SEPARATION AND GENERAL RELEASE
AGREEMENT
This Separation
and General Release Agreement (hereinafter referred to as
“Agreement”) Is made this 4th day of January, 2008 by
and between WILLIAM J. SPENCER, JR. (hereinafter referred to as
“Executive’ and EASTERN INSURANCE GROUP
(“EIG”), and PENN MILLERS MUTUAL HOLDING COMPANY
(“PMMHC”). EIG, PMMHC, Penn Millers Insurance Company,
Penn Millers Holding Corporation, Penn Software & Technologies
Services, Inc, and their respective subsidiaries and affiliates,
past and present, together with their directors, officers, agents,
employees, stockholders, representatives, assigns, and successors,
past and present, and each of them whether in such capacity,
individually or in any other capacity are collectively hereinafter
referred to as “Penn Millers”, and such term shall be
construed as inclusive of as many of the foregoing entities and
individuals as may be applicable.
Executive and
EIG are parties to an Executive Employment Agreement dated the
1 st
of January, 2006 (the
“Employment Agreement”) which sets forth the terms and
conditions of the employment of Executive by EIG and contains
certain provisions relating to the termination of such employment.
Section 7.4 of the Employment Agreement requires that
Executive agree to and sign a complete release and hold harmless
agreement as a condition of Executive’s entitlement to
contain payments under the Employment Agreement.
In connection with
the termination of Executive’s employment effective as of
December 31, 2007, and in consideration of the covenants of
EIG contained in this Agreement, Executive therefore intends by
this Agreement to agree to the release and hold harmless agreement
required by such Section 7.4, and the parties agree that,
except as otherwise set forth in this Agreement, Executive’s
employment and the Employment Agreement shall terminate effective
as of December 31, 2007 subject to the terms and conditions of
this Agreement; provided only however that Section 4.3 of the
Employment Agreement and any other provisions of the Employment
Agreement necessary or desirable for the enforcement of such
provision shall survive and remain in effect.
In consideration
of the covenants undertaken and the releases contained in this
Agreement, EIG, PMMHC and Executive agree as follows:
1. Executive’s
employment with EIG is terminated effective as of December 31,
2007 (the “Termination Date”). As a result,
Executive’s employment relationship with EIG shall be deemed
terminated as of the Termination Date.
2. PMMHC
shall pay to Executive as severance pay his annual base
compensation (“Base Compensation”) for a period of
three (3) years following the Termination Date, less
appropriate withholdings and deductions, to be paid in accordance
with the executive payroll practices employed by PMMHC, as in
effect from time to time, beginning with the first regular payroll
date after this Agreement has become final and binding, as set
forth in Paragraph 10 of
this Agreement.
Executive’s Base Compensation as the Termination Date is Two
Hundred Twenty-Six Thousand Six Hundred Nine Dollars and Fifty
Cents ($226,609.50).
3. PMMHC
shall pay to Executive that certain one-time bonus
(“Retention Bonus”) in the amount of Fifty Thousand and
00/100 Dollars ($50,000,00) pursuant to that certain Senior
Executive Retention Agreement, effective January 1, 2005, made
by and between PMMHC, Penn Millers Holding Corporation, EIG and
Executive, in accordance with the terms stated therein.
4. PMMHC will
provide to Executive information regarding Executive’s option
to convert his group life insurance coverage to an individual
policy.
5. PMMHC
shall continue Executive’s group health, dental and vision
insurance coverage until June 30, 2009. For such period, PMMHC
shall continue to pay its applicable portion of the health, dental
and vision insurance premium. The provision of health, dental and
vision insurance benefits under this Paragraph is expressly
conditioned upon and subject to all of the following conditions:
(a) the payment by Executive of applicable premiums,
co-payments and/or other applicable contributions which are to be
deducted from payments made by PMMHC to Executive under
Paragraph 2 above, with such premiums, co-payments and/or
other applicable contributions paid by Executive to be in the same
amount as are in effect from time to time for, and paid by, active
employees of PMMHC; (b) PMMHC continues to maintain health
and/or insurance benefits for its active employees;
(c) Executive remains eligible for the health insurance plans
and programs in accordance with all applicable terms and provisions
thereof; and (d) the applicable health insurance benefits
shall cease upon Executive’s commencement of new employment
under which he is eligible for health insurance benefits under a
plan maintained by his new employer.
6. The
provision of health, dental and vision insurance benefits under
this Agreement shall constitute health insurance coverage to be
provided to Executive according and subject to the provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA’). Executive will be provided with additional
information at the appropriate time concerning any right under
COBRA to elect to continue health insurance coverage after
June 30, 2009.
7. Penn
Millers shall continue Executive’s director’s and
officer’s liability insurance coverage under a standard
directors’ and officers’ liability insurance policy
(“D&O Policy”) in amounts consistent with amounts
provided to the other officers and directors of EIG until the
earlier of December 31, 2010 and the last payment of Base
Compensation payable by PMMHC as provided in this Agreement. The
provision of D&O coverage under this Paragraph is expressly
conditioned upon and subject to all of the following conditions:
(a) Penn Millers continues to maintain D&O coverage
benefits for its active executive employees in accordance with the
practices then employed by Penn Millers; and (b) Executive
remains eligible for the D&O coverage in accordance with all
applicable terms and provisions thereof.
8. Excepting
only (a) as specifically set forth in the written provisions
of this Agreement, and (b) to the extent Executive or
Executive’s beneficiaries are entitled to benefits under any
retirement, thrift/401(k), and/or profit sharing plan of PMMHC,
Executive expressly agrees and understands that Penn Millers does
not have, and will not have, any obligation to provide him
presently or at any time in the future with any payments, benefits
or considerations other than those specifically recited in
Paragraphs 2 through 7 above. Executive also expressly agrees and
understands that his employment relationship with EIG and/or PMMHC
has been permanently and irrevocably severed, and by his voluntary
execution of this
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