exv10w2






Exhibit 10.2




AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT




     THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and
entered into this 14th day of August 2009, by and between PMMHC CORPORATION, a Pennsylvania
business corporation (the “MHC”), PENN MILLERS HOLDING CORPORATION, a Pennsylvania business
corporation (the “Holding Corporation”), and PENN MILLERS INSURANCE COMPANY, a Pennsylvania
property and casualty stock insurance company (the “Insurance Company”) (the Holding Corporation
and the Insurance Company herein shall be referred to as the “Company,” collectively or each of
them individually, as the context so requires) all with offices at 72 North Franklin Street,
Wilkes-Barre, PA 18773-0016 (the MHC, the Holding Corporation, and the Insurance Company, and their
direct and indirect subsidiaries, are sometimes referred to collectively herein as the “Penn
Millers System”), and DOUGLAS GAUDET, an adult individual residing at 325 Bulford Road, Shavertown,
PA 18798 (“Executive”).



     WHEREAS, the Company and Executive entered into an executive employment agreement dated
November 21, 2005 (the “Prior Agreement”); and



     WHEREAS, the Company wishes to continue to employ Executive as its President and Chief
Executive Officer and Executive wishes to continue such employment; and



     WHEREAS, the parties have determined that it is necessary and appropriate to amend and restate
the Prior Agreement in connection with the Company’s initial public offering; and



     NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other
terms and conditions hereinafter provided, the parties hereby agree as follows:


1. Employment. The Company agrees to employ Executive, and Executive agrees to serve the Company
on the terms and conditions set forth in this Agreement.



2. Term of Agreement. Executive’s term of employment under this Agreement shall commence on the
date of this Agreement (the “Effective Date”) and shall continue for a period of three (3) years
thereafter. Commencing on the first anniversary of the Effective Date and on each anniversary
thereafter (“Anniversary Date”), this Agreement shall automatically be renewed for one (1)
additional year beyond the term otherwise established, unless one party provides written notice to
the other party, at least ninety (90) days in advance of an Anniversary Date, of its intent not to
renew this Agreement for an additional one year term. Nothing in this provision shall preclude
termination as otherwise provided or permitted under this Agreement. Notwithstanding the
foregoing, if a Change in Control occurs after the Effective Date and during the term of this
Agreement, this Agreement shall continue in effect for a period of not less than two (2) years
beyond the date of such Change in Control.



3. Position and Duties. Executive shall devote substantially all of his working time to the
Company to the exclusion of any other business activity. Executive shall serve as President and
Chief Executive Officer of the Company and shall report directly to the Chairman of the Board of
Directors of the Company (the “Board”). Executive shall submit such direct reports as are needed,
from time to time, and shall be responsible for the day-to-day operations of the Company and shall
perform all reasonable duties assigned by the Board.




 









 








4. Covenant Not to Compete; Nonsolicitation; Confidential Information.




     4.1 During Executive’s employment with the Company and during the Restricted Period (as
defined below), Executive shall not directly or indirectly, either for Executive’s own account or
as an agent, consultant, employee, partner, officer, director, proprietor, investor (except as an
investor owning less than 5% of the stock of a publicly owned company) or otherwise, of any person,
firm, corporation, or enterprise:




	 	a.	 	solicit or hire any employees of the Company or induce any of such employees
to terminate their employment relationship with the Company; or
	 
	 	b.	 	solicit, induce or attempt to solicit or induce any customer, supplier or
other entity doing business with the Company to cease doing business with the
Company 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.
For purposes of the foregoing provision, the term “customer” shall mean a business
that the Company insures on the date that Executive’s employment terminates (or
has insured during the previous twelve months) and a broker who has placed
business with the Company on the date that Executive’s employment terminates but
only with respect to those clients of the broker for which the broker has placed
business with the Company in the twelve-month period preceding the date that
Executive’s employment terminates.





     4.2 In addition to the limitations described in Section 4.1, during the Restricted Period
Executive shall not, directly or indirectly, own, manage, operate, render services for (as a
consultant or an advisor) or accept any employment with (a) Nationwide Agribusiness Insurance
Company, Michigan Millers Insurance Company or Westfield Insurance Company, or any of their
successors in interest or (b) 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 business insurance business. In addition, Executive shall not, directly or indirectly,
own, manage, operate, render services for (as a consultant or an adviser) or accept any employment
with, within a fifty (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 business
insurance business.



     4.3 Executive agrees that he will not at any time during the term of this Agreement (as
determined under Section 2 hereof) or at any time thereafter 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, 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 operation or management, any information regarding its
financial matters, or any other material information concerning the business of the Company, its
manner of operation, its plan or other material data. The provisions of this Section
4.3 shall not



2









 







apply to (i) information that is public knowledge other than as a result of
disclosure by Executive in breach of this Section 4.3; (ii) information disseminated by the Company
to third parties in the ordinary course of business; (iii) information lawfully received by
Executive from a third party who, based upon inquiry by Executive, is not bound by a confidential
relationship to the Company, or (iv) information disclosed under a requirement of law or as
directed by applicable legal authority having jurisdiction over Executive.



     4.4 Although Executive and the Company consider the restrictions contained in Sections 4.1,
4.2 and 4.3 to be the minimum restriction reasonable for the purposes of preserving the Company’s
goodwill and other proprietary rights, if a final determination is made by a court that the time or
territory, or any other restriction contained in Sections 4.1, 4.2 and 4.3 is an unreasonable or
otherwise unenforceable restriction against Executive, the provisions of Sections 4.1, 4.2 and 4.3
will not be rendered void, but will be deemed amended to apply as to such maximum time and
territory and to such other extent as the court may determine to be reasonable.



     4.5 Executive agrees that the covenants contained in this Section 2 may be assigned by the
Company, as needed, to affect its purpose and intent and that the Company’s assignee shall be
entitled to the full benefit of the restrictions enjoyed by the Company under the terms of these
covenants.



     4.6 The term “Restricted Period” shall mean:




	 	a.	 	In the event Executive is terminated by the Company for Cause, the twenty-four
(24) month period following Executive’s termination of employment;
	 
	 	b.	 	In the event of a termination pursuant to Section 7.1, the twenty-four (24)
month period following Executive’s termination of employment;
	 
	 	c.	 	Notwithstanding Section 4.6.b., in the event of a termination pursuant to
Section 7.1 and such termination would amount to Good Reason but for the fact that
it occurred prior to a Change in Control, a period up to twenty-four (24) months
following Executive’s termination of employment, with the number of months, if
any, selected by the Company in its sole discretion by providing written notice of
such number to Executive within ten (10) days following the date on which
Executive gives notice of his termination of employment;
	 
	 	d.	 	In the event of a termination pursuant to Section 7.2, the date of Executive’s
termination of employment; or
	 
	 	e.	 	In the event of a termination pursuant to Sections 7.3 or 7.4, the twenty-four
(24) month period following Executive’s termination of employment.





5. Compensation and Related Matters.




     5.1 Base Compensation. During the period of Executive’s employment, the Company
shall pay to him annual base compensation of $342,500 (“Base Compensation”). The Board shall
periodically review Executive’s employment performance, in accordance with
policies



3









 







generally in effect from time to time, for possible merit or cost-of-living increases
in such Base Compensation. Except for a reduction which is proportionate to a company-wide
reduction in executive or senior management pay, not including eliminated positions or unfilled
positions, the annual Base Compensation paid to Executive in any calendar year shall not be less
than the annual Base Compensation paid to him in the immediately preceding calendar year. The
frequency and manner of payment of such Base Compensation shall be in accordance with the Company’s
executive payroll practices, as in effect from time to time. Nothing in this Agreement shall be
construed as precluding Executive from entering into any salary reduction or deferral plan or
arrangement during the term of this Agreement.



     5.2 Incentive Compensation. During the period of Executive’s employment with the
Company, he shall be eligible to participate in any incentive plans or programs such as stock
programs, options programs, long term cash plans, etc., that may be developed from time to time for
the Company. Actual participation will be at the sole and final determination of the Board.



     5.3 Employee Benefit Plans and Other Plans or Arrangements. Executive shall be
entitled to participate in any Penn Millers System benefit or incentive plans on the same basis as
other executive officers of the Company. The Company may provide Executive with those perquisites
that are reasonable and customary for similar positions.



     5.4 Expenses. During the period of Executive’s employment hereunder, he shall be
entitled to receive reimbursement for reasonable and necessary expenses related to the business of
the Company, in accordance with the general policies and procedures established by the Company.



     5.5 Annual Stipend. Executive shall be entitled to receive, in lieu of any other
reimbursement for or payment of country club or social club membership fees, dues or other fees and
any automobile allowance, an annual reimbursement allowance of $18,000 for 2009, and thereafter as
determined by the Board. This annual reimbursement allowance will be paid quarterly, in arrears
within thirty (30) days following the end of each quarter, provided that Executive provides the
Company with such verification of his actual expenses paid for the purposes described above or
similar purposes as approved by the Board in its discretion, as the Company shall reasonably
request.



6. Termination for Cause.




     6.1 In General. The Company shall be entitled to terminate Executive’s employment
for Cause in any of the following circumstances:




	 	•	 	Breach of Executive’s fiduciary duty to the Company or Executive’s duty of loyalty
to the Company;
	 
	 	•	 	Willful act of material dishonesty with respect to any material matter involving the
Company;
	 
	 	•	 	Theft or material misuse of Company property;




4









 






	 	•	 	Engaging in personal conduct that would constitute grounds for liability for
discrimination or sexual harassment (as proscribed by the U.S. Equal Employment
Opportunity Commission Guidelines or any other applicable state or local regulatory
body);
	 
	 	•	 	Fraternization which affects Executive’s objectivity in the treatment of fellow
employees or abusive or threatening behavior, after a warning by the Board or Human
Resources to cease;
	 
	 	•	 	Excessive absenteeism (which shall not include authorized absences for leave
pursuant to the Family and Medical Leave Act, the Americans With Disabilities Act, or
the Company’s vacation, paid time off, or short-term disability leave plans, policies,
or arrangements) having a material adverse effect on Company business operations;
	 
	 	•	 	Conviction of, or plea of guilty or nolo contendere to, a felony, any criminal
charge involving moral turpitude, or illegal substance abuse charges;
	 
	 	•	 	Illegal substance abuse or being under the influence of illegal substances during
working time;
	 
	 	•	 	Continuing neglect of management duties and responsibilities that has a material
adverse effect on the Company; or
	 
	 	•	 	Willful failure to timely report to the Board information having a material adverse
effect on Company business operations.





     6.2 Compensation. Within a reasonable time after termination for Cause, the Company
shall pay Executive, in one lump sum, Executive’s accrued but unpaid Base Compensation earned
through the date of Executive’s termination and any accrued but unpaid or otherwise vested benefits
to which Executive is entitled in the event of a termination for Cause under the terms of any Penn
Millers System benefit or incentive plan. In the event of termination for Cause hereunder,
Executive shall forfeit any right to any unvested long-term incentive or deferred awards and shall
be entitled to no Success Sharing (or other annual incentive) awards for the year of Executive’s
termination or for any award cycle that remains uncompleted at the date of Executive’s termination.



7. Termination without Cause.




     7.1 Termination by Executive on Voluntary Basis. In the event that Executive
voluntarily terminates employment hereunder without Good Reason, as defined below, Executive shall
be, subject to Section 7.5, entitled to receive:




	 	a.	 	Executive’s accrued but unpaid Base Compensation and any accrued but unpaid or
otherwise vested benefits to which Executive is entitled in the event of such a
termination under the terms of any Penn Millers System benefit or incentive plan;




5









 






	 	b.	 	If Executive’s voluntary termination of employment is by reason of his normal
retirement at or after age 65:






	 	i.	 	A pro-rata payment from the Success Sharing Plan (or other annual
incentive plan in effect) based on the number of full months that have
elapsed from the start of the current annual performance period to the date
of Executive’s termination of employment and actual annual performance
through the end of the current annual performance period to the extent that
at the conclusion of such period, such award is deemed earned, payable at
the time such award would otherwise have been paid had Executive’s
employment not terminated, but in no event later than March 15 of the
calendar year following the end of such performance period; and
	 
	 	ii.	 	pro-rata vesting of any unvested and outstanding performance-based
equity awards granted to Executive, based on the number of full months that
have elapsed from the date of grant of such award to the date of Executive’s
termination of employment and actual performance through the end of the
applicable performance period to the extent that at the conclusion of such
period, such awards are deemed earned, payable in-kind at the time such
award would otherwise have been paid had Executive’s employment not
terminated, but in no event later than March 15 of the calendar year
following the end of the applicable performance period; provided, however,
that (i) to the extent the benefits provided in this Subsection conflict
with the terms of any plan or other agreement under or pursuant to which any
equity awards were granted, the terms of such plan or other agreement shall
control, and (ii) this Subsection shall not apply to payments or awards made
or granted under any plan or other agreement designed to replace Executive’s
benefits under the Penn Millers Holding Corporation Supplemental Executive
Retirement Plan (the “SERP”), if any (with any such payments or awards shall
be subject to the terms and conditions of any such plan or agreement); and






	 	c.	 	If Executive’s voluntary termination of employment would amount to Good Reason
but for the fact that it occurred prior to a Change in Control, a lump sum cash
payment within sixty (60) days following termination of Executive’s employment
equal to the product of (i) the number of months selected by the Company pursuant
to Section 4.6.c. and (ii) Executive’s Base Compensation, divided by twelve (12).





     7.2 Termination By Reason of Death or Permanent Disability: In the event Executive’s
employment is terminated by reason of death or permanent disability (defined for this purpose as a
condition by reason of which Executive is entitled to and receiving disability benefits under the
Company’s long-term disability plan, if any, and if none, under the U.S. Social Security Act)
Executive, or Executive’s estate, shall be, subject to Section 7.5, entitled to receive:




	 	a.	 	Executive’s accrued but unpaid Base Compensation and any accrued but unpaid or
otherwise vested benefits to which Executive is entitled in the event of such




6









 






	 	 	 	a termination under the terms of any Penn Millers System benefit or incentive plan;
	 
	 	b.	 	Continuation of Executive’s Base Compensation then in effect for one (1) year
(commencing on the next payroll date following the date of Executive’s termination
of employment), offset by any amounts payable to Executive under any disability
insurance plan or policy provided by the Company;
	 
	 	c.	 	Continuation of employer-provided healthcare benefits for one (1) year at the
levels and cost to Executive and his qualified dependents in effect on the date of
Executive’s termination, and thereafter to elect, at Executive’s or his qualified
dependents’ cost, COBRA continuation for the remainder of Executive’s or his
qualified dependents’ COBRA eligibility, if any, it being understood that
Executive’s and his dependents’ COBRA eligibility period will include the period
during which the Company is providing benefits under this Section 7.2.c.; and,
	 
	 	d.	 	If Executive is age 55 or has 10 years of service in the year of his
termination of employment:






	 	i.	 	Pro-rata vesting of any unvested and outstanding performance-based
equity awards granted to Executive, based on the number of full months that
have elapsed from the date of grant of such award to the date of Executive’s
termination of employment, with all such awards payable in-kind at target
levels for the applicable performance period within (60) days following the
date Executive’s employment terminates; and
	 
	 	ii.	 	Pro-rata vesting of any unvested and outstanding non-performance-based
equity awards granted to Executive, based on the number of full months that
have elapsed from the date of grant of such award to the date of termination
of Executive’s employment, payable in-kind within sixty (60) days following
the date Executive’s employment terminates.






	 	 	 	Notwithstanding the foregoing, (i) to the extent the benefits provided in this
Subsection d. conflict with the terms of any plan or other agreement under or
pursuant to which any equity awards were granted, the terms of such plan or other
agreement shall control; and (ii) this Subsection d. shall not apply to awards
granted under any plan or other agreement designed to replace Executive’s benefits
under the SERP, if any (with any such awards subject to the terms and conditions
of any such plan or agreement).
	 
	 	e.	 	A pro-rata payment from the Success Sharing Plan (or other annual incentive
plan then in effect) as set forth in Section 7.1.b.i., without regard to the age
requirements contained in Section 7.1.b.i.





     7.3 Termination by the Company without Cause prior to a Change in Control: In the
event that Executive’s employment hereunder is terminated by the Company without Cause (as



7









 







defined
in Section 6.1), before a Change in Control (as defined in Section 7.7 below), Executive shall be,
subject to Section 7.5, entitled to receive:




	 	a.	 	Executive’s accrued but unpaid Base Compensation and any accrued but unpaid or
otherwise vested benefits to which Executive is entitled in the event of such a
termination under the terms of any Penn Millers System benefit or incentive plan;
	 
	 	b.	 	Continuation of Executive’s Base Compensation then in effect for two (2) years
(commencing on the next payroll date following the date of Executive’s termination
of employment);
	 
	 	c.	 	Continuation of employer-provided healthcare benefits for two (2) years at the
levels and cost to Executive and his qualified dependents in effect on the date of
Executive’s termination, and thereafter to elect, at Executive’s or his qualified
dependents’ cost, COBRA continuation for the remainder of Executive’s or his
qualified dependents’ COBRA eligibility, if any, it being understood that
Executive’s and his dependents’ COBRA eligibility period will include the period
during which the Company is providing benefits under this Section 7.3.c.;
	 
	 	d.	 	Continuation of the annual stipend described in Section 5.5 (the “Annual
Stipend”) then in effect for two (2) years; provided that such amount shall be
paid in accordance with the Company’s executive payroll practices, commencing on
the next payroll date following the date of Executive’s termination of employment;
	 
	 	e.	 	If Executive’s termination of employment occurs prior to his attaining age 62,
payment of all fees and expenses related to the provision of outplacement services
through a firm of Executive’s choice, not to exceed $25,000; provided, however,
that such outplacement expenses: (i) must be incurred no later than the end of the
second full calendar year following the year of Executive’s termination of
employment; and (ii) must be paid no later than the end of the third full calendar
year following the year of Executive’s termination of employment;
	 
	 	f.	 	A pro-rata payment from the Success Sharing Plan (or other annual incentive
plan then in effect) as set forth in Section 7.1.b.i., without regard to the age
requirements contained in Section 7.1.b.i.; and
	 
	 	g.	 	A lump sum cash payment within sixty (60) days following Executive’s
termination of employment equal to two (2) times Executive’s target annual bonus
for the year of termination.





     7.4 Termination by the Company Without Cause or by Executive with Good Reason on or after
a Change in Control: If a Change in Control (as defined in Section 7.7 below)
shall occur and concurrently therewith or during a period of twenty-four (24) months
thereafter Executive’s employment hereunder is terminated by the Company without Cause (as defined
in



8









 







Section 6.1) or by Executive with Good Reason (as defined in Section 7.6 below), Executive shall
be, subject to Section 7.5, entitled to receive:




	 	a.	 	Executive’s accrued but unpaid Base Compensation and any accrued but unpaid or
otherwise vested benefits to which Executive is entitled in the event of such a
termination under the terms of any Penn Millers System benefit or incentive plan;
	 
	 	b.	 	A lump sum cash payment within sixty (60) days following Executive’s
termination of employment equal to one (1) times Executive’s Base Compensation
then in effect (or immediately prior to any reduction resulting in a termination
for Good Reason);
	 
	 	c.	 	Continuation of Executive’s Base Compensation then in effect (or immediately
prior to any reduction resulting in a termination for Good Reason) for one (1)
year (commencing on the next payroll date following the date of Executive’s
termination of employment);
	 
	 	d.	 	Continuation of employer-provided healthcare benefits for two (2) years at the
levels and cost to Executive and his qualified dependents in effect on the date of
Executive’s termination (or immediately prior to any reduction resulting in a
termination for Good Reason), and thereafter to elect, at Executive’s or his
qualified dependents’ cost, COBRA continuation for the remainder of Executive’s or
his qualified dependents’ COBRA eligibility, if any, it being understood that
Executive’s and his dependents’ COBRA eligibility period will include the period
during which the Company is providing benefits under this Section 7.4.d.;
	 
	 	e.	 	A lump sum cash payment within sixty (60) days following Executive’s
termination of employment equal to two (2) times the Annual Stipend then in effect
(or immediately prior to any reduction resulting in a termination for Good
Reason);
	 
	 	f.	 	If Executive’s termination of employment occurs prior to his attaining age 62,
payment of outplacement services as set forth in Section 7.3.e.;
	 
	 	g.	 	A pro-rata payment from the Success Sharing Plan (or other annual incentive
plan then in effect) as set forth in Section 7.1.b.i., without regard to the age
requirements contained in Section 7.1.b.i.;
	 
	 	h.	 	A lump sum cash payment within sixty (60) days following Executive’s
termination of employment equal to two (2) times Executive’s target annual bonus
for the year of termination; and
	 
	 	i.	 	Immediate and full vesting of equity awards as follows:






	 	i.	 	Immediate and full vesting of any unvested and outstanding
performance-based equity awards granted to Executive, with all such awards
payable




9









 






	 	 	 	in-kind at target levels for the applicable performance period
within sixty (60) days following the date Executive’s employment terminates;
and
	 
	 	ii.	 	Immediate and full vesting of any unvested and outstanding
non-performance-based equity awards granted to Executive, payable in-kind
within sixty (60) days following the date Executive’s employment terminates.






	 	 	 	Notwithstanding the foregoing, (i) to the extent the benefits provided in this
Subsection i. conflict with the terms of any plan or other agreement under or
pursuant to which any equity awards were granted, the terms of such plan or other
agreement shall control; and (ii) this Subsection i. shall not apply to awards
granted under any plan or other agreement designed to replace Executive’s benefits
under the SERP, if any (with any such awards subject to the terms and conditions
of any such plan or agreement).





     7.5 Requirement of Release; Cessation and Recovery on Competition.




	 	a.	 	Notwithstanding anything to the contrary in Sections 7.2, 7.3, or 7.4,
Executive’s entitlement to any payments other than Executive’s accrued but unpaid
Base Compensation and any accrued but unpaid or otherwise vested benefits under
any Penn Millers System benefit or incentive plan determined at the time of
Executive’s termination of employment shall be contingent upon Executive’s prior
agreement with and signature to a complete release agreement substantially in the
form of Exhibit A attached hereto.
	 
	 	b.	 	Notwithstanding anything to the contrary in Sections 7.3 or 7.4, in the event
that Executive breaches any of the covenants contained in Section 4 of this
Agreement:






	 	i.	 	Any remaining payments or benefits to be provided under Sections 7.3 or
7.4 shall not be paid or shall cease immediately upon such breach; and
	 
	 	ii.	 	The Company shall be entitled to the immediate repayment of all
payments and benefits provided under Sections 7.3 and 7.4.





     7.6 Good Reason: Executive shall be considered to have terminated employment
hereunder for Good Reason if such termination of employment occurs on or within twenty-four (24)
months after a Change in Control and is on account of any of the following actions by the Company
without Executive’s express written consent:




	 	a.	 	A material reduction in Executive’s Base Compensation as in effect immediately
prior to a Change in Control;
	 
	 	b.	 	Any material diminution of Executive’s positions, duties or responsibilities
or the assignment to Executive of duties or responsibilities that are materially
inconsistent with Executive’s then position, in effect immediately prior to a
Change in Control;




10









 






	 	c.	 	A failure by the Company to continue Executive as a participant in any
incentive plan or program (whether annual or long-term and whether paid in cash or
in equity) on at least the same basis with respect to the potential amount of
incentives thereunder immediately prior to a Change in Control;
	 
	 	d.	 	Any exclusion from full participation in or any material diminution in the
benefits Executive is entitled to receive under any of the employee benefit plans
of the Company in effect immediately prior to a Change in Control to the extent
such exclusion or reduction is not imposed on executive officers of the Company
generally;
	 
	 	e.	 	Any change in Executive’s principal place of work (other than a temporary
change occasioned by the Company’s business needs) that would increase Executive’s
commute by 50 miles or more as of the date of the Change in Control; or
	 
	 	f.	 	A material breach by the Company of its obligations under this Agreement.





     Notwithstanding the foregoing, a termination by Executive shall not be for “Good Reason,”
unless Executive shall have given the Company at least ten (10) business days written notice
specifying the grounds upon which Executive intends to terminate his employment hereunder for “Good
Reason” and such notice is received by the Company within ninety (90) days of the date the event of
“Good Reason” occurred. In addition, any action or inaction by the Company which is remedied
within thirty (30) days following such written notice shall not constitute “Good Reason” for
termination hereunder.



     7.7 Change in Control: Change in Control shall have the same meaning as a “Change in
Control” under the Penn Millers Stock Incentive Plan, as such term may be amended from time to
time.



     7.8 Exclusive Remedy. Except for any explicit rights and remedies Executive may have
under any other contract, plan or arrangement with the Company, the compensation and benefits
payable under this Agreement and the remedy for enforcement shall constitute Executive’s exclusive
rights and remedy in the event of the termination of his employment.


8. Best Net Benefit Limitation. Anything contained in this Agreement to the contrary
notwithstanding, if any of the payments or benefits received or to be received by Executive
pursuant to this Agreement (which the parties agree will not include any portion of payments
allocated to the non-solicitation and non-compete provisions of Section 4 which are classified as
payments of reasonable compensation for purposes of Code Section 280G), when taken together with
payments and benefits provided to Executive under any other plans, contracts, or arrangements with
the Penn Millers System (all such payments and benefits being hereinafter referred to as the “Total
Payments”), will be subject to any excise tax imposed under Section
4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (together with any interest or
penalties, the “Excise Tax”), then such Total Payments shall be reduced to the extent necessary so
that no portion thereof shall be subject to the Excise Tax; provided, however, that if Executive
would receive in the aggregate greater value (as determined under Code Section 280G


11









 






and the
regulations thereunder) on an after tax basis if the Total Payments were not subject to such
reduction, then no such reduction shall be made. To effectuate the reduction described above, if
applicable, the Company shall first reduce or eliminate the payments and benefits provided under
this Agreement. All calculations required to be made under this Section, including the portion of
the payments hereunder to be allocated to the restrictive covenants set forth in Section 4, will be
made by the Company’s independent public accountants, subject to the right of Executive’s
representative to review the same. The parties recognize that the actual implementation of the
provisions of this Section are complex and agree to deal with each other in good faith to resolve
any questions or disagreements arising hereunder.



9. Withholding Taxes. All compensation and benefits provided in this Agreement shall, to the
extent required by law, be subject to federal, state, and local tax withholding.



10. Applicable Law and Jurisdiction. This Agreement shall be governed by and construed in
accordance with the domestic laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles, unless and to the extent preempted by the laws of the United States of
America. Any controversy or dispute arising out of or relating to this Agreement, including an
alleged breach, shall be subject to the jurisdiction of Court of Common Pleas of Luzerne County.



11. Additional Equitable Remedy. Executive acknowledges and agrees that the Company’s remedy at
law for a breach or a threatened breach of the provisions of this Agreement would be inadequate.
In recognition of this fact, in the event of such a breach or threatened breach by Executive, it is
agreed that the Company shall be entitled to request equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction, or any other equitable
remedy which may then be available. Nothing in this Section shall be construed as prohibiting the
Company from pursuing any other remedy available under this Agreement for such a breach or
threatened breach.



12. Indemnification.




     12.1 The Company shall indemnify Executive in the event Executive is made a party or is
threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (including, without limitation, actions
by or in the right of the Company), by reason of the fact that Executive is or was a director or
officer of the Company, or such director or officer of the Company is or was serving at the request
of the Company as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys’ fees), amounts
paid in settlement, judgments, and fines actually and reasonably incurred by Executive in
connection with such action, suit, or proceeding; provided, however, that no indemnification shall
be made in any case where the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or recklessness.



     12.2 Expenses (including attorneys’ fees) incurred in defending a civil or criminal action,
suit, or proceeding, under Section 12.1 shall be paid by the Company in advance of the final
disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of



12









 







Executive to repay such amount if it shall be ultimately determined that Executive is not entitled
to be indemnified by the Company as authorized in this Section 12.



     12.3 The Company shall purchase and maintain directors’ and officers’ liability insurance on
behalf of Executive, at the Company’s expense, consistent with the amounts and terms provided to
other directors and officers of the Company.


13. Notices. Any notice required or permitted under this Agreement shall be sufficient if it is in
writing and shall be deemed given (i) at the time of personal delivery to the addressee, or (ii) at
the time sent First Class U.S. Mail, with form 3817 requested, addressed as follows:




To the Company:

72 North Franklin St.

Wilkes-Barre, PA 18773-0016




To Executive:

25 Bulford Road

Shavertown, PA 18798



14. No Waiver. The failure by any party to this Agreement at any time or times to require strict
performance by any other party of any of the provisions, terms, or conditions contained in this
Agreement shall not waive, affect, or diminish any right of the first party at any time or times to
demand strict performance therewith and with any other provision, term, or condition contained in
this Agreement. Any actual waiver of a provision, term, or condition contained in this Agreement
shall not constitute a waiver of any other provision, term, or condition, whether prior or
subsequent to such actual waiver and whether of the same or a different type. The failure of the
Company to promptly terminate Executive’s employment for Cause shall not be construed as a waiver
of the right of termination, and such right may be exercised at any time following the occurrence
of the event giving rise to such right.



15. Survival. Notwithstanding the termination of this Agreement, the provisions which specify
continuing obligations, compensation and benefits, and rights shall remain in effect until such
time as all such obligations are discharged, all such compensation and benefits are received, and
no party or beneficiary has any remaining actual or contingent rights under this Agreement.



16. Severability. In the event any provision in this Agreement shall be held illegal or invalid
for any reason, such illegal or invalid provision shall not affect the remaining provisions and
this Agreement shall be construed, administered and enforced as though such illegal or invalid
provision were not contained in this Agreement.



17. Mutual Waiver of Jury Trial. The Company and Executive each waives its/his respective rights
to a trial by jury of any claim or cause of action based upon or arising out of or related to this
Agreement in any action, proceeding or other litigation of any type brought by any
of the parties against any other party or any affiliate of any other such party, whether with
respect to contract claims, tort claims or otherwise. The Company and Executive each agree that
any such claim or cause of action shall be tried by a court trial without a jury. Without limiting





13









 







the foregoing, the parties further agree that their respective right to a trial by jury is waived
by operation of this Section as to any action, counterclaim or other proceeding which seeks, in
whole or in part, to challenge the validity or enforceability of this Agreement or any provision
hereof. This waiver shall apply to any subsequent amendments, renewals, supplements or
modifications to this Agreement.



18. Binding Effect and Benefit.




     18.1 The Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business or assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
Failure by the Company to obtain such assumption and agreement prior to the effectiveness of any
such succession shall constitute a material breach of this Agreement. As used in this Agreement,
“the Company” shall mean the Company as hereinbefore defined and any successor to the respective
business or assets of the Company as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.



     18.2 This Agreement shall inure to the benefit of and be enforceable by Executive’s personal
or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees.
If Executive should die while any amount is payable to him under this Agreement if he had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to his devisee, legatee, or other designee, or, if there is no such
designee, to his estate.


19. Entire Agreement; Reservation. This Agreement embodies the entire agreement among the parties
with respect to the subject matter of this Agreement, and it supersedes all prior discussions and
oral understandings of the parties with respect thereto.



20. Review of Agreement. The Company and Executive hereby acknowledge and agree that the parties
shall review the terms and conditions contained in this Agreement on a triennial basis and engage
in discussions regarding possible amendments to this Agreement; provided, however, no party hereto
shall be obligated to amend this Agreement at any time.



21. Assignment. This Agreement shall not be assignable by either party hereto, except as provided
in Section 4.5 and by the Company to any successor in interest to the business of the Company,
provided that the Company (if it remains a separate entity) shall remain fully liable under this
Agreement for all obligations, payments and otherwise.



22. No Mitigation or Offset. In the event of termination of Executive’s employment, Executive will
be under no obligation to seek other employment and there will be no offset against any payment or
benefit provided for in this Agreement on account of any remuneration or benefits from any
subsequent employment that he may obtain.



23. Captions. The captions of the several sections and subsections of this Agreement have been
inserted for convenience of reference only. They constitute no part of this Agreement and are not
to be considered in the construction of this Agreement.





14









 







24. Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed one and the same instrument which may be sufficiently evidenced by any one
counterpart.



25. Number. Wherever any words are used in the singular form, they shall be construed as though
they were used in the plural form, as the context requires, and vice versa.



26. Legal Fees. In the event of a dispute following a Change in Control, the Company, or its
successor, shall reimburse Executive for all reasonable legal fees and expenses incurred by
Executive in attempting to obtain or enforce rights or benefits provided by this Agreement, if,
with respect to any such right or benefit, Executive is successful in obtaining or enforcing such
right or benefit (including by negotiated settlement).



27. Application of Code Section 409A.




     27.1 Notwithstanding anything in this Agreement to the contrary, the receipt of any benefits
under this Agreement as a result of a termination of employment shall be subject to satisfaction of
the condition precedent that Executive undergo a “separation from service” within the meaning of
Treas. Reg. § 1.409A-1(h) or any successor thereto. In addition, if Executive is deemed to be a
“specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with
regard to any payment or the provisions of any benefit that is required to be delayed pursuant to
Code Section 409A(a)(2)(B), such payment or benefit shall not be made or provided prior to the
earlier of (i) the expiration of the six (6) month period measured from the date of Executive’s
“separation from service” (as such term is defined in Treas. Reg. § 1.409A-1(h)), or (ii) the date
of Executive’s death (the “Delay Period”). Within ten (10) days following the expiration of the
Delay Period, all payments and benefits delayed pursuant to this Section (whether they would have
otherwise been payable in a single sum or in installments in the absence of such delay) shall be
paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under
this Agreement shall be paid or provided in accordance with the normal payment dates specified for
them herein. Notwithstanding the foregoing, to the extent that the foregoing applies to the
provision of any ongoing welfare benefits to Executive that would not be required to be delayed if
the premiums therefore were paid by Executive, Executive shall pay the full costs of premiums for
such welfare benefits during the Delay Period and the Company shall pay Executive an amount equal
to the amount of such premiums paid by Executive during the Delay Period within ten (10) days after
the conclusion of such Delay Period.



     27.2 Except as otherwise expressly provided herein, to the extent any expense reimbursement
or other in-kind benefit is determined to be subject to Code Section 409A, the amount of any such
expenses eligible for reimbursement or in-kind benefits in one calendar year shall not affect the
expenses eligible for reimbursement or in-kind benefits in any other taxable year (except under any
lifetime limit applicable to expenses for medical care), in no event shall any expenses be
reimbursed or in-kind benefits be provided after the last day of the calendar year
following the calendar year in which Executive incurred such expenses or received such
benefits, and in no event shall any right to reimbursement or in-kind benefits be subject to
liquidation or exchange for another benefit.



15









 





     27.3 Any payments made pursuant to this Sections 7.3 and 7.4, to the extent of payments made
from the date of termination through March 15th of the calendar year following such date, are
intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) and thus
payable pursuant to the “short-term deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4); to the
extent such payments are made following said March 15th, they are intended to constitute separate
payments for purposes of Treas. Reg. §1.409A-2(b)(2) made upon an involuntary termination from
service and payable pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), to the maximum extent permitted
by said provision. Notwithstanding the foregoing, if the Company determines that any other
payments hereunder fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the
Internal Revenue Code of 1986, as amended (the “Code”), the payment of such benefit shall be
delayed to the minimum extent necessary so that such payments are not subject to the provisions of
Code Section 409A(a)(1).



     27.4 To the extent it is determined that any benefits described in Sections 7.3.c and 7.4.d.
are taxable to Executive, they are intended to be payable pursuant to Treas. Reg.
§1.409A-1(b)(9)(v), to the maximum extent permitted by said provision.


28. Recovery of Bonuses and Incentive Compensation. Notwithstanding anything in this Agreement to
the contrary, all bonuses and incentive compensation paid hereunder (whether in equity or in cash)
shall be subject to recovery by the Company in the event that such bonuses or incentive
compensation are based on materially inaccurate financial statements (which includes, but is not
limited to, statements of earnings, revenues, or gains) or other materially inaccurate performance
metric criteria; provided that a determination as to the recovery of a bonus or incentive
compensation shall be made within twelve (12) months following the date such bonus or incentive
compensation was paid. In the event that the Board determines by at least a majority vote that a
bonus or incentive compensation payment to Executive is recoverable, Executive shall reimburse all
or a portion of such bonus or incentive compensation, to the fullest extent permitted by law, as
soon as practicable following written notice to Executive by the Company of the same.




     IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be executed, as
of the date first above written.



	 	 	 	 	 
	For: PMMHC Corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ J. Harvey Sproul
	 	DATE: 8/14/09
	 

	 	 	 	 
	 
	 	 	 	 
	For: Penn Millers Holding Corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ J. Harvey Sproul
	 	DATE: 8/14/09
	 

	 	 	 	 
	 
	 	 	 	 
	For: Penn Millers Insurance Company	 	 
	 
	 	 	 	 
	By:

	 	/s/ J. Harvey Sproul
	 	DATE: 8/14/09
	 

	 	 	 	 





16









 






	 	 	 	 	 
	 

	 	/s/ Douglas Gaudet
	 	DATE: 8/14/09
	 

	 	 	 	 
	 

	 	Douglas Gaudet	 	 






17









 






EXHIBIT A

RELEASE AGREEMENT



THIS
RELEASE AGREEMENT (this “Release Agreement”) is made as
of this ___ day of ____________,
20__, by and between PMMHC Corporation, Penn Millers Holding Corporation, Penn Millers Insurance
Company (collectively, the “Employer”) and Douglas Gaudet (the “Executive”). Capitalized terms not
defined in this Release Agreement shall have the meanings ascribed to them in the Employment
Agreement (as defined below). In consideration of the mutual agreements set forth below, the
Executive and the Employer hereby agree as follows:




     1. General Release.



          a. In consideration of the payments and benefits required to be provided to the Executive
under the agreement between the Employer and the Executive, dated August 14, 2009, (the “Employment
Agreement”) and after consultation with counsel, the Executive, for himself and on behalf of each
of the Executive’s heirs, executors, administrators, representatives, agents, successors and
assigns (collectively, the “Releasors”), hereby irrevocably and unconditionally releases and
forever discharges the Employer, its majority owned subsidiaries and affiliated companies, and each
of its officers, employees, directors, shareholders, and agents (collectively, the “Releasees”)
from any and all claims, actions, causes of action, rights, judgments, obligations, damages,
demands, accountings, or liabilities of whatever kind or character (collectively, “Claims”),
including, without limitation, any Claims under any federal, state, local, or foreign law, that the
Releasors may have, or in the future may possess, arising out of (i) the Executive’s employment
relationship with and service as an employee, officer, or director of the Employer and any of its
majority-owned subsidiaries and affiliates, or the termination of the Executive’s service in any
and all of such relevant capacities, (ii) the Employment Agreement, or (iii) any event, condition,
circumstance, or obligation that occurred, existed, or arose on or prior to the date hereof;
provided, however, that the release set forth in this Section shall not apply to (iv) the payment
and/or benefit obligations of the Employer or any of its affiliates, (collectively, the “Employer
Group”) under the Employment Agreement, (v) any Claims the Executive may have under any plans or
programs not covered by the Employment Agreement in which the Executive participated and under
which the Executive has accrued and become entitled to a benefit, and (vi) any indemnification or
other rights the Executive may have under the Employment Agreement or in accordance with the
governing instruments of any member of the Employer Group or under any director and officer
liability insurance maintained by the Employer or any such group member with respect to liabilities
arising as a result of the Executive’s service as an officer and employee of any member of the
Employer Group or any predecessor thereof. Except as provided in the immediately preceding
sentence, the Releasors further agree that the payments and benefits as required by the Employment
Agreement shall be in full satisfaction of any and all Claims for payments or benefits, whether
express or implied, that the Releasors may have against the Employer or any member of the Employer
Group arising out of the Executive’s employment relationship under the Employment Agreement and the
Executive’s service as an employee, officer or director of the Employer or a member of the Employer
Group under the Employment Agreement or the termination thereof, as applicable.




18









 








     2. Specific Release of Claims. In further consideration of the payments and benefits
provided to the Executive under the Employment Agreement, the Releasors hereby unconditionally
release and forever discharge the Releasees from any and all Claims that the Releasors may have in
connection with the Executive’s employment or termination of employment, arising under:



          a. Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act
(“ADEA”), the Americans With Disabilities Act of 1990 (“ADA”), the Rehabilitation Act of 1973, and
any similar federal, state or local laws, including without limitation, the Pennsylvania Human
Relations Act, as amended and any other non-discrimination and fair employment practices laws of
any state and/or locality in which the Executive works or resides, all as amended;




          b. the Fair Credit Reporting Act (“FCRA”), the Employee Retirement Income Security Act of 1974
(“ERISA”), the Worker Adjustment and Retraining Notification Act (“WARN”); and




          c. all common law Claims including, but not limited to, actions in tort and for breach of
contract, including, without limitation, Claims for incentive payments and/or commissions,
including but not limited to, Claims for incentive and/or commission payments under any Employer
incentive or commission plan, Claims for severance benefits, all Claims to any non-vested ownership
interest in the Employer, contractual or otherwise, including but not limited to Claims to stock or
stock options.




               This release applies to any and all Claims that the Executive may have relating to rights,
known or unknown to him, resulting from a change in ownership control of the Employer, including,
without limitation, rights pursuant to severance agreements, severance plans, incentive plans,
equity compensation plans, or any other plan or agreement relating to the Executive’s employment.



               Notwithstanding anything contained herein to the contrary, no portion of any release contained
in any Section of this Release Agreement shall release the Employer or the Employer Group from any
Claims the Executive may have for breach of the provisions of this Release Agreement or to enforce
this Release Agreement, that arise after the date of this Release Agreement, or to challenge the
validity of the Executive’s release of ADEA Claims.



               By signing this Release Agreement, the Executive hereby acknowledges and confirms the
following: (i) the Executive was advised by the Employer or his then employer in connection with
his termination of employment or retirement to consult with an attorney of his choice prior to
signing this Release Agreement and to have such attorney explain to the Executive the terms of this
Release Agreement, including, without limitation, the terms relating to the Executive’s release of
Claims arising under this Section, and the Executive has in fact consulted with an attorney; (ii)
the Executive was given a period of not fewer than 21 days to consider the terms of this Release
Agreement prior to its signing; and (iii) the Executive knowingly and voluntarily accepts the terms
of this Release Agreement.



19









 





     3. No Assignment of Claims. The Executive represents and warrants that he has not
assigned any of the Claims being released hereunder.



     4. Complaints. The Executive affirms that he has not filed any complaint against any
Releasee with any local, state or federal court and agrees not to do so in the future, except for
Claims challenging the validity of the release of ADEA Claims. The Executive affirms further that
he has not filed any claim, charge or complaint with the United States Equal Employment Opportunity
Commission (“EEOC”) or any state or local agency authorized to investigate charges or complaints of
unlawful employment discrimination (together, “Agency”). The Executive understands that nothing in
this Release Agreement prevents him from filing a charge or complaint of unlawful employment
discrimination with any Agency or assisting in or cooperating with an investigation of a charge or
complaint of unlawful employment discrimination by an Agency, provided however that, the Executive
acknowledges that he may not be able to recover any monetary benefits in connection with any such
claim, charge, complaint or proceeding and disclaim entitlement to any such relief. Furthermore,
if any Agency or court has now assumed or later assumes jurisdiction of any claim, charge or
complaint on the Executive’s behalf against any Releasee, the Executive will disclaim entitlement
to any relief.



     5. Revocation. This Release Agreement may be revoked by the Executive within the
seven-day period commencing on the date the Executive signs this Release Agreement (the “Revocation
Period”). In the event of any such revocation by the Executive, all obligations of the parties
under this Release Agreement shall terminate and be of no further force and effect as of the date
of such revocation. No such revocation by the Executive shall be effective unless it is in writing
and signed by the Executive and received by the Employer prior to the expiration of the Revocation
Period. In the event of revocation, the Executive shall not be entitled to the payments and
benefits under the Employment Agreement, the receipt of which is conditioned on the Executive’s
execution of this Release Agreement.



     6. Non-Disparagement. The Executive agrees not to disparage or criticize the
Releasees, or any of them, or otherwise speak of Releasees, or any of them, in any negative or
unflattering way to anyone with regard to any matters relating to the Executive’s employment by the
Employer Group or the business or employment practices of such business entities. The Employer
agrees, on behalf of itself, and the Employer Group, not to disparage or criticize the Executive or
otherwise speak of the Executive in any negative or unflattering way to anyone with regard to any
matters relating to the Executive’s employment with the Employer Group. The parties understand
that this entire provision is a material provision of this Release Agreement. This Section shall
not operate as a bar to (i) statements reasonably necessary to be made in any judicial,
administrative or arbitral proceeding, or (ii) internal communications between and among the
employees of the Employer Group with a job-related need to know about this Release Agreement or
matters related to the administration of this Release Agreement.



     7. Cooperation. The Executive agrees to cooperate with the Employer with respect to
all matters arising during or related to his employment about which he has personal knowledge
because of his employment with the Employer, including but not limited to all matters (formal or
informal) in connection with any government investigation, internal Employer investigation,
litigation (potential or ongoing), administrative, regulatory, or other proceeding which currently
exists, or which may have arisen prior to or arise following the signing of this



20









 







Release Agreement. The Executive understands that the Employer agrees to reimburse Executive
for his reasonable out-of-pocket expenses (not including attorney’s fees, legal costs, or lost time
or opportunity) incurred in connection with such cooperation.



     8. No Admission of Liability. The Executive agrees that this Release Agreement does
not constitute, nor should it be construed to constitute, an admission by the Employer of any
violation of federal, state, or local law, regulation, or ordinance, nor as an admission of
liability under the common law or for any breach of duty the Employer owed or owes to the
Executive.



     9. Representations and Warranties. The Executive acknowledges and agrees that (i) he
is not aware of nor has he reported any conduct by any of the Releasees that violates any federal,
state, or local law, rule, or regulation, (ii) he has not been denied any rights or benefits under
the Family and Medical Leave Act of 1993 (“FMLA”) or any state or local law, act, or regulation
providing for family and/or medical leave or been discriminated against in any way for exercising
his rights under these laws, and (iii) in connection with offering the payments and benefits
provided under the Employment Agreement, the Employer has not provided to the Executive, and has no
obligation to provide to the Executive, any material non-public information as defined in
applicable federal securities laws, concerning the Employer.



     10. Confidentiality. The Executive agrees to maintain as confidential, the terms and
contents of this Release Agreement, and the contents of the negotiations and discussions resulting
in this Release Agreement, except (i) as needed to obtain legal counsel, financial, or tax advice,
(ii) to the extent required by federal, state, or local law or by order of court (iii) as needed to
challenge the release of ADEA Claims or to participate in an Agency investigation, or (iv) as
otherwise agreed to in writing by an officer of the Employer. The Executive agrees that before he
seeks legal counsel or financial or tax advice, he will secure an agreement from such counsel or
advisors to adhere to the same confidentiality obligations that apply to him. The Executive agrees
not to discuss either the existence of or any aspect of this Release Agreement with any employee or
ex-employee of the Employer.



     11. Successors. This Release Agreement is for the benefit of and is binding upon the
Executive and his heirs, administrators, representatives, executors, successors, beneficiaries and
assigns, and is also for the benefit of the Releasees and their successors and assigns.



     12. Violation. If the Executive violates any provisions of this Release Agreement,
the Employer will be entitled to the immediate repayment of all payments and benefits paid pursuant
to the Employment Agreement. The Executive agrees that repayment will not invalidate this Release
Agreement and acknowledges that he will be deemed conclusively to be bound by the terms of this
Release Agreement and to waive any right to seek to overturn or avoid it. If the Executive
violates any provisions of this Release Agreement before all of the payments and benefits under the
Employment Agreement have been provided, the Employer may discontinue any unpaid conditional
payments and benefits.



     13. Additional Damages Available for Violation. The Executive agrees that the Employer
will maintain all rights and remedies available to it at law and in equity in the event the
Executive violates any provision of this Release Agreement. These rights and remedies may include,
but may not be limited to, the right to bring court action to recover all consideration paid



21









 







to the Executive pursuant to this Release Agreement and any additional damages the Employer
may suffer as a result of such a breach.



     14. Entire Agreement and Amendment. This Release Agreement contains and constitutes
the entire understanding and agreement between the parties hereto with respect to the Executive’s
severance benefits and waiver and release of Claims against the Employer and cancels all previous
oral and written negotiations, agreements, commitments and writings in connection therewith. This
Release Agreement shall be binding upon the parties and may not be modified in any manner, except
by an instrument in writing of concurrent or subsequent date signed by a duly authorized
representative of the parties and their respective agents, assign, heirs, executors, successors,
and administrators. No delay or omission by the Employer in exercising any right under this
Release Agreement shall operate as a waiver of that or any other right. A waiver or consent given
by the Employer on any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion. The parties acknowledge and agree
that Sections 12 and 15 of the Employment Agreement shall survive the execution of this Release
Agreement and the termination of the Employment Agreement.



     15. Applicable Law. This Release Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to choice of law
principles, and except as preempted by federal law. Should any provision of this Release Agreement
be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected thereby and the illegal
or invalid part, term, or provision will be deemed not to be a part of this Release Agreement.



     16. Assignment. The Executive’s rights and obligations under this Release Agreement
shall inure to the Executive’s benefit and shall bind the Executive, his heirs and representatives.
The Employer’s rights and obligations under this Release Agreement shall inure to the benefit of
and shall bind the Employer, its successors and assigns. The Executive may not assign this Release
Agreement. The Employer may assign this Release Agreement, but it may not delegate the duty to
make any payments hereunder without the Executive’s written consent, which shall not be
unreasonably withheld.



     17. Severability. If any provision of this Release Agreement is held unenforceable by
a court of competent jurisdiction, all remaining provisions shall continue in full force and effect
without being impaired or invalidated in any way.



     18. Notices. All notices required by this Release Agreement shall be in writing and
shall be deemed to have been duly delivered in person or when mailed by certified mail, return
receipt requested, as follows:




	 	a.	 	If to the Executive: 25 Bulford Road, Shavertown, PA 18798
	 
	 	b.	 	If to the Employer: 72 North Franklin St., Wilkes-Barre, PA 18773-0016




22









 










The Executive is hereby advised that the Executive has up to twenty-one (21) calendar days to
review this Release Agreement and that the Executive should consult with an attorney of the
Executive’s choice prior to execution of this Release Agreement.




     The Executive agrees that any modifications, material or otherwise, made to this Release
Agreement do not restart or affect in any manner the original twenty-one (21) calendar day
consideration.



     Having elected to execute this Release Agreement, to fulfill the promises and to receive the
payments and benefits under the Employment Agreement, the Executive freely and knowingly,
after due consideration, enters into this Release Agreement intending to waive, settle and release
all claims the Executive has or might have against the Employer.




Statement by the Executive who is signing below. By signing
this Release Agreement, I acknowledge that the Employer has advised
and encouraged me to consult with an attorney prior to executing
this Release Agreement. I have carefully read and fully understand
the provisions of this Release Agreement and have had sufficient
time and opportunity (over a period of 21 days) to consult with my
personal tax, financial and legal advisors prior to executing this
Release Agreement, and I intend to be legally bound by its terms.



     IN WITNESS WHEREOF, the Employer (on its behalf and on behalf of the members of the Employer
Group) and the Executive, intending to be legally bound have executed this Release Agreement on the
day and year first above written.



	 	 	 	 	 
	 	PENN MILLERS HOLDING CORPORATION

 	 
	 	By  	 	 
	 	 	Title  	 	 
	 
	 
	 	EXECUTIVE

 	 
	 	
 	 
	 	Douglas Gaudet 	 
	 	 	 
	 




23