agreement hereunder, to take effect retroactively or otherwise, as the Committee
deems necessary or advisable for the purpose of conforming the Plan or such
Award Agreement to any present or future law, regulation, or rule applicable to
the Plan.
Section 6.2 Payment of Benefits upon Plan Termination. Absent an amendment to
the contrary, in the event of a termination of the Plan, Plan benefits that had
vested prior to the termination of the Plan will be paid at the times and in the
manner provided for by the Plan at the time of the termination.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Governing Law. Except to the extent superseded by laws of the United
States, the laws of the Commonwealth of Pennsylvania will be controlling in all
matters relating to the Plan without regard to the choice of law principles
therein. The Plan and all Award Agreements are intended to comply, and will be
construed by the Company in a manner which they are exempt from or comply with
the applicable provisions of Code Section 409A. To the extent there is any
conflict between a provision of the Plan or an Award Agreement and a provision
of Code Section 409A, the applicable provision of Code Section 409A will
control.

 

 

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Section 7.2 Headings and Gender. The headings and subheadings in the Plan have
been inserted for convenience of reference only and will not affect the
construction of the Plan provisions. In any necessary construction, the
masculine will include the feminine and the singular the plural, and vice versa.
Section 7.3 Spendthrift Clause. No benefit or interest available under the Plan
will be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment by creditors of a
Participant, either voluntarily or involuntarily.
Section 7.4 Counterparts. This Plan may be executed in any number of
counterparts, each one constituting but one and the same instrument, and may be
sufficiently evidenced by any one counterpart.
Section 7.5 No Enlargement of Employment Rights. Nothing contained in the Plan
may be construed as a contract of employment between the Company and any person,
nor may the Plan be deemed to give any person the right to be retained in the
employ of the Company or limit the right of the Company to employ or discharge
any person with or without cause.
Section 7.6 Limitations on Liability. The individual members of the Board and
the Committee will, in accordance with the Company’s by-laws, be indemnified and
held harmless by the Company with respect to any alleged breach of
responsibilities performed or to be performed hereunder. In addition,
notwithstanding any other provision of the Plan, neither the Company nor any
individual acting as an employee or agent of the Company will be liable to a
Participant for any claim, loss, liability, or expense incurred in connection
with the Plan, except when the same has been affirmatively determined by a court
order or by the affirmative and binding determination of an arbitrator, to be
due to the gross negligence or willful misconduct of that person.
Section 7.7 Incapacity of Participant. If any person entitled to receive a
distribution under the Plan is physically or mentally incapable of personally
receiving and giving a valid receipt for any payment due (unless a prior claim
for the distribution has been made by a duly qualified guardian or other legal
representative), then, unless and until a claim for the distribution has been
made by a duly appointed guardian or other legal representative of the person,
the Committee may provide for the distribution to be made to any other
individual or institution then contributing toward or providing for the care and
maintenance of the person. Any payment made for the benefit of the person under
this Section will be a payment for the account of such person and a complete
discharge of any liability of the Company and the Plan.
Section 7.8 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document, or other information which the person relying
on the evidence considers pertinent and reliable, and signed, made or presented
by the proper party or parties.

 

 

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Section 7.9 Severability. In the event any provisions of the Plan are held to be
illegal or invalid for any reason, the illegality or invalidity will not affect
the remaining parts of the Plan, and the Plan will be construed and endorsed as
if the illegal or invalid provisions had never been contained in the Plan.
Section 7.10 Information to be Furnished by a Participant. A Participant, or any
other person entitled to benefits under the Plan, must furnish the Committee
with any and all documents, evidence, data, or other information the Committee
considers necessary or desirable for the purpose of administering the Plan.
Benefit payments under the Plan are conditioned on a Participant (or other
person who is entitled to benefits) furnishing full, true and complete data,
evidence, or other information to the Committee, and on the prompt execution of
any document reasonably related to the administration of the Plan requested by
the Committee.
Section 7.11 Binding on Successors. The Plan will be binding upon and inure to
the benefit of the Company and its successors and assigns, and the successors,
assigns, designees, and estates of a Participant. The Plan will also be binding
upon and inure to the benefit of any successor organization succeeding to
substantially all of the assets and business of the Company, but nothing in the
Plan will preclude the Company from merging or consolidating into or with, or
transferring all or substantially all of its assets to, another organization
which assumes the Plan and all obligations of the Company hereunder. The Company
agrees that it will make appropriate provision for the preservation of a
Participant’s rights under the Plan in any agreement or plan which it may enter
into to effect any merger, consolidation, reorganization, or transfer of assets.
Upon such a merger, consolidation, reorganization, or transfer of assets and
assumption of Plan obligations of the Company, the term “Company” will refer to
such other organization and the Plan will continue in full force and effect.

 

 

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EXHIBIT A
FORM OF AWARD AGREEMENT
THIS AWARD AGREEMENT (the “Award Agreement”) is made and entered into this
           day of                     , 2010, but effective as of [January 1,
2010], between Penn Millers Holding Corporation (the “Company”), and
                     (the “Participant”).
WITNESSETH:
WHEREAS, the Company has adopted the Penn Millers Holding Corporation Open
Market Share Purchase Incentive Plan (the “Plan”) to attract, retain and
motivate designated key employees of the Company, to focus the efforts of
employees on continued improvement in the profitability of the Company, and to
promote the success and enhance the value of the Company by requiring employees
to increase their share ownership in the Company; and
WHEREAS, the Participant is eligible to receive an Award;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and the Participant agree as follows:
1. Award. The Company hereby awards to the Participant the Award specified in
Schedule A to this Award Agreement which is incorporated herein as if fully set
forth, subject to the terms of this Award Agreement and the provisions of the
Plan (the “Award”). All provisions of the Plan, including defined terms, are
incorporated herein and are expressly made a part of this Award Agreement and
related schedules by reference. If any provision of this Award Agreement
conflicts with a provision of the Plan, the provision of the Plan will control.
2. Open Market Shares. The Participant hereby agrees that in the event that the
Participant receives payment of a Final Award under this Award Agreement and the
Plan, the Participant will, within 30 days after the payment of such Final
Award, purchase on the open market shares of Common Stock with a fair market
value equal to the value of such Final Award (less applicable federal, state,
and local taxes).
3. Income and Employment Tax Withholding. The Participant will be responsible
for (and, where required by applicable law, the Company will withhold from any
amounts payable under the Plan) all required federal, state, and local taxes.
4. Nontransferability. During the Participant’s lifetime, Awards will be payable
only to him or her. Neither an Award nor any rights and privileges pertaining
thereto, may be transferred, assigned, pledged or hypothecated by the
Participant in any way, whether by operation of law or otherwise, and are not
subject to execution, attachment or similar process.
5. Condition Precedent. In no event will the Company be obligated to make
payment for a vested Award until it is satisfied that all conditions precedent
to the payment of the Award, as provided in the Plan and this Award Agreement,
have been performed and completed.

 

 

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6. Acknowledgments. The Participant acknowledges receiving, reading and fully
understanding all of the provisions of the Plan and this Award Agreement and
that the execution and delivery of this Award Agreement constitutes his or her
unequivocal acceptance of all of the terms and conditions thereof.
IN WITNESS WHEREOF, the Company, by its officer thereunder duly authorized, and
the Participant, have executed this Award Agreement on the day and year first
above written, but effective as of [January 1, 2010].

            PENN MILLERS HOLDING CORPORATION
      By           Title                  PARTICIPANT
            [Name]