Document:

EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

BY AND AMONG

PRUDENTIAL BANCORP, INC.

PRUDENTIAL SAVINGS BANK

AND

DENNIS POLLACK

THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of May 16, 2016, by and among Prudential Bancorp, Inc., a Pennsylvania corporation (the "Corporation"), Prudential Savings Bank, a Pennsylvania‐chartered, stock-form savings bank (the "Bank" and collectively with the Corporation, the "Employers"), and Dennis Pollack (the "Executive").

WHEREAS, effective as of May 1, 2016, the Executive, then currently a director of the Company and the Bank, was appointed the President and Chief Executive Officer of the Corporation and the Bank;

WHEREAS, the Employers desire to be ensured of the Executive's continued active participation in the business of the Employers; and

WHEREAS, the Executive is willing to serve each of the Corporation and the Bank on the terms and conditions hereinafter set forth.

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

1. Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

(a) Average Annual Compensation. The Executive's "Average Annual Compensation" for purposes of this Agreement shall be deemed to mean the average amount of Base Salary and cash bonus received by the Executive from the Employers or any subsidiary thereof (excluding any deferred amounts) during the most recent five calendar years immediately preceding the Date of Termination (or, if the Executive was not employed by the Corporation or the Bank as officer thereof for all of such five-year period, such shorter period as the Executive was employed).

(b) Base Salary.  "Base Salary" shall have the meaning set forth in Section 3(a) hereof.

(c) Cause. Termination of the Executive's employment for "Cause" shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, willful conduct which is materially detrimental (monetarily or otherwise) to the Employers or material breach of any provision of this Agreement.

(d) Change in Control.  "Change in Control" shall mean a change in the ownership of the Corporation or the Bank, a change in the effective control of the Corporation or the Bank or a change in the ownership of a substantial portion of the assets of the Corporation or the Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

(e) Code.  "Code" shall mean the Internal Revenue Code of 1986, as amended.

(f) Date of Termination.  "Date of Termination" shall mean (i) if the Executive's employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if the Executive's employment is terminated for any other reason, the date specified in such Notice of Termination.

(g) Disability. "Disability" shall mean the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employers.

(h) Good Reason.  "Good Reason" means the occurrence of any of the following events:

	
(i)

	
any material breach of this Agreement by the Employers, including without limitation any of the following: (A) a material diminution in the Executive's base compensation, (B) a material diminution in the Executive's authority, duties or responsibilities, or (C) any requirement that the Executive report to a corporate officer or employee of the Employers instead of reporting directly to the Board of Directors of the Employers, or

	
(ii)

	
any material change in the geographic location at which the Executive must perform his services under this Agreement;

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Employers within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Employers shall thereafter have the right to remedy the condition within thirty (30) days of the date the Employers received the written notice from the Executive.  If the Employers remedy the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Employers do not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

(i) IRS. "IRS" shall mean the Internal Revenue Service.

(j) Notice of Termination.  Any purported termination of the Executive's employment by the Employers for any reason, including without limitation for Cause, Disability or Retirement, or by the Executive for any reason, including without limitation for Good Reason, shall be communicated by a written "Notice of Termination" to the other party hereto.  For purposes of this Agreement, a "Notice of Termination" shall mean a dated notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Employers' termination of the Executive's employment for Cause, which shall be effective immediately; and (iv) is given in the manner specified in Section 10 hereof.

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(k) Retirement.  "Retirement" shall mean voluntary termination by the Executive in accordance with the Employers' retirement policies, including early retirement, generally applicable to the Employers' salaried employees.

2. Term of Employment.

(a) The Employers hereby employ the Executive as President and Chief Executive Officer of each of the Corporation and the Bank, and the Executive hereby accepts said employment and agrees to render such services to the Employers on the terms and conditions set forth in this Agreement. Subject to the terms hereof, this Agreement shall terminate on December 31, 2018.  Beginning on December 31, 2017 and on each December 31st thereafter, the term of this Agreement shall be extended for a period of one additional year, provided that the Employers have not given notice to the Executive in writing at least 30 days prior to such day that the term of this Agreement shall not be extended further and/or the Executive has not given notice to the Employers of his election not to extend the term at least thirty (30) days prior to any such December 31st; provided, however, notwithstanding the foregoing to the contrary, if a Change in Control occurs during the term of this Agreement, then the remaining term of this Agreement shall be automatically extended until the one-year anniversary of the completion of the Change in Control. If any party gives timely notice that the term will not be extended as of any such December 31st, then this Agreement shall terminate at the conclusion of its remaining term.  References herein to the term of this Agreement shall refer both to the initial term and successive terms.

(b) During the term of this Agreement, the Executive shall perform such executive services for the Employers as is consistent with his title of President and Chief Executive Officer and from time to time assigned to him by the Employers' Boards of Directors.

3. Compensation and Benefits.

(a) The Employers shall compensate and pay the Executive for his services during the term of this Agreement at a minimum base salary of $250,000 per year ("Base Salary"), which may be increased from time to time in such amounts as may be determined by the Boards of Directors of the Employers and may not be decreased without the Executive's express written consent.  In addition to his Base Salary, the Executive shall be entitled to receive during the term of this Agreement such bonus payments as may be determined by the Boards of Directors of the Employers.

(b) During the term of this Agreement, the Executive shall be entitled to participate in and receive the benefits of any pension or other retirement benefit plan, profit sharing, stock option, restricted stock, stock incentive, employee stock ownership, medical, dental and vision insurance or other plans, benefits and privileges given to employees and executives of the Employers, to the extent commensurate with his then duties and responsibilities, as fixed by the Board of Directors of the Employers.  The Employers shall not make any changes in such plans, benefits or privileges which would adversely affect the Executive's rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of the Employers and does not result in a proportionately greater adverse change in the rights of or benefits to the Executive as compared with any other executive officer of the Employers.  Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to the Executive pursuant to Section 3(a) hereof.

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(c) During the term of this Agreement, the Executive shall be entitled to paid annual vacation in accordance with the policies as established from time to time by the Boards of Directors of the Employers with respect to full-time employees and executive officers.  The Executive shall not be entitled to receive any additional compensation from the Employers for failure to take a vacation during a given calendar year, nor shall the Executive be able to accumulate unused vacation time from one year to the next, except to the extent authorized by the Boards of Directors of the Employers or consistent with Board approved policies related thereto.

(d) During the term of this Agreement, the Employers shall provide the Executive with an automobile allowance equal to $750 per month.

4.  Expenses.  The Employers shall reimburse the Executive or otherwise provide for or pay for all reasonable expenses incurred by the Executive in furtherance of or in connection with the business of the Employers, including, but not by way of limitation, automobile and traveling expenses and the costs of hotel and/or short-term lodging in the Philadelphia area to the extent necessary to fulfill his obligations hereunder, subject to such reasonable documentation and other limitations as may be established by the Boards of Directors of the Employers.  If such expenses are paid in the first instance by the Executive, the Employers shall reimburse the Executive therefor.  Such reimbursement shall be made promptly by the Employers and, in any event, no later than March 15th of the year immediately following the year in which such expenses were incurred.

5.  Termination.

(a) The Employers shall have the right, at any time upon prior Notice of Termination, to terminate the Executive's employment hereunder for any reason, including without limitation termination for Cause, Disability or Retirement, and the Executive shall have the right, upon prior Notice of Termination, to terminate his employment hereunder for any reason.

(b) In the event that (i) the Executive's employment is terminated by the Employers for Cause, or (ii) the Executive terminates his employment hereunder other than for Good Reason, the Executive shall have no right pursuant to this Agreement to compensation or other benefits for any period after the applicable Date of Termination.

(c) In the event that the Executive's employment is terminated as a result of Disability, Retirement or the Executive's death during the term of this Agreement, the Executive shall have no right pursuant to this Agreement to compensation or other benefits for any period after the applicable Date of Termination.

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(d)       In the event that prior to a Change in Control (i) the Executive's employment is terminated by the Employers for other than Cause, Disability, Retirement or the Executive's death or (ii) such employment is terminated by the Executive for Good Reason, then the Employers shall:

 

(A)             pay to the Executive, in a single lump sum within five (5) business days following the Date of Termination, a cash severance amount equal to one (1) times the Executive's Average Annual Compensation;

 

(B) maintain and provide for a period ending at the earlier of (i) one (1) year subsequent to the Date of Termination or (ii) the date of the Executive's full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (B)), at no cost to the Executive, the Executive's continued participation in all group insurance, life insurance, health, dental, vision and accident insurance, and disability insurance plans offered by the Employers in which the Executive was participating immediately prior to the Date of Termination; in each case subject to clauses (C) and (D) of this Section 5(d);

(C) in the event that the continued participation of the Executive in any group insurance plan as provided in clause (B) of this Section 5(d) is barred or would trigger the payment of an excise tax under Section 4980D of the Code, or during the period set forth in Section 5(d)(B) any such group insurance plan is discontinued, then the Employers shall at their election either (i) arrange to provide the Executive with alternative benefits substantially similar to those which the Executive was entitled to receive under such group insurance plans immediately prior to the Date of Termination, provided that the alternative benefits do not trigger the payment of an excise tax under Section 4980D of the Code, or (ii) in the event that the continuation of any insurance coverage pursuant to Section 5(d)(C)(i) above would trigger the payment of an excise tax under Section 4980D of the Code or in the event such continued coverage is unable to be provided by the Employers, pay to the Executive within ten (10) business days following the Date of Termination (or within ten (10) business days following the discontinuation of the benefits if later) a lump sum cash amount equal to the projected cost to the Employers of providing continued coverage to the Executive until the one-year anniversary of his Date of Termination, with the projected cost to be based on the costs being incurred immediately prior to the Date of Termination (or the discontinuation of the benefits if later);

(D) any insurance premiums payable by the Employers pursuant to Section 5(d)(B) or (C) shall be payable at such times and in such amounts (except that the Employers shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Employers, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Employers in any taxable year shall not affect the amount of insurance premiums required to be paid by the Employers in any other taxable year; and

(E) pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the projected cost to the Employers of providing benefits to the Executive for a period of twelve (12) months pursuant to any other employee benefit plans, programs or arrangements offered by the Employers in which the Executive was entitled to participate immediately prior to the Date of Termination (other than stock option plans, restricted stock plans, stock incentive plans or retirement plans of the Employers), with the projected cost to the Employers to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs, and with any automobile-related costs to exclude any depreciation on Bank-owned automobiles.

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(e)       In the event that concurrently with or subsequent to a Change in Control (i) the Executive's employment is terminated by the Employers for other than Cause, Disability, Retirement or the Executive's death, or (ii) by the Executive for Good Reason, then the Employers shall, subject to the provisions of Section 6 hereof, if applicable:

 

(A)             pay to the Executive, in a single lump sum within five (5) business days following the Date of Termination, a cash severance amount equal to two (2) times the Executive's Average Annual Compensation;

 

(B) maintain and provide for a period ending at the earlier of (i) two (2) years subsequent to the Date of Termination or (ii) the date of the Executive's full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (B)), at no cost to the Executive, the Executive's continued participation in all group insurance, life insurance, health, dental, vision and accident insurance, and disability insurance plans offered by the Employers in which the Executive was participating immediately prior to the Date of Termination; in each case subject to clauses (C) and (D) of this Section 5(e);

(C) in the event that the continued participation of the Executive in any group insurance plan as provided in clause (B) of this Section 5(e) is barred or would trigger the payment of an excise tax under Section 4980D of the Code, or during the period set forth in Section 5(e)(B) any such group insurance plan is discontinued, then the Employers shall at their election either (i) arrange to provide the Executive with alternative benefits substantially similar to those which the Executive was entitled to receive under such group insurance plans immediately prior to the Date of Termination, provided that the alternative benefits do not trigger the payment of an excise tax under Section 4980D of the Code, or (ii) ) in the event that the continuation of any insurance coverage pursuant to Section 5(d)(C)(i) above would trigger the payment of an excise tax under Section 4980D of the Code or in the event such continued coverage is unable to be provided by the Employers, pay to the Executive within ten (10) business days following the Date of Termination (or within ten (10) business days following the discontinuation of the benefits if later) a lump sum cash amount equal to the projected cost to the Employers of providing continued coverage to the Executive until the two-year anniversary of his Date of Termination, with the projected cost to be based on the costs being incurred immediately prior to the Date of Termination (or the discontinuation of the benefits if later);

(D) any insurance premiums payable by the Employers pursuant to Section 5(e)(B) or (C) shall be payable at such times and in such amounts (except that the Employers shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Employers, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Employers in any taxable year shall not affect the amount of insurance premiums required to be paid by the Employers in any other taxable year; and

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(E) pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the projected cost to the Employers of providing benefits to the Executive for a period of twenty-four (24) months pursuant to any other employee benefit plans, programs or arrangements offered by the Employers in which the Executive was entitled to participate immediately prior to the Date of Termination (other than stock option plans, restricted stock plans, stock incentive plans or retirement plans of the Employers), with the projected cost to the Employers to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs, and with any automobile-related costs to exclude any depreciation on Bank-owned automobiles.

(f) Notwithstanding any other provision contained in this Agreement, if either (i) the time period for making any cash payment under subsections (A), (C) and (E) of either Section 5(d) or Section 5(e) commences in one calendar year and ends in the succeeding calendar year or (ii) in the event any payment under this Section 5 is made contingent upon the execution of a general release and the time period that the Executive has to consider the terms of such general release (including any revocation period under such release) commences in one calendar year and ends in the succeeding calendar year, then the payment shall not be paid until the succeeding calendar year.

6. Limitation of Benefits under Certain Circumstances.  If the payments and benefits pursuant to Section 5 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Employers, would constitute a "parachute payment" under Section 280G of the Code, then the payments and benefits payable by the Employers pursuant to Section 5 hereof shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Employers under Section 5 being non‐deductible to the Employers pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.  If the payments and benefits under Section 5 are required to be reduced, the cash severance shall be reduced first, followed by a reduction in the fringe benefits.  The determination of any reduction in the payments and benefits to be made pursuant to Section 5 shall be based upon the opinion of independent tax counsel selected by the Employers and paid by the Employers.  Such counsel shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the Date of Termination, and may use such actuaries as such counsel deems necessary or advisable for the purpose.  Nothing contained in this Section 6 shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment under any circumstances other than as specified in this Section 6, or a reduction in the payments and benefits specified in Section 5 below zero.

 

 

  

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7. Mitigation; Exclusivity of Benefits.

(a) The Executive shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise, nor shall the amount of any such benefits be reduced by any compensation earned by the Executive as a result of employment by another employer after the Date of Termination or otherwise, except as set forth in Sections 5(d)(B)(ii) and 5(e)(B)(ii) above.

(b) The specific arrangements referred to herein are not intended to exclude any other benefits which may be available to the Executive upon a termination of employment with the Employers pursuant to employee benefit plans of the Employers or otherwise.

8. Withholding.  All payments required to be made by the Employers hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employers may reasonably determine should be withheld pursuant to any applicable law or regulation.

9. Assignability.  The Employers may assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which the Employers may hereafter merge or consolidate or to which the Employers may transfer all or substantially all of its assets, if in any such case said corporation, bank or other entity shall by operation of law or expressly in writing assume all obligations of the Employers hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or its rights and obligations hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

10. Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

		To the Employers:	Boards of Directors

Prudential Bancorp, Inc.

Prudential Savings Bank

1834 West Oregon Avenue

Philadelphia, Pennsylvania 19145

To the Executive:          Dennis Pollack

At the address last appearing on the

personnel records of the Employers

11. Amendment; Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer or officers as may be specifically designated by the Boards of Directors of the Employers to sign on their behalf.  No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  In addition, notwithstanding anything in this Agreement to the contrary, the Employers may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Code.

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12. Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the Commonwealth of Pennsylvania.

13. Nature of Obligations.  Nothing contained herein shall create or require the Employers to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Employers hereunder, such right shall be no greater than the right of any unsecured general creditor of the Employers.

14. Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

15. Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

16. Changes in Statutes or Regulations. If any statutory or regulatory provision referenced herein is subsequently changed or re-numbered, or is replaced by a separate provision, then the references in this Agreement to such statutory or regulatory provision shall be deemed to be a reference to such section as amended, re-numbered or replaced.

17. Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

18. Regulatory Prohibition.  Notwithstanding any other provision of this Agreement to the contrary, any renewal of this Agreement and payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDIA (12 U.S.C. §1828(k)) and the regulations promulgated thereunder, including 12 C.F.R. Part 359.  In the event of the Executive's termination of employment with the Bank and/or Corporation for Cause, all employment relationships and managerial duties with the Bank or the Corporation shall immediately cease.  Furthermore, following such termination for Cause, the Executive will not, directly or indirectly, influence or participate in the affairs or the operations of the Bank or the Corporation.

19. Payment of Costs and Legal Fees and Reinstatement of Benefits.  In the event any dispute or controversy arising under or in connection with the Executive's termination is resolved in favor of the Executive, whether by judgment, arbitration or settlement, the Executive shall be entitled to the payment of (a) all legal fees incurred by the Executive in resolving such dispute or controversy, and (b) any back-pay, including Base Salary, bonuses and any other cash compensation, fringe benefits and any compensation and benefits due to the Executive under this Agreement.

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20. Entire Agreement.  This Agreement embodies the entire agreement between the Employers and the Executive with respect to the matters agreed to herein.  All prior agreements between the Employers and the Executive with respect to the matters agreed to herein are hereby superseded and shall have no force or effect.

[signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

	
ATTEST:

	 	
PRUDENTIAL BANCORP, INC.

	 	 	 
	 	 	 
	
By:

	/s/Regina Wilson	 	
By:

	/s/Francis V. Mulcahy
	
Name:      Regina Wilson

	 	 	
Francis V. Mulcahy

	
Title:        Corporate Secretary

	 	 	
Chairman of the Compensation

	 	 	 	
Committee of the Board of Directors

 

  

	 	 	
PRUDENTIAL SAVINGS BANK

	 	 	 
	 	 	 
	
By:

	/s/Regina Wilson	 	
By:

	/s/Francis V. Mulcahy
	
Name:      Regina Wilson

	 	 	
Francis V. Mulcahy

	
Title:        Corporate Secretary

	 	 	
Chairman of the Compensation

	 	 	 	
Committee of the Board of Directors

 

  

	 	 	
EXECUTIVE

	 	 	 
	 	 	 
	 	 	
By:

	/s/Dennis Pollack
	 	 	 	
Dennis Pollack

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

11Exhibit 101

		

			

		

		
			Exhibit 10.1
		

		
			May 15,  2016
		

		
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			Joseph M. Zubretsky
		

		
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			Dear Joe:
		

		
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			On behalf of the Board of Directors of The Hanover Insurance Group, Inc. (“The Hanover” or the “Company”),  I am pleased to confirm our offer for you to join The Hanover as its  President and Chief Executive Officer, reporting to the Board of Directors.  We believe you are very well-suited to lead our Company and we are excited for The Hanover’s future.  The terms of your employment are as follows:
		

		
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				 1.
			

			
	
			
			Base Salary: Effective on the date you commence employment with The Hanover (your “Employment Date”), your salary will be payable in biweekly installments which annualize to $1,000,000.  

		
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				 2.
			

			
	
			
			Short-Term Incentive Compensation:  

		
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			2016 Short-Term Incentive Compensation Award
		

		
			You will participate in a  tailored  2016 short-term incentive compensation (“STIC”) program in accordance with the terms of the plan attached hereto as Exhibit A. 
		

		
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			Eligibility for 2017 Short-Term Compensation Award
		

		
			Your 2017 STIC target award, for which you will be eligible next year, will equal 140% of your base salary.  Actual payouts, however, may range from 0% to 200% of target depending upon your individual performance and The Hanover’s performance against certain pre-established performance criteria approved by the Compensation Committee and the Committee of Independent Directors (the “CID”).
		

		
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			Terms and Conditions
		

		
			The terms and conditions of our annual STIC Programs are established by the Compensation Committee and the CID, typically at the regularly scheduled February meetings.  Any STIC payment, including the 2016 award, is contingent upon you being employed at The Hanover at the time the payment is made and is subject to the terms and conditions of the program.
		

		
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				 3.
			

			
	
			
			Long-Term Incentive Compensation: 

		
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			2016 Long-Term Incentive Compensation Award 
		

		
			Effective on your Employment Date, you will be granted a 2016 long-term equity award with an estimated grant date fair value of approximately $3,000,000 (the “2016 Award”).  Approximately one-half of the 2016 Award will be in the form of performance-based restricted 
		

		 

		

			 

		

 

		

			 

		

		

			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

			Page 2 of 9

		

		

			 

		

		

			 

		

		

			 

		

		stock units (“PBRSUs”) that will vest,  if at all, at a level commensurate with the achievement of the performance metrics applicable to such award, on  the third anniversary of your Employment Date.  Actual payouts may range from 0% to 150% of the targeted number of units based upon The Hanover’s relative total shareholder return measured from your Employment Date through December 31, 2018.  The balance of this award will be granted in the form of stock options that will vest in three approximately equal annual installments commencing on the first anniversary of your Employment Date.
		

		
			 
		

		
			Initial Sign-On Long-Term Incentive Compensation Award
		

		
			Effective on your Employment Date, you will also receive a one-time sign-on long-term equity incentive award with an estimated grant date fair value of approximately $3,000,000 (the “Sign-On Award”).  The Sign-On Award will be granted in the same form and proportions, and with the same terms and conditions, as the 2016 Award described above.  
		

		
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			Future Long-Term Compensation Awards
		

		
			You shall be eligible for future annual long-term equity or other grants in such amounts and on such terms and conditions as shall be determined at such times by the Compensation Committee and the CID.
		

		
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			Terms and Conditions
		

		
			Exhibit B sets forth certain additional terms of these long-term equity awards.  In the case of a conflict between the terms of this Section 3 or Exhibit B, the terms of Exhibit B shall govern.
		

		
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				 4.
			

			
	
			
			Relocation:  You will be eligible to receive relocation assistance during the first twenty-four months of your employment under The Hanover Insurance Group Executive Relocation Program.  If you voluntarily terminate your employment without “Good Reason”, or your employment is terminated by The Hanover for “Cause”, within twenty-four (24) months from the start of your relocation process (the “Measurement Period”),  then you will be obligated to repay the unearned portion of such relocation expenses.  The start of the Measurement Period is the date of the first incurred expense by the relocation vendor.   The “unearned portion of such relocation expenses” shall be calculated by subtracting the number of whole months during the Measurement Period you worked from 24, and dividing the resulting difference by 24, and then multiplying the resulting quotient by the total amount of such relocation expenses.  We will discuss later the terms of your temporary living arrangements, but as a point of clarification, this “clawback” provision shall not apply to temporary living expenses approved by the Compensation Committee.

		
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				 5.
			

			
	
			
			Benefits: You will be eligible to participate in The Hanover’s benefit programs, including, but not limited to, Group Medical, Dental, Life, Short and Long-Term Disability Insurance, The Hanover Insurance Group Retirement Savings Plan, and our Non-Qualified Retirement Savings Plan.  Eligibility for and entitlements to benefits are determined by the terms and conditions of the applicable benefit plans, as they may be amended from time to time.  

		
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			You will be eligible to earn four (4) weeks of vacation annually.  
		

		
			
		

		
			You will be eligible to participate in the financial planning and matching gifts programs currently available to other senior executives. 
		

		

		

		 

 

		

			 

		

		

			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

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				 6.
			

			
	
			
			Severance Protection: 

		
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			Change in Control
		

		
			You will also be eligible to participate in The Hanover Insurance Group, Inc. Amended and Restated Employment Continuity Plan (the “Change in Control Plan”), in accordance with the terms thereof, as an “Executive Tier Participant” with a 2X “Multiplier” but without a Section 280G excise tax “gross up” and on a “best net” basis instead.  Participation in the Change in Control Plan requires agreement to certain non-solicitation, non-interference, confidentiality and other covenants as set forth in the plan (a copy of which has been provided to you), which are applicable whether or not such benefits become available, and no benefits shall be payable unless the Company receives a waiver and release and other terms and conditions of the Change in Control Plan are satisfied.
		

		
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			Other Involuntary Termination
		

		
			In the event your employment is involuntarily terminated, other than for “Cause” or in connection with a “Change  in Control”, or you terminate your employment with the Company for “Good Reason”,  then you will be eligible to receive severance compensation equal to 2.4 times your base salary payable in a single lump sum cash payment to be paid on a date selected by the Company that is not later than sixty (60) days after your termination of employment; provided,  however, that if the 60-day period straddles a calendar year, then the payment will be made in the later year during the remainder of the 60-day period.  Additionally, to the extent unvested, you will continue to vest in any long-term equity incentive awards for one (1) year following your termination, but in no event may vesting extend beyond the award’s expiration date in the case of stock option awards. 
		

		
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			As a condition to eligibility for such severance benefits, you will be required to execute and return to The Hanover  an irrevocable separation agreement in a form that is acceptable to the Company, which shall include a release of claims,  customary non-solicitation, non-interference, confidentiality, and non-disparagement provisions (but no other covenants that impose restrictions materially more burdensome than those set forth herein), along with other terms acceptable to the Company.  In the event that the Company believes that it has the right to terminate your employment for “Cause,” the Company must give you written notice of the purported Cause.  The Company shall provide you with notice of such purported Cause within ten (10) business days after the Board has become aware that Cause has been triggered (except that failure to provide notice timely shall be without prejudice to the Company’s right to terminate you with Cause unless such delay materially impaired your ability to cure such matter within the time-period hereinafter provided).  If such matter is susceptible to cure, then you shall have the right to do so within thirty (30) days of receipt of said notice.  To the extent that such matter is not susceptible to cure, or you do not cure such event within this thirty (30) day period, the Company shall be required to terminate your employment within thirty (30) days thereafter in order to have your termination of employment treated as a “Cause” termination.    In the event that you believe that you have the right to terminate your employment for “Good Reason” and receive severance benefits hereunder, you must give the Board of Directors written notice of the purported Good Reason within ten (10) business days of the first occurrence of such triggering event.  The Hanover shall have the right to cure within thirty (30) days of receipt of said notice.  To the extent that The Hanover does not cure such event within this thirty (30) day period, you 
		

		 

 

		

			 

		

		

			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

			Page 4 of 9

		

		

			 

		

		

			 

		

		

			 

		

		shall be required to terminate your employment within thirty (30) days thereafter in order to have your termination of employment treated as a “Good Reason” termination.  References in this section to a “termination of employment” shall mean a “separation of service” as defined by Section 409A of the Internal Revenue Code of 1986 (the “Code”) (after giving effect to the presumptions contained therein). 
		

		
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				 7.
			

			
	
			
			Covenants and Other Agreements:  The Hanover has certain conditions to employment which apply to all of its officers and senior employees.  Accordingly, as a condition of your employment with the Company, you agree that you will (i) not, directly or indirectly, during the term of your employment with The Hanover, and for a period of one year thereafter, hire, solicit, entice away or in any way interfere with The Hanover’s relationship with, any of its officers or employees, or in any way attempt to do so or participate with, assist or encourage a third party to do so; (ii) at all times, neither disclose any of The Hanover’s confidential or proprietary information to any third party, nor use such information for any purpose other than for the benefit of The Hanover and in accordance with Hanover policy; (iii) not, during the term of your employment  with The Hanover, and for a period of one year thereafter,  interfere with or seek to interfere with, The Hanover’s relationships with any of its policyholders, customers, clients, agents or vendors; and (iv) at all times, comply with The Hanover’s Code of Conduct and other policies and procedures as in effect from time to time. For the purposes of this provision, “confidential” or “proprietary” information shall include any information concerning the business, prospects, and goodwill of The Hanover including, by way of illustration and not limitation, all information (whether or not patentable or copyrightable) owned, possessed or used by The Hanover including, without limitation, any agent or vendor information, client information, potential agent or client lists, trade secrets, reports, technical data, computer programs, software documentation, software development, marketing or business plans, unpublished financial information, budgeting/price/cost information or agent, broker, employee or insured’s lists or compensation information, except to the extent such information is otherwise legally and publicly available.

		
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				 8.
			

			
	
			
			Representations and Other Considerations:  Please be advised that to the extent you are subject to any employment or contractual obligations to prior employer(s), the Company expects you to comply with such obligations and to inform the Company accordingly. The Hanover respects its competitors’ trade secrets and confidential information.  Please do not bring with you any confidential information or proprietary information from any of your prior employers, and please do not use such information at any time, in any way, during the course of your employment with The Hanover.

		
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			You represent that you have provided The Hanover with copies of any agreement or employment policies, including any code of conduct or similar policies, that may set forth any continuing obligations to such prior employer(s), and that you are not aware of any agreement or employment policy of any kind that will prevent you from fulfilling, or that in any way could interfere or adversely affect your ability to fulfill, your responsibilities to The Hanover in the capacities contemplated. You represent that you have no reason to believe that any regulatory authority in the U.S., United Kingdom, European Union, or elsewhere, including, but not limited to the U.S. Securities and Exchange Commission, various state departments of insurance, the U.K. Financial Conduct Authority and the U.K. Prudential Regulatory Authority, would object to you becoming an officer and director of The Hanover or of any of its insurance and non-
		

		 

 

		

			 

		

		

			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

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		insurance subsidiaries.  You also represent that you are not aware of any other impediment to your ability to fulfill the responsibilities contemplated as President, Chief Executive Officer and a Director of The Hanover or any of its subsidiaries.
		

		
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				 9.
			

			
	
			
			Miscellaneous:

		
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			Electronic Payment: As a condition of employment, all employees are paid through Electronic Funds Transfer (EFT).  
		

		
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			Employment Eligibility:  Under the Federal immigration law, you will be required to complete an I-9 form verifying your employment eligibility in the United States on or prior to your Employment Date.  We will provide you with a list of acceptable forms of documentation.  
		

		
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			At-Will Employment Relationship:  This offer letter briefly summarizes some of the terms and conditions of your employment.  This letter is not and should not be construed as an employment contract.  Employment at The Hanover is at-will.  This means that you or the Company can terminate the employment relationship at any time, for any reason or no reason at all, with or without cause or notice.
		

		
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			Other Activities:  You may, with the permission of the Board, accept outside directorships (but no more than one public company) and engage in other activities for civic and charitable organizations to the extent doing so does not interfere or adversely affect your ability to fulfill your responsibilities to The Hanover in the capacities contemplated.  
		

		
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			Definitions:  Certain terms used herein or in the Exhibits hereto have the meanings assigned to them in Exhibit C.
		

		
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			Entire Agreement; Governing Law: This letter agreement sets forth the entire agreement between you and the Company and replaces all prior and contemporaneous communications, agreements and understandings, written or oral, with respect to the terms and conditions of your employment.  This letter agreement and your employment relationship shall be governed by the laws of Massachusetts, without regard to the law of conflicts.
		

		
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			Company Policies:  You shall be subject to the Company’s policies as in effect from time to time, including stock ownership guidelines applicable to executive officers, Insider Trading Policy, Policy Regarding Recoupment of Formulae-Based Performance Compensation, and policies relating to hedging and pledging of securities linked to The Hanover. 
		

		
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			Withholding:  All payments made by the Company under this agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.
		

		
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				 10.
			

			
	
			
			Other:  Our current plan is to announce your appointment on Monday, May 16, 2016, effective June 20,  2016, which would be your actual Employment Date. We will elect you as a non-independent director of  The Hanover effective on your Employment Date.  No additional compensation is payable to management members for Board service.

		
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			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

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		Joe, we are truly excited about your decision to join The Hanover. The entire Board looks forward to working with you.   
		

		
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			Very truly yours,
		

		
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			/s/ Michael Angelini
		

		
			Michael Angelini
		

		
			Chairman of the Board
		

		
			The Hanover Insurance Group, Inc.
		

		
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			/s/ P. Kevin Condron                                                                             
		

		
			P. Kevin Condron
		

		
			Chairman of the Search Committee
		

		
			and of the Compensation Committee
		

		
			The Hanover Insurance Group, Inc.
		

		
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			Accepted and Agreed:
		

		
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			/s/ Joseph M. Zubretsky
		

		
			Name: Joseph M. Zubretsky
		

		
			Date: May 15, 2016
		

		

		

		 

 

		

			 

		

		

			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

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		Exhibit A
		

		
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			2016 Annual Short-Term 
		

		
			Incentive Compensation Plan
		

		
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			The award payable under this program will equal the lesser of (i) 1% of The Hanover’s pre-tax operating income, before interest expense on debt and as adjusted to exclude the impact of catastrophes, measured over the six month period ending on December 31, 2016, as reported on the Company’s financial statements as filed with the Securities and Exchange Commission on a Form 8-K (including as a cover to the year-end earnings press release) or Form 10-K and certified by the Company’s Chief Financial Officer;  or (ii) 140% of your 2016 annualized base salary. Such award will be issued pursuant to, and subject to the terms of, the 2014 Executive Short-Term Incentive Compensation Plan, will be payable in March 2017 at such time as 2016 STIC awards are payable to other executives of the Company, and shall be subject to such further terms and conditions as are designed to ensure its compliance with Section 162(m) of the Code and to such administrative rules and conditions as otherwise apply to the Company’s Executive and Leadership STIC Plans.  
		

		
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			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

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		Exhibit B
		

		
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			Certain Additional Terms Applicable to Long-Term Equity Awards
		

		
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			Retirement:  Your 2016 Award, Sign-On Award and any future long-term equity awards will provide for pro-rated vesting of PBRSUs upon Retirement.  Additionally, upon Retirement, any then vested stock options shall remain exercisable for a period of three (3) years (but in no event later than the option’s scheduled expiration date and subject to earlier cancellation as provided under Award Terms below).    
		

		
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			Award Terms: Except as otherwise provided herein, all such awards shall be subject to the terms and conditions of The Hanover Insurance Group 2014 Long-Term Incentive Plan (the “2014 Plan”) or any successor long-term equity plan of the Company and the standard Company grant agreements as in effect from time to time (the “Grant Agreements”).  For purposes of determining the Company’s relative total shareholder return with respect to the 2016 and Sign-on Award PBRSUs, the Company will adopt the same methods and methodologies, to the extent practicable, as apply to the 2016 grants of PBRSUs made to other executive officers of the Company.     Notwithstanding any provision of any stock option awards which provide for an extended exercise period following separation from the Company, in the event of a Change in Control (as defined in the 2014 Plan) or other extraordinary transaction pursuant to which options are cashed-out, converted to or exchanged for another right, cancelled, or otherwise amended, such awards shall be subject to the same treatment, which may include cancellation, as shall apply generally to all executive-level holders of vested stock options.  For example, in the event the terms of any such transaction provide for the cancellation of options which are “out-of-the-money” at the designated time, any out-of-the-money vested options then held by you shall similarly be subject to cancellation and the extended right to exercise such options shall not survive.
		

		
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			Change in Control:  In the event of a Change in Control (as defined in the 2014 Plan), any vested or unvested equity awards will be subject to the same terms, conditions and rights as are set forth in all other awards governed by Grant Agreements except that, notwithstanding any other provision to the contrary, including any rights otherwise triggered by the subsequent involuntary termination of your employment by the Company (or its successor) or constructive termination by you, no equity-based awards granted pursuant to this letter agreement or otherwise within twelve months from your Employment Date, shall be subject to accelerated vesting (or conversion) as a result of such events without the explicit approval of the CID in its sole discretion.  For avoidance of doubt and in the event of a Change in Control, and unless otherwise agreed, any such awards granted after the one-year anniversary of the Employment Date shall be governed by the terms of the standard plan agreements in effect from time to time.
		

		
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			Joseph M. Zubretsky

		

		

			May 15, 2016

		

		

			Page 9 of 9

		

		

			 

		

		

			 

		

		

			 

		

		Exhibit C
		

		
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			Selected Definitions
		

		
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			Except as provided herein, capitalized terms used herein without definition shall have the following meanings:    
		

		
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			The term “Cause” shall mean:  (i) your continued willful failure to perform substantially your duties with the Company or any affiliate (other than any such failure resulting from your incapacity due to disability within the meaning of the Company's short-term disability plan as in effect at the time such determination is made) after ten (10) days prior written notice from the Board; (ii) your conviction of, or plea of guilty or nolo contendere to, a misdemeanor involving theft or embezzlement, or a felony; (iii) your willful engagement in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or any affiliate; (iv) your material breach of any non-disclosure or non-solicitation agreement with the Company or any affiliate; (v) your willful violation of a posted Company policy applicable to all employees which violation is demonstrably and materially injurious to the Company or any affiliate; or (vi) any material breach of your representations, covenants and other obligations and agreements set forth in this letter agreement.  “Cause” may not be alleged except upon a determination by the Board of Directors of the Company.  
		

		
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			The term “Good Reason” shall mean (i) any material and adverse change with respect to your authority, duties or responsibilities; (ii) a reduction in your rate of annual base salary as set forth in the letter agreement; (iii) a reduction in your annual short-term incentive compensation plan target award (but excluding the conversion of any cash incentive arrangement into an equity incentive arrangement of commensurate value or vice versa) from that set forth in the letter agreement; (iv) a material reduction in health, welfare and retirement benefits offered as of the date of this letter agreement, unless the reduction applies similarly to all domestic executive officers of the Company; (v) any requirement that you relocate to an office more than 35 miles from the Worcester facility; (vi) any failure of the Board to nominate you to the Board of Directors at the end of your then current term; or (vii) your removal as a director by action of the Board of Directors; in each case set forth in clauses (vi) and (vii), without Cause.  Notwithstanding the foregoing with respect to subsections (ii) and (iii) above, reductions to your annual base salary and/or target annual short-term incentive compensation of less than 10% in the aggregate, taking into account any prior reductions to the same, shall not be deemed “Good Reason” if such reductions are applied to all senior executives at the Company or the applicable successor entity, as applicable. 
		

		
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			The term “Change in Control” shall have the meaning in the Change in Control Plan.
		

		
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			The term “Retirement” as used in Exhibit B only, shall mean your termination of employment with the Company for any reason other than by the Company for “Cause”,  following your attainment of age 65.
		

		
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			The terms “the Company” and “The Hanover” shall include, depending on the context, the direct and indirect subsidiaries of The Hanover Insurance Group, Inc.
		

		
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