Exhibit 10.33


     

    Exhibit
      10.33


    AGREEMENT
      AND RELEASE

    


    


    


    THIS
      AGREEMENT is made on the 25nd day of August, 2006, by and among Henry
      O. Schramm (hereinafter
      called “Employee”) and PMA Capital Corporation and Pennsylvania Manufacturers’
Association Insurance Company and their affiliates, (hereinafter called
“Employer”).

    


    RECITAL

     

    


    WHEREAS,
      Employer has determined to terminate Employee’s employment; and

    


    WHEREAS,
      the Employee has agreed to resign his position, and Employee and Employer have
      agreed to enter into this Agreement and Release (“Agreement”) to resolve any and
      all issues that may exist between them concerning Employee’s employment and
      separation from employment.

    


    NOW
      THEREFORE, Employer and Employee, for good and valuable consideration, and
      intending to be legally bound, agree as follows:

    


    1.  Resignation
      Date.
      Employee’s employment with Employer and its affiliates terminated effective
      August 10, 2006 (“Termination
      Date”).

     

    2.  Severance
      Pay.
      

     

    a) Employer
      shall provide severance pay to Employee equal to twenty (20) weeks of pay,
      calculated as two (2) weeks of pay for each year of service up to a maximum
      of
      26 weeks and a minimum of four (4) weeks (“Severance Period”) as provided in the
      PMA Capital Corporation and Pennsylvania Manufacturers’ Association Insurance
      Company Amended and Restated Severance Pay Plan (the “Severance
      Plan”).

     

    b) Based
      on
      the foregoing, Employer shall provide severance pay to Employee in the sum
      of
      $110,769.23 less all applicable withholding taxes and other deductions
      (“Severance Pay”). The Severance Pay shall be payable in accordance with its
      standard payroll periods the gross amount of twelve thousand dollars ($12,000)
      until the gross sum of one hundred ten thousand seven hundred sixty nine dollars
      and twenty three cents ($110,769.23), less taxes and necessary withholdings,
      has
      been paid. In addition, within thirty (30) days following the Effective Date
      of
      this Agreement as defined in paragraph 21, Employer shall pay Employee the
      gross
      sum of thirty three thousand two hundred thirty dollars ($33,230.00), less
      taxes
      and necessary withholdings, as additional consideration.

     

    c) If
      Employee dies before all amounts due Employee under this paragraph 2 have been
      paid to Employee, then Employer will pay any remaining amounts due Employee
      to
      Employee’s surviving spouse, or if there is no surviving spouse, to Employee’s
      estate, in a lump sum within 90 calendar days after the date of
      death.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.  Benefits.
      Except
      as otherwise set forth in sub-paragraphs a) through c) below, all of Employee’s
      employee benefits, including, but not limited to, health, welfare and disability
      benefits, shall terminate as of the Termination Date. 

     

    a)  Employee’s
      Group Term Life Insurance, Dependent Child Life Insurance and Spousal Life
      Insurance group coverages will terminate at the end of the Severance Period.
      Employee may convert all or part of these group coverages to non-group coverages
      provided that Employee shall be responsible for the payment of all premiums
      after the end of the Severance Period.

    


    b) In
      the
      event Employee elects to continue health insurance coverage through the
      Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
      and returns this executed Agreement, and further does not revoke this Agreement
      within the seven day revocation period, as provided under the Severance Plan,
      Employer will, during the Severance Period (“Continuation Period”), continue to
      pay the same monthly subsidy of the premiums for such health insurance
      continuation as was being paid by Employer prior to the Termination Date. The
      Continuation Period for payment of health insurance premiums under this
      Agreement shall commence on August 11, 2006, and conclude on December 29, 2006.
      Employee must, during the Continuation Period, make timely monthly premium
      payments under COBRA for such health insurance coverage to the extent that
      the
      COBRA premium exceeds the monthly subsidy paid by the Employer. After the
      Continuation Period, Employee must make the full monthly COBRA premium payment
      to continue the COBRA health insurance coverage. Notwithstanding the foregoing,
      to the extent that Employee’s (or a qualified beneficiary’s) right to COBRA
      continuation coverage terminates prior to the end of the Continuation Period,
      Employer’s obligation to pay the monthly premium subsidy shall
      cease.

     

    c) The
      Continuation Period for payment of health insurance premiums under this
      Agreement shall be deemed to run concurrently with the continuation period
      federally mandated by COBRA (generally 18 months), or any other legally mandated
      federal, state, or local coverage period for benefits provided to terminated
      employees under the Employer’s group health care plan. The Continuation Period
      will be deemed to commence on August 11, 2006, whether or not COBRA coverage
      is
      actually elected at such time or deferred until the expiration of the
      Continuation Period. Notwithstanding the foregoing, COBRA coverage will only
      be
      available if Employee is eligible for COBRA coverage elected in the time and
      manner prescribed, and Employee timely remits Employee’s payments of the
      premiums, as required, for COBRA coverage

     

    d) Nothing
      in this paragraph 3 will affect the Employee’s vested benefits, if any, under
      PMA Capital Corporation’s qualified and non-qualified employee plans; the
      existence, amount, and payment of such benefits shall be determined pursuant
      to
      the applicable provisions of the applicable plans, and as outlined in Addendum
      A
      attached hereto.

     

    Vacation
      Pay.
      Payment
      for accrued unused vacation days will be made as soon as practicable after
      the
      Termination Date. Employees who participate in the Purchased Personal Time
      program will be reimbursed for any amounts paid for days not used. Employee
      agrees that the amount of Severance Pay defined in paragraph 2(a) to which
      the


     

    
      
        
        

      

      
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    Employee
      would be eligible will be reduced by any amounts due from the Employee for
      days
      used, but not fully paid for, under the Purchased Personal Time program.


     

     

    4.  Unemployment
      Compensation.
      If
      Employee elects to file a claim for unemployment compensation benefits, Employer
      will not contest Employee’s eligibility. Employer will, upon request, confirm
      the resignation of Employee’s employment.

     

    5.  Outplacement
      Assistance.
      Employer agrees to engage the services, on Employee’s behalf and at employer’s
      direction and expense, the services of an outplacement company, who will assist
      employee with job search support. Services will be available for six months,
      beginning immediately upon the expiration of the revocation period as described
      in section 21 of this document.

     

    6.  Business
      Expenses.
      Employer agrees to reimburse Employee for regular, pre-approved, business
      expenses incurred prior to the Termination Date; provided that Employee submits
      appropriate and complete documentation that is satisfactory to Employer to
      support Employee’s claim for such reimbursement and requests such reimbursement
      upon acceptance of this Agreement. Employee warrants that Employee has
      surrendered any and all credit cards issued to Employee through Employer on
      or
      prior to the date hereof, and shall not incur any additional expenses on behalf
      of Employer nor seek reimbursement therefor after the date of this
      Agreement.

     

    7.  Referrals
      of Employment.
      All
      referrals for verification of employment should be directed solely to Andrew
      J.
      McGill, Vice President, Human Resources, Pennsylvania Manufacturers’ Association
      Insurance Company. Upon request, verification will note that Employee resigned
      his position, and received positive evaluations during his tenure.

     

    8.  Agreements
      and Covenants.
      Employee agrees that:

     

      
      a)     Employee has no claim to, nor will Employee seek or
      receive, any other money or consideration from Company. 

     

      
      b)    Employee returned to Employer on August 18, 2006 all
      known company property including, but not limited to, company-provided
      automobiles, cell telephones, identification cards, access cards, personal
      laptop computers, company manuals, equipment, records and files, including
      any
      and all copies of same, as well as electronic and paper records whether or
      not
      they are stored on the Employer’s premises.

     

      
      c)    Employee will not disclose or make known to anyone (other
      than in the good faith performance of Employee’s services to Employer before the
      Termination Date) other than employees of Employer, or use for Employee’s
      benefit, or the benefit of any corporation, firm, entity or person unrelated
      to
      Employer any knowledge, information or materials belonging to Employer or its
      Affiliates about their products, services, know-how, customers, business plans
      or financial, marketing, pricing, compensation and other proprietary matters
      (“Confidential Information”), whether or not subject to trademark, copyright,
      trade secret or other protection, which was made known to Employee (whether
      or
      not with the knowledge and permission of Employer, whether or not developed,
      devised or otherwise created in whole or in part by the efforts of Employee
      and
      whether or not a matter 

     

    
      
        
        

      

      
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    of
      public
      knowledge unless as a result of authorized disclosure) by reason of Employee’s
      employment by Employer. However, after such Confidential Information has become
      public knowledge, Employee shall have no further obligation under this paragraph
      regarding that publicly known Confidential Information so long as Employee
      was
      in no manner responsible, directly or indirectly, for permitting such
      Confidential Information to become public knowledge without the consent of
      Employer or the applicable Affiliate.

     

      
      d)     Employer and Employee will not make any public or
      private statements or other utterances, written or oral, or act in any manner
      that is intended to, or does in fact disparage or damage the other party, or
      the
      goodwill of the business of Employer, or the business or personal reputation
      of
      any of its directors, officers, agents or employees, clients or
      suppliers.

     

      
      e)     A violation on the part of the Employer or Employee
      of the covenants contained in paragraphs (c) or (d) above will cause irreparable
      damage to the parties such that it is and will be impossible to estimate or
      determine the damage that will be suffered by the parties in the event of a
      breach of such covenants. Therefore, the parties further agree that the parties
      shall be entitled, as a matter of course, to an injunction out of any court
      of
      competent jurisdiction, restraining any further violation of such covenant
      or
      covenants. This right to an injunction shall be in addition to all other rights
      and remedies afforded by law and under this Agreement.

     

    9.  Release.
      Employee, for him or her self, and Employee’s executors, administrators, heirs
      and assigns:

     

    a)  For
      and
      in consideration of the monies and benefits provided to Employee by Employer,
      as
      more fully described in this Agreement, and for other good and valuable
      consideration, Employee hereby fully waives, releases, and forever discharges
      Employer, and each and all of their past and present subsidiaries, parent and
      related corporations, companies and divisions, and their past and present
      respective officers, directors, shareholders, trustees, employees, attorneys,
      agents and affiliates, and their predecessors, successors and assigns
      (hereinafter collectively referred to as “Releasees”) of and from any and all
      rights, debts, claims, actions, liabilities, agreements, damages, or causes
      of
      action (hereinafter collectively referred to as “claims”), of whatsoever kind or
      nature, whether in law or equity, whether known or unknown, that Employee ever
      had or now has in any capacity, either individually, or as a director, officer,
      representative, agent or employee of Releasees against any or all of the
      Releasees, for, upon, or by reason of any cause, matter, thing or event
      whatsoever occurring at any time up to and including the date Employee signs
      this Agreement. Employee acknowledges and understands that the claims and rights
      being released in this paragraph include, but are not limited to, all claims
      and
      rights arising from or in connection with any agreement of any kind Employee
      may
      have had with any of the Releasees, or in connection with Employee’s employment
      or termination of employment, all claims and rights for wrongful discharge,
      breach of contract, either express or implied, interference with contract,
      emotional distress, back pay, front pay, benefits, fraud, misrepresentation,
      defamation, claims and rights arising under the Civil Rights Acts of 1964 and
      1991, as amended, (which prohibits the discrimination in employment based on
      race, color, national origin, religion or sex), the Americans with Disabilities
      Act (ADA), as amended (which prohibits discrimination in employment based on
      disability), the Age Discrimination in Employment Act (ADEA), as amended (which
      

     

    
      
        
        

      

      
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    prohibits
      age discrimination in employment), Worker Adjustment and Retraining Notification
      Act (WARN), the National Labor Relations Act, the Fair Labor Standards Act,
      the
      Employee Retirement Income Act of 1974 (ERISA), as amended, the Family and
      Medical Leave Act (FMLA), as amended, the Pennsylvania Wage and Hour Laws,
      the
      Pennsylvania Wage Payment and Collection Law, the Pennsylvania Human Relations
      Act, the Health Insurance Portability and Accountability Act (HIPPA), and any
      and all other claims or rights whether arising under federal, state, or local
      law, rule, regulation, constitution, ordinance or public policy. Employee agrees
      that Employee will not initiate any civil complaint or institute any civil
      lawsuit, or file any arbitration against Releasees, or any one of them, based
      on
      the fact or circumstance occurring up to and including the date of the execution
      by Employee of this Agreement. This Release does not cover claims relating
      to
      the validity or enforcement of this Agreement.

     

    b)  Employee
      hereby agrees to waive any provisions of state or federal law that explicitly
      or
      implicitly would prevent the application of this Agreement to claims which
      Employee does not know of or expect to exist in Employee’s favor at the time of
      executing this Agreement which, if known by Employee, would have materially
      affected his decision to execute this Agreement. In addition, Employee hereby
      agrees to waive any provisions of state or federal law which might require
      a
      more detailed specification of the claims being released pursuant to the
      provisions of this Agreement.

     

    c)     
      Notwithstanding anything to the contrary set forth herein, Employee does not
      hereby release Employer from any obligation to indemnify Employee for
      third-party claims to which he may be entitled in the future in accordance
      with
      Employer’s Bylaws or pursuant to any insurance policies of the Employer covering
      directors and officers of the Employer.

     

    10.   No
      Lawsuits.
      Employee understands and acknowledges that Employer’s purpose for entering into
      this Agreement is to avoid any civil litigation or filing of arbitration by
      Employee. Therefore, in the event the Employee has filed or files any civil
      complaint, institutes any civil lawsuit, or initiates or continues any civil
      action whatsoever, for a claim that is being released under paragraph 9
      (excepting only an action to compel compliance by Employer with this Agreement)
      against any of the Releasees, the Employee shall pay back to Employer
      Seventy-Five percent (75%) of all monies received or paid out under paragraphs
      2
      and 3b, and any other thing of value received under this Agreement to that
      date,
      with the maximum amount of interest allowed by law compounded annually, and
      to
      pay Releasees their costs and attorney’s fees in such action. With respect to
      the Employee’s obligations to the Releasees under paragraph 9, the Releases
      shall also have the right of set-off against any obligation to the Employee
      whether or not under this Agreement. The
      provisions of this paragraph 10 shall be inapplicable in any matters regarding
      the ADEA.

     

    11.   Cooperation.
      Employee agrees to cooperate fully with Employer, its legal counsel and/or
      insurance carrier in the defense of any claim, suit, action, charge, complaint
      or controversy arising out of the Employee’s employment or area of
      responsibility (including depositions, hearings and judicial proceedings, if
      necessary); provided that such cooperation does not interfere with the
      Employee’s normal work hours with a subsequent employer and the Employer
      reimburses Employee for reasonable out-of-pocket travel expenses incurred by
      Employee in fulfilling his obligations under this paragraph 11. Such


     

    
      
        
        

      

      
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    cooperation
      includes, but is not limited to, meeting with Employer personnel and/or its
      attorneys in order to prepare for any such deposition, hearing or judicial
      proceeding. Employee acknowledges that Employee has advised Employer’s legal
      counsel completely and candidly of all facts that Employee is personally aware
      of that constitutes or might reasonably constitute violations of Employer’s
      ethical standards, legal or regulatory obligations. 

     

    12.   No
      Contract of Employment.
      This
      Agreement does not create and is not evidence of a contract of employment
      between Employee and Employer. Employee understands, as does Employer, that
      the
      employment relationship has at all times been one of employment-at-will, with
      either party having the right to terminate the employment relationship at any
      time with or without cause. Such mutual right of termination has been in full
      force and effect throughout the entire period of Employee’s employment with
      Employer

     

    13.   Reemployment.
      If
      the
      Employee is rehired by the Employer or any of its affiliates prior to the
      Employee’s receipt of his/her Severance Pay, all rights to amounts payable under
      this Agreement and Release shall cease and this Agreement and Release shall
      automatically terminate and be of no force or effect. 

     

    14.   No
      Legal Liability.
      Employee agrees that the payments made and other consideration received pursuant
      to this Agreement are not to be construed as an admission of legal liability
      by
      Releasees or any one of them and that no person or entity shall utilize this
      Agreement or the consideration received pursuant to this Agreement as evidence
      of any admission of liability since Releasees expressly deny liability. Employer
      is entering into this Agreement solely for the purpose of effectuating a
      mutually satisfactory severance of Employee’s employment.

     

    15.   Confidential
      Agreement.
      Employee agrees that the terms of this Agreement shall remain confidential
      and
      shall not be disclosed or publicized under any circumstances to any other person
      or entity (other than appropriate governmental officials, or Employee’s spouse,
      counsel and accountant) unless authorized, in writing, by Employer or as
      otherwise ordered by a court of competent jurisdiction or permitted by law.
      Employer agrees that the terms of this Agreement shall remain confidential
      and
      shall not be disclosed or publicized unless required by law or
      regulation.

     

    16.   Severability.
      Should
      any clause of this Agreement be found to be in violation of law, or ineffective
      or barred for any reason whatsoever, the remainder of the Agreement shall
      continue in full force and effect; provided however, that if any release, waiver
      or agreement set forth or referred to in this Agreement, including, but not
      limited to, those set forth in paragraphs 8, 9, and 10, is declared to be
      invalid, illegal or unenforceable, in whole or in part, Employer shall have
      the
      right to elect to consider its obligations under this Agreement to be null
      and
      void as of the date of execution of this Agreement and, in such case, any
      payments or benefits that had been afforded under this Agreement shall be
      returned to Employer with the maximum amount of interest permitted by law,
      compounded annually,
      except to the extent inconsistent with the ADEA.

     

    17.   Remedies
      Cumulative.
      The
      Employee agrees that the remedies under paragraphs 8, 10 and 16 shall not
      constitute or be construed to constitute liquidated damages 

     

    
      
        
        

      

      
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    and
      shall
      not in any way cancel or impair any right or remedy at law or equity which
      Employer may otherwise have.

     

    18.   No
      Assignment.
      The
      rights and obligations conferred hereunder shall not be subject to assignment
      without the prior consent of both Employee and Employer.

     

    19.   Exclusive
      Agreement.
      Employee affirms that the only consideration for the signing of this Agreement
      is the terms stated herein and that no other representations, promises or
      agreements of any kind have been made to Employee by any person or entity
      whatsoever to cause Employee to sign this Agreement. Employee and Employer
      affirm that this Agreement sets forth the entire agreement between the parties
      with respect to the subject matter contained herein and supersedes all prior
      or
      contemporaneous agreements or understandings between the parties with respect
      to
      employment and/or the subject matter contained herein. No alteration or other
      modification of this Agreement shall be effective unless made in writing and
      signed by both parties.

     

    20.   Acknowledgement.
      Employee acknowledges that Employee has read this Agreement and that Employer
      has recommended and advised Employee to consult with an attorney prior to
      executing this Agreement. Employee further acknowledges that Employee has been
      given a period of twenty-one (21) days within which to consider this Agreement
      before executing it, and that if Employee does so before the end of such period,
      Employee does so of Employee’s own free will and with the full knowledge that
      Employee could have taken the full period. In the event Employee desires to
      execute this Agreement prior to the end of the twenty-one (21) day period,
      Employee shall also execute and provide to the Employer an endorsement as
      provided in Exhibit “A”. If Employee does not execute the Agreement on or before
      September 15, 2006 the offer by Employer to enter into this Agreement shall
      automatically be withdrawn, and this Agreement shall be deemed null and void
      without any further action by Employer.

     

    21.   Effective
      Date.
      This
      Agreement will not become effective or enforceable until after seven (7) days
      after Employee executes it without revocation. Employee may revoke this
      Agreement within the seven (7) day period by sending written notice to Employer,
      Attention: Andrew J. McGill, Vice President, Human Resources, Pennsylvania
      Manufacturers’ Association Insurance Company, but such notice must be received
      within that seven (7) day period to be valid. If the Employee so revokes this
      Agreement, the offer of the terms contained herein shall be automatically
      withdrawn, and this Agreement shall be deemed null and void without any further
      action by Employer. If revocation is not received within the seven (7) day
      period referred to above, this Agreement will go into effect on the first
      business day immediately following the expiration of that seven (7) day period
      (“Effective Date”).

     

    22.   Affirmation.
      Employee affirms that (a) Employee has carefully read the foregoing Agreement,
      (b) Employee fully understands the meaning, intent, and consequences of this
      document, (c) Employee has signed the Agreement voluntarily, knowingly and
      without any force and coercion, and (d) Employee intends to be bound by the
      promises contained in this Agreement for the consideration stated in the
      Agreement and (e) Employee agrees that the total compensation provided under
      this Agreement and Release includes compensation and consideration that is
      not
      required by the policies and procedures of Employer, its past or present parent,
      direct and indirect subsidiaries or affiliates and such 

     

    
      
        
        

      

      
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    compensation
      and consideration are not something to which Employee was or is indisputably
      entitled, but is solely being provided to Employee in consideration of
      Employee’s full, final and complete release of any and all rights and claims
      under this Agreement and Release and Employee’s complete and timely performance
      of all of the Employee’s obligations that are contained within this Agreement
      and Release.

     

    23.   Withholding
      Taxes. All
      applicable federal, state and local withholding taxes shall be withheld from
      the
      payments made to Employee under and in connection with this
      Agreement.

     

    24.   Counterparts.
      This
      Agreement may be executed simultaneously in two or more counterparts, each
      of
      which shall be deemed an original, and it shall not be necessary in making
      proof
      of this Agreement to produce or account for more than one such
      counterpart.

     

    25.   Successors
      and Assigns.
      All
      covenants and other agreements in this Agreement contained by or on behalf
      of
      the parties hereto shall bind and inure to the benefit of their respective
      successors, heirs and assigns.

     

    26.   Governing
      Law.
      This
      Agreement shall be interpreted and enforced pursuant to the internal laws of
      the
      Commonwealth of Pennsylvania.

     

    27.   Waiver.
      No term
      or provision of this Agreement may be changed, waived, discharged, or terminated
      orally, but only by an instrument in writing signed by all parties
      hereto.

     

    28.   Notices.
      All
      notices or other communications hereunder shall be in writing and addressed
      as
      follows:

    


    To
      Employer:

    


    PMA
      Capital Corporation and

    Pennsylvania
      Manufacturers’ Association Insurance Company

    380
      Sentry Parkway

    Blue
      Bell, PA 19422

    Attention:
      Andrew J. McGill 

    


    To
      Employee:

    


    Henry
      O.
      Schramm

    53
      Longview Circle

    Berwyn,
      PA 19312

    


    or
      to
      such other addresses or persons as the parties, from time to time, may furnish
      one another by notice given in accordance with this paragraph. All notices
      or
      other communications addressed pursuant to this paragraph 28 and sent: (i)
      via
      facsimile or personal delivery shall be effective when received; and (ii) via
      first-class mail, postage pre-paid or overnight mail shall be effective when
      properly deposited.

     

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      TAKE
        THIS
        AGREEMENT AND RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS
        PROVISIONS BEFORE SIGNING IT: IT INCLUDES A

      RELEASE
        OF KNOWN AND UNKNOWN CLAIMS. 

       

      BY
        SIGNING THIS AGREEMENT AND RELEASE, YOU ACKNOWLEDGE THAT YOU HAVE READ THIS
        AGREEMENT AND RELEASE, UNDERSTAND IT AND ARE VOLUNTARILY ENTERING INTO
        IT.

       

      PLEASE
        RETAIN A COPY OF THIS AGREEMENT AND RELEASE FOR YOUR
        RECORDS.  

       

      AGREED
        TO AND ACCEPTED BY:  

       

      EMPLOYEE

       

      


      /s/
        Henry O. Schramm II 

      Employee’s
        Signature

      


      Henry
        O. Schramm II 

      Employee’s
        Name (Print)

      


      August
        25, 2006 

      Date

       

      


       

      PMA
        CAPITAL CORPORATION and

       

      PENNSYLVANIA
        MANUFACTURERS’ ASSOCIATION INSURANCE COMPANY

       

      By
        its:
/s/
        Andrew J. McGill

          Officer’s
        Signature

       

           Andrew
        J. McGill 

          Officer’s
        Name (Print)

       

          Vice
        President, Human Resources

          Officer’s
        Title

       

          8/10/06
        

          Date