Exhibit 10.6





Exhibit 10.6




PENN MILLERS STOCK INCENTIVE PLAN




STOCK OPTION AGREEMENT FOR




NONQUALIFIED STOCK OPTION




FOR NON-MANAGEMENT DIRECTORS




 






BETWEEN




PENN MILLERS HOLDING CORPORATION




AND




 






(the Optionholder)




Date of Award:



Number of Shares:



Exercise Price:



Option Expiration Date:


 


 









 





NONQUALIFIED STOCK OPTION AGREEMENT




Number of shares subject to option:                      shares (the “Option”).



This Agreement dated                     , 2010, between Penn Millers Holding Corporation (the
“Corporation”) and                                          (the “Optionholder”).



WITNESSETH:




1. Award of Option



Pursuant to the provisions of the Penn Millers Stock Incentive Plan (the “Plan”) the
Corporation hereby awards to the Optionholder, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the right and option to purchase from
the Corporation, all or any part of an aggregate of
 _____ 

shares of common stock (par value $0.01
per share) of the Corporation (the “Common Stock”) at the
exercise price of $_____ per share; such
option to be exercised as hereinafter provided.



2. Terms and Conditions



It is understood and agreed that the Option evidenced hereby is subject to the following terms
and conditions:




	 	(a)	 	Expiration Date. Subject to the provisions of Paragraph 2(d), the Option
awarded hereby shall expire on                     .
	 
	 	(b)	 	Exercise of Option. Except as may be provided below, no part of this
Option may be exercised until the Optionholder has remained in the continuous service
as a non-employee director of the Corporation or of a Subsidiary for the following
periods after date hereof:





	 	 	 	 	 	 	 	 	 
	Vesting Date	 	% of Shares
Vesting	 	 	Number of
Shares Vesting	 
	 
	 	 	20	%	 	 	 	 
	 
	 	 	20	%	 	 	 	 
	 
	 	 	20	%	 	 	 	 
	 
	 	 	20	%	 	 	 	 
	 
	 	 	20	%	 	 	 	 







	 	 	 	This Option may be exercised in whole at any time, or from time to time in
part, to the extent vested, prior to the expiration date specified in Paragraph
2(a) hereof. Any exercise shall be accompanied by a written notice to the
Corporation specifying the number of shares as to which the Option is being
exercised. Notwithstanding the foregoing:






	 		 	(1) upon the occurrence of a Change in Control, all unvested Options then held
by the Optionholder shall vest and become immediately exercisable;




 


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	 		 	(2) if the Optionholder’s service with the Corporation or a Subsidiary
terminates due to death or Disability on or after the date in which the
Optionholder (A) reaches age 55 or (B) has completed 10 years of service with
the Corporation or a Subsidiary (including a predecessor of the Corporation or
a Subsidiary), unvested Options then held by the Optionholder shall vest and
become immediately exercisable on a pro-rata basis based on the number of full
months that the Optionholder provided services to the Corporation or a
Subsidiary during the period beginning on the day after the most recent vesting
date set forth in Section 2(b) and ending on the next scheduled vesting date
set forth in Section 2(b); and
	 
	 		 	(3) if the Optionholder’s service with the Corporation or a Subsidiary
terminates (other than for death, Disability, or by reason of a Termination or
Dismissal for Cause) on or after the Optionholder reaches age 65, unvested
Options then held by the Optionholder shall vest and become immediately
exercisable on a pro-rata basis based on the number of full months that the
Optionholder provided services to the Corporation or a Subsidiary during the
period beginning on the day after the most recent vesting date set forth in
Section 2(b) and ending on the next scheduled vesting date set forth in Section
2(b).






	 	(c)	 	Payment of Exercise Price upon Exercise. At the time of any exercise, the
exercise price of the shares as to which this Option may be exercised shall be paid in
cash or, subject to the conditions and limitations described in the Plan, by one of the
methods of payment set forth in the Plan for the exercise of a Nonqualified Stock
Option.
	 
	 	(d)	 	Exercise upon Death, Being Disabled or other Termination of Service.






	 		 	(1) In the event of the termination of the Optionholder’s service by reason of
death or Disability, this Option may be exercised, to the extent that the
Optionholder was entitled to do so at the date of termination of service due to
such cause, in whole at any time, or from time to time in part, within 12
months after the Optionholder’s death or Disability, but in no event later than
the expiration date specified in Paragraph 2(a) hereof.
	 
	 		 	(2) In the event the Corporation or a Subsidiary terminates the service of the
Optionholder (other than if the termination is a Termination or Dismissal for
Cause), this Option may be exercised, to the extent that the Optionholder was
entitled to do so at the date of termination of service due to such cause, in
whole at any time, or from time to time in part, within 12 months after the
date of such termination, but in no event later than the expiration date
specified in Paragraph 2(a) hereof.
	 
	 		 	(3) In the event the Optionholder’s service is voluntarily terminated by the
Optionholder, this Option will expire upon such termination of service;
provided, however, that if the Optionholder terminates on or after reaching
age 65, this Option may be exercised, to the extent that the Optionholder was




 


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	 	 	 	entitled to do so at the date of termination of service, in whole at any time,
or from time to time in part, within 12 months after the date of such
termination, but in no event later than the expiration date specified in
Paragraph 2(a) hereof.
	 
	 		 	(4) Notwithstanding anything herein to the contrary, in the event the
Optionholder’s termination of service is a Termination or Dismissal for Cause,
all rights to exercise this Option shall lapse upon the date of such
termination of service.






	 	(e)	 	Nontransferability. This Option shall not be transferable other than by
will or by the laws of descent and distribution. During the lifetime of the
Optionholder, this Option shall be exercisable only by the Optionholder.
	 
	 	(f)	 	Adjustments. In the event that the shares of Common Stock, as presently
constituted, shall be changed into or exchanged for a different number or kind of
 shares of stock or other securities of the Corporation, or if the number of such shares
of Common Stock shall be changed through the payment of a stock dividend, stock split,
or reverse stock split, then the shares of Common Stock then subject to this Option and
the exercise price thereof shall be increased, decreased, or otherwise changed to such
extent and in such manner as may be necessary or appropriate to reflect any of the
foregoing events. If there shall be any other change in the number or kind of the
outstanding shares of the Common Stock, or of any stock or other securities into which
such Common Stock shall have been changed, or for which it shall have been exchanged,
and if a majority of the disinterested members of the Board shall, in its sole
discretion, determine that such change equitably requires an adjustment to the terms of
this Option, then such adjustment shall be made in accordance with such determination.
Any adjustment so made shall be final and binding upon the Optionholder.
	 
	 	(g)	 	No Rights as Shareholder. The Optionholder shall have no rights as a
shareholder with respect to any shares of Common Stock subject to this Option prior to
the date of issuance of a certificate or certificates for such shares.
	 
	 	(h)	 	No Right to Continued Service. This Option shall not confer upon the
Optionholder any right to continue in the service, nor shall it interfere in any way
with the right of the Corporation or any Subsidiary to terminate the Optionholder’s
service at any time and for any reason.
	 
	 	(i)	 	Compliance with Law and Regulations. This Option and the obligation of
the Corporation to sell and deliver shares hereunder shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required to
issue or deliver any certificates for shares of Common Stock prior to (1) the listing
of such shares on any stock exchange on which the Common Stock may then be listed and
(2) the completion of any registration or qualification of such
 shares under any federal or state law, or any rule or regulation of any government body
which the Corporation shall, in its sole discretion, determine to be necessary or
advisable.




 


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3. Investment Representation



The Corporation may require the Optionholder to furnish to the Corporation, prior to the
issuance of any shares upon the exercise of all or any part of this Option, an agreement (in such
form as the Corporation may specify) in which the Optionholder represents that the shares acquired
upon exercise are being acquired for investment and not with a view to the sale or distribution
thereof.



4. Optionholder Bound by Plan



The Optionholder acknowledges receipt of a copy of the Plan and agrees that this award shall
be subject to all of the terms and conditions set forth in the Plan, including future amendments
thereto, if any, pursuant to the terms thereof, which Plan is incorporated herein by reference as a
part of this Agreement. Capitalized terms used in this Agreement without definition shall have the
meanings assigned to them in the Plan.



5. Notices



Any notice hereunder to the Corporation shall be addressed to it at its office, 72 North
Franklin Street, P.O. Box P, Wilkes Barre, PA 18773 0016; Attention: Chief Financial Officer, (or
to such different address as the Corporation may designate in writing) and any notice hereunder to
Optionholder shall be addressed to him or her at the most recent address as shown in the stock
records of the Corporation.



IN WITNESS WHEREOF, Penn Millers Holding Corporation has caused this Agreement to be executed
by a duly authorized officer and the Optionholder has executed this Agreement, both as of the day
and year first above written.



	 	 	 	 	 	 	 
	PENN MILLERS	 	 	 	 
	HOLDING CORPORATION	 	OPTIONHOLDER	 	 
	 
	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	Douglas A. Gaudet
	 	(Signature)	 	 
	 

	 	President and Chief Executive Officer	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	(Print Address)	 	 







 


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