Document:

Exhibit 4.8

 

AMENDED AND RESTATED

2005 DIGITAL FUSION, INC. EQUITY INCENTIVE PLAN

 

1.                                      Purpose.

 

The purposes of the Amended and Restated 2005 Digital Fusion, Inc.
Equity Incentive Plan (the “Plan”) are to advance the interests of Digital
Fusion, Inc. (“Digital Fusion”) and its stockholders by providing
incentives and rewards to those individuals who are in a position to contribute
to the long-term growth and profitability of Digital Fusion and any present or
future Subsidiaries and affiliates of Digital Fusion (collectively, the “Company”);
to assist Digital Fusion in attracting, retaining and motivating highly
qualified employees for the successful conduct of their business; and to make
Digital Fusion’s compensation program competitive with those of other similar
employers; that is designated by the Board as a participating employee under
the Plan; provided, however, that
Digital Fusion directly or indirectly owns at least twenty percent (20%) of the
combined voting power of all classes of capital stock of such entity or at
least a twenty percent (20%) equity ownership interest in such entity.

 

2.                                      Definitions.

 

2.1                    “Award” means an award or
grant of either a Restricted Stock Grant or Stock Option to be made to a
Participant under the Plan.

 

2.2                    “Award Date” means the date
that an Award is made, as specified in a Stock Option Agreement or a Restricted
Stock Grant Agreement.

 

2.3                    “Board” means the Board of
Directors of Digital Fusion.

 

2.4                    A “Change in Ownership or
Effective Control” shall be deemed to occur in the event that any of the
following circumstances have occurred:

 

(a)  Any “person” or “group” within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act (i) becomes the “beneficial owner”, as
defined in Rule 13d-3 under the Exchange Act, of 50% or more of the
combined voting power of Digital Fusion’s then outstanding securities,
otherwise than through a transaction or series of related transactions arranged
by, or consummated with the prior approval of, the Board of Directors of
Digital Fusion (hereinafter referred to as the “Board”) or (ii) acquires
by proxy or otherwise the right to vote 50% or more of the then outstanding
voting securities of Digital Fusion, otherwise than through an arrangement or
arrangements consummated with the prior approval of the Board for the election
of directors, for any merger or consolidation of Digital Fusion or for any
other matter or question.

 

 

(b)  During any period of 24 consecutive months (not including any
period prior to the adoption of this section), Present Directors and/or New
Directors cease for any reason to constitute a majority of the Board. For
purposes of the preceding sentence, “Present Directors” shall mean individuals
who at the beginning of such consecutive 24 month period were members of the
Board and “New Directors” shall mean any director whose election by the Board
or whose nomination for election by Digital Fusion’s stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
Present Directors or New Directors.

 

(c)  Consummation of (i) any consolidation or merger of
Digital Fusion in which Digital Fusion is not the continuing or surviving
Company or pursuant to which shares of Stock would be converted into cash,
securities or other property, other than a merger of Digital Fusion in which
the holders of Stock immediately prior to the merger have the same proportion
and ownership of common stock of the surviving Company immediately after the
merger or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of Digital Fusion; provided
that, the divestiture of less than substantially all of the assets
of Digital Fusion in one transaction or a series of related transactions,
whether effected by sale, lease, exchange, spin-off, sale of the stock or
merger of a subsidiary or otherwise, shall not constitute a Change in Ownership
or Effective Control.

 

Notwithstanding anything herein to the contrary, in the event the
aforementioned definition should conflict with the definition of a “change in
ownership or effective control” as such term is defined in Code Section 409A
and the regulations promulgated thereunder, as amended, then such definition
shall be amended in all respects to conform with the requirements of Code Section 409A
and the regulations promulgated thereunder, the provisions of which shall be
incorporated herein by reference thereto.

 

For purposes of this Section 2.5, the rules of Section 318(a) of
the Code and the regulations issued thereunder shall be used to determine stock
ownership.

 

2.5                    “Code” means the Internal
Revenue Code of 1986, as now or hereafter amended.

 

2.6                    “Committee” means the
members of the Board appointed by the Board to administer the Plan pursuant to Section 4,
or if no such Committee is appointed, the full Board.

 

2.7                    “Disability” means that a
Participant has met one of the following requirements:

 

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(a)          The Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months; or

 

(b)         The Participant is, by reason of any medically
determinable physical or mental impairment than can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering the Employees of Digital
Fusion or a Subsidiary, as the case may be.

 

2.8                    “Employee” means all
employees of Digital Fusion and its Subsidiaries, including officers of Digital
Fusion and its Subsidiaries, as well as officers of Digital Fusion and its
Subsidiaries who are also directors of Digital Fusion or one or more of its
Subsidiaries.

 

2.9                    “Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.

 

2.10              “Fair Market Value” for purposes
of the Plan, unless otherwise required by any applicable provision of the Code
or any regulation issued thereunder, means, as of any date, the mean of the
high and low prices reported per share of Stock on the applicable date (a) as
reported by the principal national securities exchange in the United States on
which the Stock is then traded; (b) if not traded on any such national
securities exchange, as quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market (collectively, the “Nasdaq Markets”) (or, if the Stock has not
been reported or quoted on such date, on the first day prior thereto on which
the Stock was reported or traded); or (c) if the Stock is not listed on an
established stock exchange but is instead traded over-the-counter, as reported
by the National Association of Securities Dealers, Inc. If the Stock is
not readily tradable on a national securities exchange, a Nasdaq Market, or the
over-the-counter market, its Fair Market Value shall be delivered in good faith
by the Committee.

 

2.11              “Incentive Stock Option” or “ISO”
means any Stock Option granted pursuant to this Plan which is designated in an
Award Agreement as such by the Committee and which complies with Section 422
of the Code.

 

2.12              “Non-Qualified Stock Option” means
any Stock Option granted pursuant to this Plan which is not an Incentive Stock
Option.

 

2.13              “Option Price” means the purchase
price of one share of Stock under a Stock Option.

 

2.14              “Settlement Date” means, with
respect to any Stock Option that has been exercised in whole or in part, the
date or dates upon which shares of Stock are to be delivered to the Participant
and the Option Price therefor paid.

 

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2.15              “Stock” means
the Common Stock, par value $.01 per share, of Digital Fusion.

 

2.16              “Restricted Stock
Grant” means a grant of one or more shares of Stock awarded under the Plan
that is subject to a risk of forfeiture or other restrictions that will lapse
upon the achievement of one or more goals relating to completion of service or
achievement of performance or other objectives, as determined by the Committee.

 

2.17              “Restricted Stock
Grant Agreement” means the agreement between Digital Fusion and the
recipient of a Restricted Stock Grant that contains the terms, conditions and
restrictions pertaining to such Restricted Stock Grant.

 

2.18              “Stock Option”
or “Option” means either an Incentive Stock Option or Non-Qualified
Stock Option that entitles a Participant to purchase a share of Stock.

 

2.19              “Stock Option
Agreement” means the agreement between Digital Fusion and the recipient of
a Stock Option that contains the terms, conditions and restrictions pertaining
to such Stock Option.

 

2.20              “Subsidiary”
means any entity (other than Digital Fusion) in an unbroken chain of entities
beginning with Digital Fusion if each of such entities (other than the last
entity in the unbroken chain) own equity interests possessing fifty percent
(50%) or more of the total combined voting power of all classes of equity in
one of the other entities in the chain.

 

3.                                      Participation.

 

The participants in the Plan (“Participants”) shall be (a) all
employees of the Company, (b) directors of the Company and (c) such
other persons or entities which provide services to the Company which are
selected to participate in the Plan by the Committee.

 

4.                                      Administration.

 

The Plan shall be administered by the Committee. Except as otherwise
provided herein, the Committee shall have full power to: (a) interpret the
Plan; (b) determine who is eligible to be a Participant in the Plan; (c) select
Award recipients; (d) set the terms and conditions of Awards; (e) establish
administrative regulations to further the purpose of the Plan; and (f) take
any other action desirable or necessary to interpret, construe or implement
properly the provisions of the Plan. All decisions and acts of the Committee
shall be final and binding upon all Participants.

 

5.                                      Awards.

 

5.1                     Types of
Awards. Awards are to be in the form of either Stock Options or Restricted
Stock Grants.

 

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5.2                     Award
Agreements. All Awards shall be made pursuant to either Stock Option
Agreements or Restricted Stock Grant Agreements between the Participant and
Digital Fusion. Each Stock Option Agreement and Restricted Stock Grant
Agreement shall set forth the details, conditions and limitations for each
Award, which may include the term of the Award, the provisions applicable in
the event the Participant’s employment or service to Digital Fusion or a
Subsidiary terminates, and Digital Fusion’s authority to unilaterally or
bilaterally amend, modify, suspend, cancel or rescind any Award. In addition,
the Award Agreement may include provisions relating to control of Digital
Fusion or a Subsidiary and future issuances by Digital Fusion of debt and
equity securities, such as “drag along” rights, “tag along” rights, “lock up”
or “holdback” provisions in connection with recapitalizations, reorganizations,
acquisitions, divestitures, debt-financings, private placements of Digital
Fusion’s securities, public offerings of Digital Fusion’s securities and “voting
agreement” provisions which Digital Fusion deems necessary or appropriate in
good faith. The Stock Option Agreements and the Restricted Stock Grant
Agreements shall be in such form as the Committee approves from time to time.

 

5.3                     Maximum
Number of Shares Available. The total number of shares of Stock optioned or
granted under the Plan shall not exceed 3,250,000 shares, 2,750,000 of which
are allocated for Stock Options and 500,000 of which are allocated for
Restricted Stock Grants. If an Award is forfeited, surrendered, or cancelled or
if a Stock Option expires unexercised or is settled in cash in lieu of Stock,
shares of Stock previously set aside for such Awards shall be available for
distribution in connection with future Awards.

 

5.4                     Adjustment
in the Event of Recapitalization, etc. In the event of any change in the
outstanding shares of Digital Fusion by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, combination or exchange of shares or
other similar corporate change or in the event of any special distribution to
the stockholders, the Committee shall make such equitable adjustments in the
number and kind of shares and prices per share applicable to Awards then
outstanding and in the number and kind of shares which are available thereafter
for Awards as the Committee determines are necessary and appropriate. Any such
adjustment shall be conclusive and binding for all purposes of the Plan.

 

6.                                      Stock
Options.

 

6.1                     Grant of
Stock Options. Stock Options may be awarded to any Participant, except that
Incentive Stock Options may only be awarded to Participants who are also
Employees. Except as otherwise provided below, Stock Option Awards shall be
subject to such terms and conditions as are established by the Committee and
set forth in the Award Agreement. The Committee shall determine with respect to
each Stock Option Award and designate in the Stock Option Agreement whether a
Participant is to receive Incentive Stock Option or Non-Qualified Stock
Options.

 

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6.2                     Option
Price. The exercise price of each share of Stock subject to a Stock Option
shall be specified in the grant. Notwithstanding the foregoing, no Stock Option
shall be awarded which has an exercise price less than the Fair Market Value of
the Stock on the date of grant, if such grant date is subsequent to an initial
public offering of Stock by Digital Fusion. Additionally, if the Participant to
whom an ISO is granted owns, at the date of grant, more than ten percent (10%)
of the combined voting power of Digital Fusion, the exercise price of the ISO
subject to such grant shall be not less than one hundred ten percent (110%) of
the Fair Market Value.

 

6.3                     Exercisability
of Options. A Stock Option by its terms shall not be exercisable after such
period as determined by the Committee, provided,
that, in no event shall a Stock Option be exercisable after the expiration
of ten (10) years from the date such option is granted, except that an ISO
granted to a Participant who, at the date of grant, owns Stock representing
more than ten percent (10%) of the combined voting power of the Participating
Company shall by its terms not be exercisable after the expiration of more than
five (5) years from the date such Option is granted.

 

Subject to the preceding paragraph and except as otherwise provided
herein, an Option shall be only exercisable by a Participant while the Participant
is actively employed by or providing service to Digital Fusion or its
Subsidiaries, except the Option may be exercised: (a) in the case of a
Participant’s death, by the executor or administrator of Participant’s estate
or Participant’s distributee during the three (3) month period commencing
on the date of Participant’s death; (b) by the Participant during the
three (3) month period commencing on the date of a Participant’s
Disability or termination of service or employment by Digital Fusion or a Subsidiary
other than for cause; (c) by the Participant during the three (3) month
period commencing on the date of the Participant’s termination of service or
employment, by the Participant or Digital Fusion, after a Change in Ownership
or Effective Control, unless such termination of employment is for cause; or (d) if
the Committee decides that it is in the best interest of Digital Fusion to
permit individual exceptions. For purposes hereof, “cause” shall mean: (v) the
disclosure or misuse of confidential information or trade secrets; (w) activities
in violation of Company policies; (x) the violation or breach of any
material provision in any employment contract or agreement between a
Participant and any Company; (y) engaging in conduct relating to the Participant’s
service to or employment with Digital Fusion for which either criminal or civil
penalties may be sought; and (z) engaging in activities which adversely
affect or which are inimical, contrary or harmful to the interest of Digital
Fusion or its business operations. An Option may not be exercised pursuant to
this paragraph after the expiration date of the Option. In no event may an
Incentive Stock Option be exercised more than 12 months after a Participant’s
employment terminates due to Disability or three (3) months after such
employment terminates for any other reason.

 

6.4                     Exercise of
Option. Subject to the terms and conditions hereof and the terms and
conditions specified in the respective Award Agreement, an Option may be
exercised with respect to part or all of the shares subject to the Option by
giving written notice to Digital Fusion of the exercise of the Stock Option.
The Option Price for the shares for which an Option is exercised shall be paid
within ten business days after the date of exercise in cash, in whole shares of
Stock, in a combination of cash and such shares of Stock, or in any other
manner that the Committee may approve. The value of any share of Stock
delivered in payment of the Option Price shall be its Fair Market Value on the
date the Option is exercised.

 

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6.5                     Limitation
Applicable to ISOs. The aggregate Fair Market Value of all shares of Stock
with respect to which Incentive Stock Options are exercisable for the first
time by a Participant in any one calendar year, under the Plan or any other
Stock Option plan maintained by Digital Fusion, shall not exceed the amount set
forth in section 422(d) of the Code (currently $100,000.00). The fair
market value of such shares of Stock shall be the Fair Market Value on the date
the related Stock Option is granted.

 

7.                                      Restricted
Stock Grants.

 

7.1                   Restricted
Stock Grants may be awarded to any Participant. Each award of a Restricted
Stock Grant under the Plan shall be evidenced by a Restricted Stock Grant
Agreement between the Participant and Digital Fusion in such form as the
Committee from time to time may determine. Such Restricted Stock Grants shall
be subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various
Restricted Stock Grant Agreements entered into under the Plan need not be
identical.

 

7.2                   Restricted
Stock Grants may be sold or awarded under the Plan for such consideration as
the Committee may determine, including, without limitation, cash, cash
equivalents, full-recourse promissory notes, past services and future services;
provided, however, that to the
extent that an Award consists of newly issued shares of Stock, the Participant
shall furnish consideration with a value not less than the par value of such
shares in the form of cash equivalents or past services rendered to Digital
Fusion or its Subsidiaries, as the Committee may determine; provided, further,
no Restricted Stock Grant shall be awarded for consideration that is less than
Fair Market Value of the Stock on the date of the grant, if such grant date is
subsequent to an initial public offering of Stock of Digital Fusion.

 

7.3                   A recipient of
a Restricted Stock Grant awarded under the Plan shall have the same voting,
dividend and other rights as Digital Fusion’s other stockholders. A Restricted
Stock Grant Agreement, however, may require the Award recipient to invest any
cash dividends received in additional Stock. Such additional Stock shall be
subject to the same conditions and restrictions as the Restricted Stock Grant
with respect to which the dividends were paid.

 

7.4                   When a
Restricted Stock Grant is awarded hereunder, Digital Fusion shall issue a
certificate or certificates in respect of such Stock, which shall be registered
in the name of the recipient and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Award in
substantially the following form:

 

“THE TRANSFERABILITY OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF A RESTRICTED
STOCK GRANT AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND DIGITAL
FUSION, INC. A COPY OF SUCH AGREEMENT IS ON FILE IN THE OFFICES FO THE
SECRETARY OF DIGITAL FUSION, 4940-A CORPORATE DRIVE, HUNTSVILLE, ALABAMA 35805.”

 

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8.                                      Code
Section 162(m).

 

Any Award intended to qualify as “performance-based
compensation” as that term is used in Section 162(m) of
the Code shall be conditioned on the achievement of one or more performance
goals, to the extent required by Section 162(m) of the Code. The
performance goals that may be used by the Committee for such Awards shall be
based on any one or more of the following measures of operating performance, as
determined by the Committee: (a) earnings; (b) revenue; (c) operating
and net cash flows; (d) financial return ratios; (e) total
stockholder return; and (f) market share. Performance objectives may be
established in combination with the continued employment of the recipient.
These targets may be based upon Digital Fusion’s total business or upon a
defined business unit.

 

9.                                      Vesting
of Awards.

 

Each Award may or may not be subject to vesting. Vesting shall occur,
in full or in installments, upon satisfaction of the conditions specified in
the respective Award Agreement. During any restricted period, a Participant
shall not be permitted to sell, transfer, pledge or assign Stock awarded pursuant
to a Restricted Stock Grant under this Plan. In the event of a Participant’s
retirement, disability or death, or in cases of special circumstances, the
Committee, in its sole discretion, may waive, in whole or in part, any or all
remaining restrictions with respect to such Participant’s unvested portion of
his or her Award. Notwithstanding the foregoing, each Award may provide that
the unvested portion of any Award shall become fully vested in the event that a
Change in Ownership or Effective Control of Digital Fusion occurs.

 

10.                               Settlement
of Stock Options.

 

At the Committee’s discretion, Stock Options may be settled in cash,
shares of Stock, or any combination thereof. Subject to the limitations and
restrictions of Code Section 409A and the regulations promulgated
thereunder, the Committee may (a) require or permit Participants to defer
the issuance or vesting of shares of Stock or the settlement of Awards in cash
and (b) provide that deferred settlements include the payment or crediting
of interest on deferred amounts.

 

11.                               General
Provisions.

 

11.1               Transferability
of Awards. Awards under the Plan shall not be transferable otherwise than
by the recipient’s last will and testament or the laws of descent and
distribution or, in the case of Non-Qualified Stock Options and Restricted
Stock Grants, unless otherwise determined by the Committee.

 

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11.2               Unfunded Plan.
Nothing contained herein shall require Digital Fusion to segregate any monies
from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.

 

11.3               No Right to
Employment or Service. Participation in this Plan shall not affect Digital
Fusion or any of its Subsidiary’s right to discharge a Participant or
constitute an agreement of employment or agreement to provide services between
a Participant and Digital Fusion.

 

11.4               Rights as a
Stockholder. Except as otherwise provided in any Award Agreement, a Participant
shall have no rights as a stockholder of Digital Fusion until he or she becomes
the holder of record of Stock.

 

11.5               Applicable Law.
The validity, construction and effect of the Plan, and any actions taken or
relating to the Plan, shall be determined in accordance with applicable federal
law and the laws of the state in which Digital Fusion is incorporated.

 

11.6               Successors and
Assigns. The Plan and any Award Agreement shall be binding on all
successors and assigns of a Participant, including, without limitation, the
estate of the Participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of the
Participant’s creditors.

 

12.                               Amendment,
Suspension or Termination.

 

The Board may amend, suspend or terminate the Plan, including, but not
limited to, such amendments as may be necessary or desirable resulting from
changes in the federal income tax laws and other applicable laws, but may not,
without approval by the holders of a majority of all outstanding shares
entitled to vote on the subject at a meeting of stockholders of Digital Fusion,
increase the total number of shares of Stock that may be optioned or granted
under the Plan.

 

13.                               Tax
Withholding.

 

Digital Fusion shall have the right to (a) require that shares of
Stock be withheld in an amount sufficient to satisfy withholding of any
federal, state or local taxes required by law and (b) take such other
action as may be necessary or appropriate to satisfy any such withholding
obligations. The Committee may determine the manner in which such tax
withholding shall be satisfied. The date the Option is exercised shall be the
date used for purposes of determining the Fair Market Value of the shares of
Stock used to satisfy the required tax withholding.

 

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14.                               Effective
Date and Duration of the Plan.

 

The Plan shall be effective on the date of the approval of the Plan by
the holders of a majority of the issued and outstanding shares of Stock and
shall terminate on the tenth anniversary of the effective date. The Plan shall
be null and void and of no effect if the foregoing condition is not fulfilled,
and in such event each Stock Option granted hereunder shall, notwithstanding
any of the preceding provisions of the Plan, be null and void and of no effect.

 

15.                               Exclusion
from Retirement and Fringe Benefit Computation.

 

No portion of any Award under this Plan shall be taken into account as “wages,”  “salary”
or “compensation” for any purpose,
whether in determining eligibility, benefits or otherwise, under (a) any
pension, retirement, profit sharing or other qualified or non-qualified plan of
deferred compensation, (b) any employee welfare or fringe benefit plan
including, but not limited to, group insurance, hospitalization, medical, and
disability, or (c) any form of extraordinary pay including, but not
limited to, bonuses, sick pay and vacation pay.

 

16.                               Indemnification.

 

(a)                                       To the maximum
extend permitted by Alabama law, neither Digital Fusion, the Board or the
Committee nor any of its members, shall be liable for any action or
determination made with respect to this Plan.

 

(b)                                      In addition to
such other rights of indemnification that they may have, the members of the
Board and the Committee shall be indemnified by Digital Fusion to the maximum
extent permitted by Delaware law against any and all liabilities and expenses
incurred in connection with their service in such capacity.

 

17.                               Registration
of Stock.

 

Notwithstanding anything herein to the contrary, nothing contained in
the Plan shall confer on the Participant any rights to require Digital Fusion
to register the Stock received by the Participant pursuant to an Award.

 

*  *  *  *  *

 

10United State Securities and Exchange Commission Edgar Filing

Exhibit 10N

AMENDED CONSOLIDATED AND RESTATED COMPENSATION ALLOCATION AGREEMENT

This is an Agreement (“the Agreement”) made this ___ day of ____, 2009 among Harleysville Group Inc. (hereinafter referred to as Harleysville Group) and Harleysville Mutual Insurance Company, Harleysville Life Insurance Company, Harleysville Pennland Insurance Company, Harleysville Preferred Insurance Company, Harleysville Insurance Company of New Jersey, Harleysville Atlantic Insurance Company, Harleysville Worcester Insurance Company, Harleysville Insurance Company of Ohio, Harleysville Lake States Insurance Company, Harleysville Insurance Company of New York, Mainland Insurance Company and Harleysville Insurance Company  (collectively hereinafter referred to as the Harleysville Insurers),  and Harleysville Services, Inc., Harleysville, Ltd. and  Insurance Management Resources LP (collectively hereinafter referred to as the Non-Insurer Affiliates).

WHEREAS, Harleysville Group entered into a Salary Allocation Agreement with Harleysville Life Insurance Company, Harleysville Mutual Insurance Company and Harleysville Pennland Insurance Company, effective January 1, 1993.  Thereafter, as each remaining Harleysville Insurer became a part of Harleysville Group, similar Salary Allocation Agreements were entered into between Harleysville Group and these additional Harleysville Insurers.  These agreements had respective effective dates of February 8, 1994 (Harleysville Preferred Insurance Company, Harleysville Insurance Company of New Jersey, Mid-America Insurance Company, Harleysville Atlantic Insurance Company, Harleysville Worcester Insurance Company);  March 1, 1995 (Harleysville Insurance Company of Ohio); January 1, 1995 (Harleysville Lake States Insurance Company); March 12, 1996 ( Harleysville Insurance Company of New York); February 28, 1997 (Mainland Insurance Company); and March 12, 1999 (Harleysville Insurance Company).  

WHEREAS, effective November 1, 2007, the parties entered into a Consolidated and Restated Compensation Allocation Agreement which consolidated the above referenced Salary Allocation Agreements into one agreement.

WHEREAS, Harleysville Group serves as the paymaster for the Harleysville Insurers and the Non-Insurer Affiliates; 

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WHEREAS, Harleysville Group provided a defined benefit pension plan to its employees that was frozen at the then current benefit levels as of March 31, 2006 (“the Plan”).  

WHEREAS, as the result of the severe financial downturn experienced by worldwide equity markets in 2008, the Plan’s consulting actuary anticipates that Harleysville Group will be required to significantly increase its contributions to the Plan  in calendar year 2009 and subsequent years, in accordance with the Pension Protection Act of 2006 (“the Act”), which first became effective for Plan year 2008.

WHEREAS,  for calendar years 2006, 2007 and 2008, it has been Harleysville Group’s funding policy to contribute annually to the Plan an amount equal to at least the minimum required contribution in accordance with minimum funding standards established by ERISA.

WHEREAS, the parties desire to enter into this Amended Consolidated and Restated Compensation Allocation Agreement to limit to pre-2009 levels the contributions to the Plan which, under this Agreement, are allocated back to Harleysville Group’s affiliates, including the Harleysville Insurers, due to the adverse impact the additional contributions would have on the insurance operations of these insurer affiliates.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties agree as follows:

1.

The Agreement shall continue in full force and effect unless and until terminated by sixty (60) days’ advance written notice given by any party to all of the other parties or upon mutual consent of the parties.

2.

Except as expressly provided to the contrary in this paragraph 2, each Harleysville Insurer and Non-Insurer Affiliate shall reimburse Harleysville Group monthly in an amount equal to the compensation and benefits costs for services performed on its behalf.  The basis for the reimbursement shall be fairly allocable and attributable to service performed on behalf of each Harleysville Insurer and Non-Insurer Affiliate. Notwithstanding anything in this paragraph 2 or this Agreement to the contrary, beginning with calendar year 2009, the maximum amount of Harleysville Group’s contribution to the Plan during any calendar year which may be allocated back to the 

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Harleysville  Insurer and Non-insurer Affiliates under this Agreement is the greater of the following:

a.  $3,000,000; or 

b.  the then minimum contribution required under ERISA prior to the effectiveness of the PPA consistent with the Company’s contribution policy for calendar years 2006 through 2008, until such point that the Plan would have become fully funded considering only such contributions.

(the applicable of a. or b. above shall be referred to herein as “the Cap”)

Harleysville Group shall be solely responsible for the amount in which the sum of its contributions to the Plan in any calendar year, beginning with calendar year 2009, exceed the Cap.

3.

The monthly reimbursements provided by paragraph 2 above shall be paid by each Harleysville Insurer and Non-Insurer Affiliate to Harleysville Group no later than 15 days after their receipt of the monthly report indicating the amount due pursuant to this Agreement together with the settlement of inter-company expenses.

4.

Compensation and benefits costs shall initially be allocated among each of the Non-Insurer Affiliates, Harleysville Group, Harleysville Life Insurance Company and collectively for the Property and Casualty Harleysville Insurers (all Harleysville Insurers except for Harleysville Life Insurance Company) on the basis of time allocation.  The collective amount allocated to the Property and Casualty Harleysville Insurers on the basis of time allocation shall then be reallocated among each of the Property and Casualty Harleysville Insurers on the basis of the applicable of the following: premium volume, loss volume, investments and such special studies acceptable to statutory accounting principles as may be mutually agreed upon by the Property and Casualty Harleysville Insurers from time to time. All such allocations shall be in conformity with customary insurance accounting practices and consistently applied. Each party shall have the right during regular business hours to review the relevant books and 

3

records to confirm the proper allocation of compensation and benefits costs.

As used in this paragraph 4, the following terms have the following meaning:

a.

The term premium volume used as a basis of allocation means that the allocation of expenses shall follow the percentages of applicable premium.

b.

The term loss volume used as a basis of allocation means that the allocation of expenses shall follow the number of losses.

c.

Investments used as a basis of allocation means that the allocation of expenses shall follow the percentage of a party’s investment portfolio. 

d.

The term special studies used as a basis of allocation means that the allocation of expenses shall be analyzed and basis of allocation applied as dictated by that analysis.

5.

All allocations made pursuant to this Agreement shall be made prior to the application of any inter-company pooling agreements between and among any of the parties hereto.

6.

This Agreement may not be assigned by any party without the prior written consent of all of the parties.

7.

This Agreement may not be modified orally, nor by any subsequent practice or course of dealings by the parties, or in any manner other than through a writing signed by the parties hereto.

8.

This Agreement constitutes the entire agreement among the parties relating to reimbursement for compensation and benefits costs and supersedes any prior agreements, written or oral, relating to this same subject matter.

9.

This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

IN WITNESS WHEREOF, the parties have executed this Amended Consolidated and Restated Compensation Allocation Agreement this ___ day of ____, 2009.

			
	 
	HARLEYSVILLE GROUP INC.

	  

	 

	 
	BY:

	 

	 
	TITLE:

	 

4

			
	 
	HARLEYSVILLE MUTUAL INSURANCE

COMPANY

	 
	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE LIFE INSURANCE COMPANY

	                                                                       

	 

	 
	BY:

	                         

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE WORCESTER INSURANCE COMPANY

	 
	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE  INSURANCE COMPANY OF NEW YORK

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE PREFERRED INSURANCE COMPANY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE PENNLAND INSURANCE COMPANY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE-ATLANTIC INSURANCE COMPANY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 
	 

	 
	 
	 

5

			
	 
	 

	 
	HARLEYSVILLE INSURANCE COMPANY OF OHIO

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE INSURANCE COMPANY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE LAKE STATES INSURANCE COMPANY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	MAINLAND INSURANCE COMPAY

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE SERVICES, INC.

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	HARLEYSVILLE, LTD

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

	 
	 

	 
	INSURANCE MANAGEMENT RESOURCES L.P.

	 
	 

	 
	BY:

	 

	 
	TITLE:

	 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}]]