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EXHIBIT (10)(AI)
CONFIDENTIAL
AGREEMENT AND RELEASE
This Agreement and Release
("Agreement") is dated _____________ ("Today"). It is between
Catherine B. Strauss ("you") and Harleysville Group Inc., a
Delaware corporation and Harleysville Mutual Insurance Company, a
Pennsylvania corporation (collectively "the Company").
You and the Company intend to be legally bound by this
Agreement, and are entering into it in reliance on the promises
made to each other in this Agreement. Effective January 2,
2007, you are taking early retirement from the Company and, thus,
your employment relationship with the Company will end. In
light of the many years of service you have provided as a senior
executive to the Company, the Company will pay you certain benefits
described in this Agreement. In turn, as set forth in this
Agreement, you are releasing legal claims against the Company.
1.
Your Separation Date . Your employment will end on
January 2, 2007 ("Separation Date").
2.
Officer Status . You resign as and are no longer an
officer, plan administrator, and/or director of the Company, or any
affiliate or a member of any committee after your Separation Date.
3.
Pay and Benefits until Separation Date.
a.
From Today until your Separation Date, the Company will pay you
your current regular salary and you may continue to participate in
the Company’s employee benefits programs.
b.
Within 30 days after your Separation Date, the Company will pay
you (less applicable withholding in a lump sum) for 22 days of
accrued but unused vacation time, constituting all vacation pay due
to you up through your Separation Date.
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c.
If you die before the Separation Date, the date you die will
automatically become your new Separation Date, and neither you nor
your estate will receive the payments set forth below in Paragraph
5.a.
4.
Career Transition Services. The Company will pay
for the cost of six (6) months of career transition services,
commencing on the date this Agreement is signed by you.
The Company’s payment for such career transition
services will be limited to $9,500.00 for that six-month period.
In the event that you have not found new employment upon the
expiration of that six-month period, the Company will extend
payment for your career transition services, on a monthly basis,
for an additional period of six months or until you find new
employment, whichever occurs first.
5.
Your Benefits After Separation Date . Once this
Agreement becomes effective in accordance with Paragraph 14 below,
you will receive the following payments and benefits after the
Separation Date:
a.
The Company will make payments to you from the day after your
Separation Date at your bi-weekly salary rate in effect on your
Separation Date until July 2, 2007. Payments will be made in
bi-weekly installments on regular paydays in accordance with normal
Company payroll practices and subject to applicable federal, state,
and local withholding. If by July 2, 2007 or at any point
between July 2, 2007 and January 2, 2008, you obtain employment as
a senior level executive with a for-profit company with annual
revenues in excess of $100,000,000, then the Company will stop
making payments to you as of the date your new employment
commences. If by July 2, 2007, you have not obtained new
employment, then the Company will continue making payments to you
at the same rate for up to an additional six months, until January
2, 2008. However, if by July 2, 2007 or at any point between
July 2, 2007 and January 2, 2008, you obtain new employment
teaching, working for a non-profit company, or working for a
for-profit company with annual revenues of $100,000,000 or less, or
are self-employed, then the Company will continue making payments
to you, but the Company will subtract from the payment the
compensation you receive from the new employment after July 2,
2007, thereby offsetting your new compensation from the
Company’s payment, for up to an additional six months, until
January 2, 2008. You have a duty to inform Robert A. Kauffman, in
writing, at 355 Maple Avenue, Harleysville, PA 19438, within 5
calendar days of obtaining
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employment. The period you
receive these bi-weekly payments is your "Payment Period."
b.
If you die before the end of the Payment Period, any and all
payments due to be paid to you in the future under this Agreement
as of the date of your death will be paid in a lump sum within
ninety (90) days after your death to your surviving spouse.
If you have no surviving spouse, the payment will be made to
your estate.
c.
Beginning on January 3, 2007, you may elect to continue your
medical and dental coverage under COBRA. If you do elect to
do so, the Company will pay the full cost of continuing your
medical and dental coverage as of Today under COBRA throughout the
earlier of the end of the Payment Period and the date on which you
obtain such benefits through other employment.
d.
You may convert your group life insurance coverage to individual
coverage in accordance with the terms of the Company’s group
life insurance plan. The Company will provide you with
sufficient information to enable you to convert your group life
insurance coverage within thirty-one (31) days after your
Separation Date.
e.
You may be entitled to benefits under the Company's Pension
Plan, Supplemental Executive Retirement Plan, Retirement Savings
Plus Plan, the Non-Qualified Deferred Compensation Plan, the Equity
Incentive Plan, the Long Term Incentive Plan, or the Senior
Management Incentive Plan. Any and all benefits due under
these plans shall be paid to you in accordance with the terms of
those plans. Without limiting the foregoing, the Company
agrees:
(1)
Your payment under the Senior Management Incentive Plan ("SMIP")
for 2006 will consist of: (i) full payment due under the formulaic
component (Part "A") of the SMIP; and (ii) 50% of the payment due
under the discretionary component (Part "B") of the SMIP at target.
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(2)
If there is a payout under the 2004-2006 Long-Term Incentive
Plan, you will receive the full amount of payment to which you are
entitled, based on 36 months of employment.
(3)
If there is a payout under the 2005-2007 Long-Term Incentive
Plan, you will receive a pro rata portion of the payment, based on
24 months of employment, rather than 36 months of employment.
(4)
You will receive three-fifths of the restricted stock award
granted to you on April 26, 2006. The total number of
restricted stocks granted to you on April 26, 2006 totaled 1520;
therefore, you will receive 912 shares of the restricted stock
granted to you on April 26, 2006 upon your Separation Date.
The remaining two-fifths of the restricted stock award
granted on April 26, 2006, totaling 608 shares, will be forfeited.
f.
The Company will pay you no other money or supply any other
benefits except as described in this Agreement. You shall not
be eligible for, or be entitled to receive awards or compensation
under, any existing incentive, retirement, pension, or other
employee-related plan of the Company for calendar year 2007,
notwithstanding the Separation Date of January 2, 2007.
g.
The Company will issue a statement to the employees in the form
attached hereto as Exhibit A. In response to any reference
requests on your behalf, the Company will provide information
consistent with Exhibit A, as well as your job title and dates of
employment, and will state that early retirement was the reason for
your separation from the Company. You and the Company will
direct all requests for references for you to the Company’s
head of Human Resources. The Company and its officers (i)
shall not make any statements about you that are untrue or
disparaging; and (ii) shall not take any actions intended to damage
your reputation, cause you any embarrassment or humiliation or
otherwise cause or contribute to you being held in disrepute by the
general public or the Company’s employees, agents, clients,
or customers. The provisions of this Paragraph shall survive
termination of the Payment Period.
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h.
During the Payment Period, you shall be a consultant to the
Company, available to assist with transition of your activities
with the Company and to provide assistance with discrete
activities, such as disclosure obligations, benefit plan questions
and other activities within the scope of your employment with the
Company prior to the Separation Date. In such capacity, you
shall be an independent contractor to the Company, and the Company
will pay you $250.00 per hour for any consulting services you
provide after your Separation Date. The Company will be
required to give you reasonable notice of the need for consulting
services, and shall not, without your prior written consent, ask
you to provide more than (25) hours of consulting services per
month during the Payment Period.
6.
Your Obligations to the Company
a.
Between Today and your Separation Date, you will remain a
full-time employee of the Company and will perform the job
responsibilities and duties that are expected of you in your
position. The duties will include, among other things,
providing assistance with the transition of your activities with
the Company.
b.
Prior to your Separation Date, you will return to the Company
all Company property that you now have (for example: identification
card, access card, keys, company car, computer, company manuals,
office equipment, records and files), except for those expressly
directed by the Company for you to retain in connection with any
consulting services you are to provide, with such property to be
returned upon request of the Company.
c.
You will reconcile and submit to the Company by your Separation
Date your out
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