Document:

Exhibit 10.3

Exhibit 10.3

PENN MILLERS STOCK INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

 

BETWEEN

PENN MILLERS HOLDING CORPORATION

AND

 

(the Employee)

Date of Award:

Number of Shares:

 

1

 

RESTRICTED STOCK AGREEMENT

AGREEMENT, made as of the 12th day of May, 2010, between PENN MILLERS HOLDING CORPORATION (the
“Corporation”), and                      (the “Employee”).

1. Award.

(a) Grant of Restricted Stock. Pursuant to the provisions of the Penn Millers Stock
Incentive Plan (the “Plan”),
 _____ 

shares (the “Restricted Shares”) of the Corporation’s common
stock, par value $0.01 per share (“Common Stock”), shall be issued as hereinafter provided in the
Employee’s name subject to the restrictions described herein.

(b) Issuance of Restricted Shares. The Restricted Shares shall be issued upon acceptance of
this Agreement by the Employee and upon satisfaction of the Vesting Schedule as set forth in
Section 2(b) herein.

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

2. Terms and Conditions. The Employee hereby accepts the Restricted Shares when
issued and agrees as follows:

(a) Restrictions. The potential rights of the Employee to the Restricted Shares may not be
assigned, transferred, sold, pledged, hypothecated, or otherwise encumbered or disposed until such
time as the Employee receives unrestricted certificates for such shares. Except as provided in
Section 2(c) below, in the event of termination of the Employee’s employment with the Corporation
or a Subsidiary for any reason prior to vesting in all or any portion of the Restricted Shares, the
Employee shall, for no consideration, forfeit to the Corporation all Restricted Shares to the
extent then subject to the Restrictions (as hereinafter defined). The prohibition against transfer
and the obligation to forfeit and surrender Restricted Shares to the Corporation upon termination
of employment prior to satisfaction of the Vesting Schedule (as set forth in Section 2(b)) are
referred to herein as the “Restrictions.”

(b) Vesting Schedule. Except as provided in Section 2(c) below, the Restrictions shall lapse
and cease to apply to the Restricted Shares provided that the Employee remains in the continuous
employ of the Corporation or a Subsidiary for the following periods after the date hereof (“Vesting
Schedule”):

	 	 	 	 	 	 	 	 	 
	 	 	% of Shares	 	 	Number of	 
	Vesting Date	 	Vesting	 	 	Shares Vesting	 
	 
	May 12, 2011
	 	 	25.0	%	 	______ shares
	May 12, 2012
	 	 	15.0	%	 	______ shares
	May 12, 2013
	 	 	15.0	%	 	______ shares
	May 12, 2014
	 	 	15.0	%	 	______ shares
	May 12, 2015
	 	 	15.0	%	 	______ shares
	May 12, 2016
	 	 	15.0	%	 	______ shares

 

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(c) Acceleration of Vesting. Notwithstanding Section 2(b) above, with respect to any or all
Restricted Shares still subject to Restrictions, (i) upon the occurrence of a Change in Control,
the Restrictions shall lapse and cease to apply to such Restricted Shares; (ii) if the Employee’s
employment with the Corporation or a Subsidiary terminates due to death or Disability on or after
the date that the Employee (A) reaches age 55 or (B) has completed 10 years of service with the
Corporation or a Subsidiary (including a predecessor of the Corporation or a Subsidiary), the
Restrictions shall lapse and cease to apply to such Restricted Shares on a pro-rata basis based on
the number of full months that the Employee worked at the Corporation or a Subsidiary during the
period beginning on the day after the most recent vesting date set forth in Section 2(b) and ending
on the next scheduled vesting date set forth in Section 2(b); and (iii) if the Employee’s
employment with the Corporation or a Subsidiary terminates (other than for death, Disability, or by
reason of a Termination or Dismissal for Cause) on or after the Employee reaches age 65, the
Restrictions shall lapse and cease to apply to such Restricted Shares on a pro-rata basis based on
the number of full months that the Employee worked at the Corporation or a Subsidiary during the
period beginning on the day after the most recent vesting date set forth in Section 2(b) and ending
on the next scheduled vesting date set forth in Section 2(b).

(d) Certificates. One or more share certificates evidencing the Restricted Shares shall be
issued by the Corporation in the name of a nominee of the Corporation. The Employee shall not have
voting rights and shall not be entitled to receive dividends unless and until the Restricted Shares
vest pursuant to the provisions of this Agreement. The certificate shall bear a legend evidencing
the nature of the Restricted Shares, and the Corporation may cause the certificate to be delivered
upon issuance to the Secretary of the Corporation or to such other depository as may be designated
by the Corporation as a depository for safekeeping until the forfeiture occurs pursuant to this
award. At the time of award and upon request of the Corporation, the Employee shall deliver to the
Corporation a stock power, endorsed in blank, relating to the Restricted Shares. Within 30 days of
the vesting of all or part of the Restricted Shares, and upon satisfaction of all other terms and
conditions set forth in this Agreement, the Corporation shall cause a new certificate or
certificates to be issued without legend in the name of the Employee for the shares that have
vested, together with an amount of cash (without interest) equal to the dividends that have been
paid, if any, on such shares with respect to record dates occurring on or after the date of this
award. Notwithstanding the foregoing, the Restricted Shares may be evidenced by uncertificated
shares or otherwise in book entry form in which case the Employee shall receive a statement of
holdings evidencing ownership of the Restricted Shares. In addition, notwithstanding any other
provisions of this Agreement, the issuance or delivery of any shares of stock (whether vested or
unvested) may be postponed for such period as may be required to comply with applicable
requirements of any national securities exchange or any requirements under any law or regulation
applicable to the issuance or delivery of such shares. The Corporation shall not be obligated to
issue or deliver any shares of Common Stock if the issuance or delivery thereof shall constitute a
violation of any provision of any law or of any regulation of any governmental authority or any
national securities exchange.

 

3

 

3. Harmful Activity. Notwithstanding anything in this Agreement to the contrary, if
the Employee shall engage in any “harmful activity” (as defined herein) while employed by the
Corporation or a Subsidiary or during the six-month period thereafter, then (a) any and all
Restricted Shares held by the Employee that have vested shall be surrendered to the Corporation,
(b) any and all Restricted Shares that have not yet vested shall immediately be forfeited and
canceled, and (c) any profits realized upon the sale of any vested Restricted Shares, on or after
one year prior to the termination of employment with the Corporation, shall inure to the
Corporation. If any vested Restricted Shares are surrendered or any profits realized upon the sale
of any vested Restricted Shares inure to the benefit of the Corporation in accordance with the
first sentence of this paragraph, the Employee shall surrender all such forfeited Restricted Shares
and pay all such profits to the Corporation within 30 days after receiving written notice from the
Corporation that the Employee has engaged in a harmful activity. Consistent with the provisions of
the Plan, the determination by the Committee as to whether the Employee engaged in “harmful
activity” while employed by the Corporation or a Subsidiary or during the six-month period
thereafter shall be final and conclusive, unless otherwise determined by a majority of
disinterested members of the Board.

A “harmful activity” shall have occurred if the Employee shall do any one or more of the
following:

(a) Engage in any fraud or intentional misconduct that is a significant contributing factor to
the Corporation having to restate all or a portion of its financial statement(s).

(b) Engage in activities that would constitute grounds for the Corporation or a Subsidiary to
terminate the Employee’s employment by reason of a Termination or Dismissal for Cause (as defined
in the Plan) or for Cause (as defined in an applicable employment agreement between the Employee
and the Corporation and/or a Subsidiary), whether or not the Employee is employed at the time the
Employee engages in such activities.

(c) Solicit or hire any employees of the Corporation or a Subsidiary or induce any of such
employees to terminate their employment relationship with the Corporation or a Subsidiary.

(d) Solicit, induce, or attempt to solicit or induce any customer, supplier, or other entity
doing business with the Corporation of a Subsidiary to cease doing business with the Corporation or
a Subsidiary or, in the case of a customer, to place agribusiness insurance, as that term is
commonly understood in the industry, with any competitor of the Corporation or a Subsidiary. For
purposes of the foregoing provision, the term “customer” shall mean a business that the Corporation
or a Subsidiary insures on the date that the Employee’s employment terminates (or has insured
during the previous twelve months) and a broker who has placed business with the Corporation or a
Subsidiary on the date that the Employee’s employment terminates but only with respect to those
clients of the broker for which the broker has placed business with the Corporation or a Subsidiary
in the 12-month period preceding the date that the Employee’s employment terminates.

 

4

 

(e) Directly or indirectly, own, manage, operate, render services for (as a consultant or an
advisor), or accept any employment with (i) Nationwide Agribusiness
Insurance Company, Michigan Millers Insurance Company, or Westfield Insurance Company, or any
of their successors in interest or (ii) the agribusiness insurance business of any other insurance
company whose business has, or could reasonably be expected to have, a material adverse effect on
the Corporation’s or a Subsidiary’s business insurance business.

(f) Directly or indirectly, own, manage, operate, render services for (as a consultant or an
adviser), or accept any employment with, within a 50-mile radius of Wilkes-Barre, Pennsylvania, any
other property and casualty insurance or reinsurance line of business to the extent that such
ownership, management, operating, rendering of services, or employment (and the activities
necessarily incident thereto) have, or could reasonably be expected to have, a material adverse
effect on the Corporation’s or a Subsidiary’s business insurance business.

(g) For any reason, in any fashion, form or manner, either directly or indirectly, divulge,
disclose or communicate to any person, firm, corporation, or other business entity, in any manner
whatsoever, any confidential information or trade secrets concerning the business of the
Corporation or a Subsidiary, including, without limiting the generality of the foregoing, any
customer lists or other customer identifying information, the techniques, methods or systems of the
Corporation’s or a Subsidiary’s operations or management, any information regarding their
respective financial matters, or any other material information concerning the business of the
Corporation or a Subsidiary, their manner of operation, plan, or other material data. The
provisions of this subsection shall not apply to (i) information that is public knowledge other
than as result of Employee’s authorized disclosure; (ii) information disseminated by the
Corporation or a Subsidiary to third parties in the ordinary course of business; (iii) information
lawfully received by the Employee from a third party who, based upon inquiry by the Employee, is
not bound by a confidential relationship to the Corporation or a Subsidiary; or (iv) information
disclosed under a requirement of law or as directed by applicable legal authority having
jurisdiction over the Employee.

4. Withholding of Tax. To the extent that the receipt of the Restricted Shares or
the vesting thereof results in income to the Employee for federal or state income tax purposes, the
Employee shall deliver to the Corporation at the time of such receipt or expiration, as the case
may be, such amount of money or shares of unrestricted Common Stock as the Corporation may require
to meet its withholding obligation under applicable tax laws or regulations, and, if the Employee
fails to do so, the Corporation is authorized to withhold from any cash or stock remuneration then
or thereafter payable to the Employee any tax required to be withheld by reason of such resulting
compensation income.

5. Status of Common Stock. The Employee agrees that the Restricted Shares will not
be sold or otherwise disposed of in any manner that would constitute a violation of any applicable
federal or state securities laws. The Employee also agrees (a) that the certificates representing
the Restricted Shares may bear such legend or legends as the Corporation deems appropriate in order
to assure compliance with applicable securities laws; (b) that the Corporation may refuse to
register the transfer of the Restricted Shares on the stock transfer records of the Corporation if
such proposed transfer would, in the opinion of counsel satisfactory to the Corporation, constitute
a violation of any applicable securities law; and (c) that the Corporation may give related
instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted
Shares.

 

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6. Employment Relationship. Nothing contained in this Agreement or otherwise shall
be construed to confer upon the Employee any right to continue in the employ of the Corporation or
any Subsidiary of the Corporation or limit in any respect the right of the Corporation or of any
Subsidiary of the Corporation to terminate the Employee’s employment at any time and for any
reason. Any question as to whether and when there has been a termination of such employment, and
the cause of such termination, shall be determined by the Corporation and its determination shall
be final.

7. Corporation’s Powers. No provision contained in this Agreement shall in any way
terminate, modify, or alter, or be construed or interpreted as terminating, modifying, or altering
any of the powers, rights or authority vested in the Corporation or, to the extent delegated, in
its delegate including, without limitation, the right to make certain determinations and elections
with respect to the Restricted Shares.

8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Corporation and all persons lawfully claiming under the Employee.

9. Notices. All notices and other communications provided for herein shall be in
writing and shall be delivered by hand or sent by certified or registered mail (or by such other
method as the Committee may from time to time deem appropriate), return receipt requested, postage
prepaid, and addressed, if to the Corporation, 72 North Franklin Street, P.O. Box P, Wilkes-Barre,
PA 18773-0016; Attention:
 _____ 

(or to such different address as the Corporation may designate in
writing) or, if to the Employee, at the Employee’s most recent address as shown in the employment
or stock records of the Corporation.

10. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original as against any party whose signature appears thereon, and all
of which together shall constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together, shall bear the
signatures of all the parties reflected hereon as the signatories. Copies of such signed
counterparts may be used in lieu of the originals for any purpose.

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

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by an
officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date
first above written.

	 	 	 	 	 	 	 	 	 
	PENN MILLERS HOLDING CORPORATION	 	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Douglas A. Gaudet
	 	 	 	(Signature)	 	 
	 

	 	President and Chief Executive Officer	 	 	 	 	 	 

 

6Exhibit 10.4

Exhibit 10.4

PENN MILLERS STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

 

BETWEEN

PENN MILLERS HOLDING CORPORATION

AND

 

(the Employee)

Date of Award:

Number of Units:

 

1

 

RESTRICTED STOCK UNIT AGREEMENT

AGREEMENT, made as of the
 _____ 

day of                     , 2009, between PENN MILLERS HOLDING
CORPORATION (the “Corporation”), and                      (the “Employee”).

1. Award.

(a) Grant of Restricted Stock Units. Subject to the provisions of this Agreement and
pursuant to the provisions of the Penn Millers Stock Incentive Plan (the “Plan”), the Corporation
hereby awards to the Employee the number of Restricted Stock Units set forth in Section 2(a) (the
“Award”). The Corporation shall credit to a bookkeeping account (the “Account”) maintained by the
Corporation, or a third-party on behalf of the Corporation, for the Employee’s benefit, the
Restricted Stock Units, each of which shall be deemed to be the equivalent of one share of the
Corporation’s common stock (the “Common Stock”), par value $0.01 per share.

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

2. Terms and Conditions. The Employee hereby accepts the Restricted Stock Units when
issued and agrees as follows:

(a) Stage I Vesting Criteria. Except as provided in Section 2(b), the Employee shall satisfy
the Stage I Vesting Criteria with respect to the Restricted Stock Units only if (i) the Employee
remains in the continuous employ of the Corporation or a Subsidiary from the date hereof through
                     (the “Service Requirement”) and (ii) the Corporation achieves the following Performance
Goals:

	 	 	 	 	 
	 	 	Number of	 
	Performance Goal and Level	 	Units Vesting	 
	 
	 	 	 	 
	___________ (“Maximum Level”)
	 	 	                    	 
	___________ (“Target Level”)
	 	 	                    	 
	___________ (“Threshold Level”)
	 	 	                    	 

(b) Acceleration of Vesting. Notwithstanding Section 2(a) above, with respect to unvested
Restricted Stock Units then held by the Employee, (i) upon the occurrence of a Change in Control,
the Employee shall be deemed to have satisfied the Stage I Vesting Criteria at the Target Level;
(ii) if the Employee’s employment with the Corporation or a Subsidiary terminates due to death or
Disability on or after the date that the Employee (A) reaches age 55 or (B) has completed 10 years
of service with the Corporation or a Subsidiary (including a predecessor of the Corporation or a
Subsidiary), the Employee shall be deemed to have satisfied the Stage I Vesting Criteria on a
pro-rata basis at the Target Level based on the number of full months that

 

2

 

the Employee worked at the Corporation or a Subsidiary from the date hereof through the date
of such termination of employment; and (iii) if the Employee’s employment with the Corporation or a
Subsidiary terminates (other than for death, Disability, or by reason of a Termination or Dismissal
for Cause) on or after the Employee reaches age 65, the Employee shall be deemed to have satisfied
the Service Requirement and the Award shall be payable on a pro-rata basis based on the number of
full months that the Employee worked at the Corporation or a Subsidiary from the date hereof
through the date of such termination of employment if and to the extent that the Performance Goals
are satisfied.

(c) Settlement of Restricted Stock Units. As soon as practicable following the date that the
Committee certifies that the Employee has satisfied the Stage I Vesting Criteria with respect to
all or a portion of the Restricted Stock Units, the Corporation shall transfer to the Employee one
share of Common Stock for each Restricted Stock Unit, if any, that becomes vested with respect to
the Stage I Vesting Criteria; provided, however, that, except with respect to Restricted Stock
Units that vest through the application of Sections 2(b)(i) or (ii), in the sole discretion of the
Corporation, the Committee may settle all or a portion of such vested Restricted Stock Units in
cash, based on the fair market value of the shares on the settlement date.

(d) Stage II Vesting Criteria. Except as provided in Section 2(b), shares of Common Stock
issued under this Award by reason of the satisfaction of the Stage I Vesting Criteria may not be
sold, assigned, transferred, pledged, or otherwise encumbered, whether voluntarily or
involuntarily, by operation of law or otherwise, until the earlier of (i) three years from the date
the Committee certifies that the Employee has satisfied the Stage I Vesting Criteria or (ii) the
date that the Employee reaches age 65. Such period is referred to herein as the “Stage II Vesting
Criteria.” In the event that the Employee voluntarily terminates employment or the Corporation or
a Subsidiary terminates the Employee’s employment by reason of a Termination or Dismissal for Cause
before satisfaction of the Stage II Vesting Criteria, the Employee shall forfeit all such shares of
Common Stock. Neither (i) shares of Common Stock sold by the Employee or withheld by the
Corporation to cover applicable tax withholdings (as required by the terms of the Plan and Section
5 hereof) nor (ii) shares of Common Stock that the Employee acquires through the application of
Section 2(b) shall be subject to the Stage II Vesting Criteria. Any Common Stock issued pursuant
to this Award shall be endorsed with such legends as the Committee may determine in order to
enforce the provisions of this Section 2(d). The Employee agrees to enter into any such other
arrangements, including placing the shares in escrow, as the Committee may determine reasonably
necessary to enforce the provisions of this Section 2(d).

3. Harmful Activity. Notwithstanding anything in this Agreement to the contrary, if
the Employee shall engage in any “harmful activity” (as defined herein) while employed by the
Corporation or a Subsidiary or during the six-month period thereafter, then (a) all amounts of cash
or Common Stock received by the Employee in connection with the vesting of this Award shall inure
to the benefit of the Corporation and (b) any and all Restricted Stock Units or shares of Common
Stock held by the Employee pursuant to this Award that have not yet vested or become unrestricted,
as applicable, shall immediately be forfeited. If any cash or Common Stock inures to the benefit
of the Corporation under this Section, the Employee shall pay cash or return such shares to the
Corporation within 30 days after receiving written notice from the Corporation that the Employee
has engaged in a harmful activity. The determination by the Committee as to whether the Employee
engaged in “harmful activity” while employed by the
Corporation or a Subsidiary or during the six-month period thereafter shall be final and
conclusive, unless otherwise determined by a majority of disinterested members of the Board.

 

3

 

A “harmful activity” shall have occurred if the Employee shall do any one or more of the
following:

(a) Engage in any fraud or intentional misconduct that is a significant contributing factor to
the Corporation having to restate all or a portion of its financial statement(s).

(b) Engage in activities that would constitute grounds for the Corporation or a Subsidiary to
terminate the Employee’s employment by reason of a Termination or Dismissal for Cause (as defined
in the Plan) or for Cause (as defined in an applicable employment agreement between the Employee
and the Corporation and/or a Subsidiary), whether or not the Employee is employed at the time the
Employee engages in such activities.

(c) Solicit or hire any employees of the Corporation or a Subsidiary or induce any of such
employees to terminate their employment relationship with the Corporation or a Subsidiary.

(d) Solicit, induce, or attempt to solicit or induce any customer, supplier, or other entity
doing business with the Corporation of a Subsidiary to cease doing business with the Corporation or
a Subsidiary or, in the case of a customer, to place agribusiness insurance, as that term is
commonly understood in the industry, with any competitor of the Corporation or a Subsidiary. For
purposes of the foregoing provision, the term “customer” shall mean a business that the Corporation
or a Subsidiary insures on the date that the Employee’s employment terminates (or has insured
during the previous twelve months) and a broker who has placed business with the Corporation or a
Subsidiary on the date that the Employee’s employment terminates but only with respect to those
clients of the broker for which the broker has placed business with the Corporation or a Subsidiary
in the 12-month period preceding the date that the Employee’s employment terminates.

(e) Directly or indirectly, own, manage, operate, render services for (as a consultant or an
advisor), or accept any employment with (i) Nationwide Agribusiness Insurance Company, Michigan
Millers Insurance Company, or Westfield Insurance Company, or any of their successors in interest
or (ii) the agribusiness insurance business of any other insurance company whose business has, or
could reasonably be expected to have, a material adverse effect on the Corporation’s or a
Subsidiary’s business insurance business.

(f) Directly or indirectly, own, manage, operate, render services for (as a consultant or an
adviser), or accept any employment with, within a 50-mile radius of Wilkes-Barre, Pennsylvania, any
other property and casualty insurance or reinsurance line of business to the extent that such
ownership, management, operating, rendering of services, or employment (and the activities
necessarily incident thereto) have, or could reasonably be expected to have, a material adverse
effect on the Corporation’s or a Subsidiary’s business insurance business.

 

4

 

(g) For any reason, in any fashion, form or manner, either directly or indirectly, divulge,
disclose or communicate to any person, firm, corporation, or other business
entity, in any manner whatsoever, any confidential information or trade secrets concerning the
business of the Corporation or a Subsidiary, including, without limiting the generality of the
foregoing, any customer lists or other customer identifying information, the techniques, methods or
systems of the Corporation’s or a Subsidiary’s operations or management, any information regarding
their respective financial matters, or any other material information concerning the business of
the Corporation or a Subsidiary, their manner of operation, plan, or other material data. The
provisions of this subsection shall not apply to (i) information that is public knowledge other
than as result of Employee’s authorized disclosure; (ii) information disseminated by the
Corporation or a Subsidiary to third parties in the ordinary course of business; (iii) information
lawfully received by the Employee from a third party who, based upon inquiry by the Employee, is
not bound by a confidential relationship to the Corporation or a Subsidiary; or (iv) information
disclosed under a requirement of law or as directed by applicable legal authority having
jurisdiction over the Employee.

4. Voting Rights and Dividends. Except as provided in Section 11 of the Plan, the
Employee shall be entitled to receive dividends and shall have vesting rights with respect to
Common Stock received upon the satisfaction of the Stage I Vesting Criteria pursuant to this Award.

5. Withholding of Tax. This Award is subject to the withholding of all applicable
taxes. The Corporation may withhold, or permit the Employee to remit to the Corporation, any
federal, state, or local taxes applicable to the grant, vesting, or other event giving rise to tax
liability with respect to this Award. If the Employee has not remitted the full amount of
applicable withholding taxes to the Corporation by the date the Corporation is required to pay such
withholding to the appropriate taxing authority (or such earlier date that the Corporation may
specify to assist it in timely meeting its withholding obligations), the Corporation shall have the
unilateral right to withhold Common Stock relating to this Award in the amount it determines is
sufficient to satisfy the minimum tax withholding required by law. State taxes shall be withheld
at the appropriate rate set by the state in which the Employee is employed or were last employed by
the Corporation. The Employee may elect to surrender previously acquired Common Stock or to have
the Corporation withhold Common Stock relating to this Award in an amount sufficient to satisfy all
or a portion of the minimum tax withholding required by law.

6. Status of Restricted Stock Units and Common Stock. This Award shall create no
fiduciary duty of the Corporation to the Employee, and this Agreement creates only a contractual
obligation on the part of the Corporation to deliver shares of the Corporation’s Common Stock (or
cash, in the discretion of the Committee), subject to vesting and the other terms and conditions
hereof, as provided in the Agreement. The Restricted Stock Units shall not be treated as property
or as a trust fund of any kind. No assets have been secured or set aside by the Corporation with
respect to this Award and, if any amounts become payable to the Employee pursuant to this
Agreement, the Employee’s rights with respect to such amounts shall be no greater than the rights
of any general unsecured creditor of the Corporation.

7. Securities Laws. The Employee agrees that the Common Stock acquired pursuant to
this Award will not be sold or otherwise disposed of in any manner that would constitute a
violation of any applicable federal or state securities laws. The Employee also agrees that, (a)
in addition to any legend that the Committee may require under Section 2 herein, the certificate(s)

 

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representing the Common Stock issued pursuant to this Agreement may bear such legend or
legends as the Committee deems appropriate in order to assure compliance with applicable securities
laws, (b) the Corporation may refuse to register the transfer of shares of such Common Stock if
such proposed transfer would, in the opinion of counsel satisfactory to the Corporation, constitute
a violation of any applicable securities law, and (c) that the Corporation may give related
instructions to its transfer agent, if any, to stop registration of the transfer of such Common
Stock.

8. Employment Relationship. Nothing contained in this Agreement or otherwise shall
be construed to confer upon the Employee any right to continue in the employ of the Corporation or
any Subsidiary or limit in any respect the right of the Corporation or of any Subsidiary to
terminate the Employee’s employment at any time and for any reason. Any question as to whether and
when there has been a termination of such employment, and the cause of such termination, shall be
determined by the Corporation and its determination shall be final.

9. Tax Treatment. This Award is not intended to provide a deferral of compensation
under Code Section 409A, and this Agreement shall be so construed and administered. The
Corporation intends to report as includible in the Employee’s gross income for any taxable year an
amount equal to the fair market value (determined in accordance with Section 6.3 of the Plan) of
the Common Stock covered by the Restricted Stock Units that are no longer subject to a substantial
risk of forfeiture. In the event that the Corporation reasonably determines that any compensation
or benefits payable under this Agreement may be subject to taxation under Code Section 409A, the
Committee may adopt, prospectively or retroactively, such amendments to this Agreement or to take
any other actions it determines necessary or appropriate to (a) exempt the compensation and
benefits payable under this Agreement from Code Section 409A or (b) comply with the requirements of
Code Section 409A. In no event, however, shall this section or any other provisions of this
Agreement be construed to require the Corporation to provide any gross-up for the tax consequences
of any provisions of, or payments under, this Agreement and the Corporation shall have no
responsibility for tax consequences to Employee (or his or her beneficiary) resulting from the
terms or operation of this Agreement.

10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Corporation and all persons lawfully claiming under the Employee.

11. Notices. All notices and other communications provided for herein shall be in
writing and shall be delivered by hand or sent by certified or registered mail (or by such other
method as the Committee may from time to time deem appropriate), return receipt requested, postage
prepaid, and addressed, if to the Corporation, 72 North Franklin Street, P.O. Box P, Wilkes-Barre,
PA 18773-0016; Attention:                      (or to such different address as the Corporation may designate in
writing) or, if to the Employee, at the Employee’s most recent address as shown in the employment
or stock records of the Corporation.

12. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original as against any party whose signature appears thereon, and all
of which together shall constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all the parties reflected hereon as the signatories. Copies of such signed
counterparts may be used in lieu of the originals for any purpose.

 

6

 

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

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by an
officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date
first above written.

	 	 	 	 	 	 	 	 	 
	PENN MILLERS HOLDING CORPORATION	 	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Douglas A. Gaudet

President and Chief Executive Officer
	 	 	 	(Signature)	 	 

 

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